Ladies and gentlemen, good day, and welcome to Pitti Engineering's Q1 FY25 earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions at the end of today's presentation. Please note that this conference call will be recorded. Before we begin, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. For a list of such considerations, please refer to the earnings presentation. I would now like to hand the call over to Mr. Akshay Pitti. Please go ahead, sir. Good evening, and a warm welcome to the Q1 FY25 earnings call. I'll start with a brief overview of the performance during the quarter, followed by the Q&A session. We completed the acquisition of Bagadia Chaitra Industries Private Limited on sixth of May, twenty twenty-four. The financials are pro rata consolidated for the period. Consolidated revenue for the quarter stood at INR 386.71 crores. EBITDA was INR 56.35 crores, and PAT was INR 20.55 crores. Total sales volume was 14,992 tons. On a standalone basis, the revenue for the quarter grew by 21.92% to INR 354.45 crores. EBITDA grew by 28.07% to INR 54.34 crores. PAT grew by 41% to INR 19.70 crores. Sales volume was 12,411 tons, up 24.63%. Q1 FY25 saw the highest ever volumes, revenue, and EBITDA for the quarter. Blended EBITDA per ton was INR 43,785. In Q1 FY25, we have also accounted for one-time expenditures related to the BCIPL acquisition, amounting to INR 2.18 crores. Installation of new capacities in our Aurangabad facility is in process and on track for commissioning by September. With this, our consolidated capacity will go to 90,000 tons per annum. During the quarter, the board had approved the fund raise of up to INR 360 crores. I'm happy to note that we have successfully completed the same via QIP. These funds will go a long way to strengthening our balance sheet and fueling our future growth. A quick update on the merger with Pitti Castings, the approval of NCLT is expected shortly, and we hope to conclude the same during this quarter. With a strong performance in quarter one and continued demand from almost all our customers, we have a very optimistic outlook for the rest of the year and hope to surpass our annual targets of 48,000 tons on a standalone basis and 63,000 tons on a consolidated basis. I would now like to open the floor for the Q&A session. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking your questions. Our first question comes from the line of Balas ubramanian from Arihant Capital. Please go ahead. Good evening, sir. Congratulations for good set of numbers. My first question regarding railway side, lot of railway players are given conservative guidance because lot of railway orders has been delayed. So I just want to understand, we have exposure around 30%-33% kind of business in railways. I just want to understand what kind of order intake we have and what kind of opportunities we have in coming years. And sir, order book number is also not there, that PPT. Could you please share order book and short-term and long-term order mix, and what kind of order inflows we can expect in this year? These are my first questions. Firstly, regarding the railways business, as you know, majority of our railway-related business is export-oriented. If you see last financial year, about 25% of our total revenue from railways was from domestic, 75% from export. Our exposure to direct Indian Railways supplies is only starting now, so we are not seeing any de growth in our order intake. In fact, we are seeing more orders from railway coming in going forward. As far as the order book is concerned, like I mentioned, since we operate in a build-to-ship kind of a model to our customers, order book is not indicative of the strength of the business and its prospects for the current year. However, the total order book is around INR 1,000 crore as of date. What is the short-term and long-term mix? Long term would be about INR 200 crore. This is a decreasing order, which is one time in nature and not our industry standard. This number will keep coming down as we keep consuming that. Okay, sir. Sir, we have added a new segment for pumps. So what kind of work we are doing? The pump segment has been added from the acquisition of Bagadia Chaitra Industries. A lot of the business at that company's level is for the agricultural pump side business. The major customer there is Texmo, and it's a good business. It's a good amount of revenue. Got it, sir. Sir, recently, this Dakshin Foundry, when we can expect the 3,300 metric ton, whether it is FY 2026 or FY 2027? Balas ubramanian, I, I've already answered this question in the call for Dakshin. However, for the sake of repetition, they are already doing about 3,000 tons per annum of utilization, so they will continue at that rate. Okay. Got it, sir. Sir, I'll come back in queue for further. Thank you. Thank you. Our next question comes from the line of Sahil Sanghvi with Axis Securities. Please go ahead. Yeah. Thanks for the good opportunity, and congratulations on another set of strong numbers. I have a few basic questions, sir. So one is, could you throw some light on the decline in exports revenue compared to the earlier quarters? And similarly, we are also focusing on high-value added assemblies, which also have shown decline in trailing volumes. So that's my first question. Second is more of a bookkeeping question, but EBITDA per ton declined for BCIPL. I understand it is because of some one-time expenses. So just wanted to know that whether we expect any repetition of such expense expenditure in the coming quarters, or do we remain on track to improve the EBITDA per ton for the company, for BCIPL? Yeah. So, firstly, on the revenue, on a sequential basis, yes, exports are down, but if you see on a YOY basis, exports are up. For the same period in FY 2024, export revenue of INR 91.96 crores. However, for the quarter one, it's about INR 106.64 crores. Secondly, coming to your third question, which is the EBITDA per ton. EBITDA per ton, again, is actually higher than the same period before last, the same corresponding period of last year, and if I'm not mistaken, on a sequential basis also it is higher than the previous quarter, at INR 43,785 per ton. For BCIPL, I'm looking at the presentation, the blended EBITDA per ton stood at INR 7,204, which compares to the previous year quarter, INR 11,256. So is there a misunderstanding on my side? See, in that, you also have to see two things. In the, BCIPL side, we have taken accounting policy changes, number one, in terms of the inventory valuation. We have moved to a conservative method of accounting our inventory in that company post-takeover. Secondly, if you see the tonnage, the tonnages reported in this PPT are for the full, quarter. It is very categorically written. It's for full quarter, not proportionate. However, the EBITDA taken is for the proportionate period. Therefore, the EBITDA per ton comes down by about INR 1,200 a ton. The impact of the inventory valuation is about INR 2 crore. If you adjust for that, the EBITDA in BCIPL on a standalone basis would have been about INR 12,000 a ton. Yeah, makes sense. I think we can expect it to around INR 12,000 or above that in the coming quarter. See, once the consolidation benefits start, as we have only acquired it on sixth of May, over the next two or three quarters, we expect this number to go up to about INR 18,000 a ton. Okay. Understood. Yeah. On the volume side, what is the reason? I mean, maybe some color on why machining products volumes declined and the high-value added assemblies declined. This is purely on the product mix basis. On a full year basis, it should still be higher than the last year. Okay. Okay. Thank you, sir. Thank you. We have follow-up questions from Balasu bramanian, from Arihant Capital. Please go ahead. Thank you so much for follow-up question. Sir, what is the balance sheet numbers as on this quarter? How much cash and debt level? The net debt number as on end of period, 30th June, was INR 525 crores. However, post-funding, the net debt picture as of, first of August is down to about INR 300 crores, post both the acquisitions. That's through the 1st of August, right, sir? Sorry, 1st of August. Okay, got it, sir. So how were the inventory levels, sir, inventory levels? If you could share some highlights on that, working capital cycle side in this quarter. So, on the inventory number, we are at about INR 270 crores of inventory. Inventory days outstanding is about 70. DSO is about 60, and DPO is about 70. Working capital has come down to about 63 days, net working capital cycle. Got it, sir. So, sir, with INR 300 crore of net debt, so, like, how, how we can look at over the next two years, like whether we are trying to reduce further or, like we are focusing on further, inorganic growth opportunities? As of this particular second, we are not looking at any additional inorganic opportunities in the current financial year. We have already done two, and we'll be looking to consolidate these and integrate them into our business. Whatever cash flow that we generate, the free cash flow should be going towards further reducing our debt only. Beyond that, we'll look at strategies for next financial year closer to the time, looking at how the integration of the existing acquisition goes. Got it, sir. Got it. Thank you, sir. Thanks for calling me. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. Our next question is from the line of Dharmil with DAM Capital Advisors. Please go ahead. Dharmil, if you can unmute your line from your end, and please ask your questions. Thank you. Yeah. Can you hear me? Yes, Dharmil, please go ahead. Yeah. So my first question is more on the operating metrics that you have shared. So the lower value-added has grown and the machining part and the REE have declined, despite that the EBITDA per ton has increased for the standalone business. Any reason? What is the particular reason for this? The total operating leverage is up by 25%, so your overheads will be distributed better, simply on that basis. And the product mix. So if you see the blended sales realization of the rotating electrical equipment is still up by 9.8%, despite the decrease in raw material prices. Understood. And secondly, in the standalone business, your other expenses used to be somewhere around INR 20 crores-INR 25 crores, which has now increased to INR 35 crores-INR 40 crores. So what is the particular reason other expenses has grown, and will this remain same for the remaining year? Like I mentioned, there are certain one-time expenses amounting to INR 2 crore with the acquisition. Also a lot of the one-time expenses for the full year is normally booked in the first quarter for the norm then. The other expenses are higher by about INR 5 crore when compared to the previous quarter. INR 33.68 crore of the other expenditure during quarter four. Sequentially, it's up by about INR 5 crore, in which expenditure on one-time basis is about INR 2 crore. So for the next three quarters, keeping aside the one-time expense, other expense should come down. They should come down by a small margin. Understood. And lastly, I mean, the overall lamination industry in India is seeing quite a growth. All the players have been seeing some growth as well. Now that, I mean, you can- Dharmil, I, I'm not able to, I'm not able to hear you clearly. Yeah. Is it audible now? Yeah, this is better. Yeah. The last question is more on the industry, and what we have seen is lamination industry in India has grown quite a bit for the last few years. All the organized players has been part of that growth journey. Now, we also see that the MNC companies are also taking up interest in setting up factories in India, either directly or through acquisitions. So any broad sense on how the competitive landscape is changing or how would that affect the company? Because recently we saw, we came across a news that one of the MNC companies is entering India. Yeah. So that was on the cards for some time, so it's not news, at least to us. And there have been MNCs in India doing this work in form of Tempel Steel for the last 15 years. So it doesn't really change the competitive landscape. It gets more organized, which is much better for the industry as a whole. We welcome the addition of these MNCs and hope that they further drive up the consolidation of the industry. Understood. That's it, sir. Thank you very much. Thank you. Our next question is from the line of Sanjeev Zarbade with DreamLadder Investment Advisors. Please go ahead. Yes, sir. My first question was regarding, is there any further space available at your Aurangabad unit after completing the current CapEx? Hello? Yeah, sorry. In Aurangabad, we have actually added about 220, INR 2.5 lakhs sq ft of built-up area. We do not have any further area to add new buildings, but within the space created, we have enough runway to expand the capacity there up to 100,000 tons per annum, which is basically another 28,000 tons increase in the location. And, sir, related to this, is any update on when you will specific timeline when you can complete the current CapEx, the INR 90 crore CapEx announced for machining? Sorry, I couldn't hear you clearly. The CapEx for machining, you said? Correct. Correct, yes. What, what would be the completion timeline? See, in that, the good part about adding the capacity in machining, as the requirement is there, we are able to add it. So we intend to finish this about 12 months-18 months from now, looking at the increased demand. We are not rigid on closing it on a particular date. We are gonna keep it slightly flexible so that we don't incur the overhead cost of the expansion without the revenue coming in. Okay. Great, sir. And the last question, if I can squeeze in, it was regarding the EBITDA per ton. Can you shed some light on what kind of, you know, growth trajectory on EBITDA per ton we can expect over the middle term? So, if you take on a standalone basis, we did about INR 43,785 as the rate per ton. If you adjust for the one-time expenditure related to the acquisition of Bagadia Chaitra, we are already somewhere around INR 45,500 on a standalone basis. With the addition of Pitti Castings, the merger, this number should grow to about INR 48,000 on a standalone basis. Okay, sir, that's it from my side, and all the best. Thank you. We have follow-up question from Balas ubramanian with Arihant Capital. Please go ahead. Hi, sir. So sir, we have seen this quarter, employee cost and other expenses in terms of sales increased around 100 basis points-200 basis points. Post consolidation of all the acquisitions, we can expect the normal levels of 8%, kind of employee cost and 8%-9% kind of other expenses, in coming quarters? We've had our increment cycle in the first quarter, and obviously the numbers are gonna grow over the next quarters on the sales line. So the employee cost as a whole will remain fixed at this at an absolute number. As a percentage of revenue, it really doesn't have much meaning, as the revenue will change with respect to the raw material pricing. Got it, sir. So these recent acquisitions is Bagadia Chaitra, as well as Dakshin Foundry. These order executions are having any price clause, like, in Pitti standalone basis, we have a price clause. Excuse me, I'm sorry, but I'm not able to understand your question. If you can speak slightly slowly and clear. Yes, sir. Sir, I'll repeat the questions. In Pitti Engineering, on standalone basis, we have a price variation clause for three months, and some of the contracts are like wind and other contracts, we have some material there is no price variation clause. Like, like this recent acquisition companies, Bagadia Chaitra, as well as Dakshin Foundry, any price variation clause on the execution of orders? Yeah, so, the casting industry as well as the lamination industry as a standard have a quarterly price variation clause built into all contracts. Similarly, these two companies also have the same clause with all the customers. Is there any lag, sir? It happens, it happens from the first. See, See, the raw material prices on the lamination business are for a quarter, which is January to March. The sell price, which we as a supplier built into our customer, is from February to April. So while it is for a quarter, it's staggered by one month. The idea behind that is that your inventory can be consumed at the old rate. So that way, we do not incur any losses when compared to the increases or decreases in the market. Okay, sir, got it. Thank you, sir. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and one. As there are no further questions, ladies and gentlemen, we have reached the end of the question and answer session. On behalf of Pitti Engineering, that concludes this conference. Thank you for joining the call. For further queries or visiting the plant, please be in touch with Raman Naidu from Intellect PR on 9920209623. Thank you for joining us, and have a wonderful day!