Dear Members,
Your Directors are pleased to present the 38th Annual Report on the
business and operations of the Company together with the Audited Financial Statements
(Standalone and Consolidated) for the year ended 31 st March 2022.
Business Overview
Pitti Engineering Limited is engaged in the manufacture of engineering
products of iron and steel including electrical steel laminations, sub-assemblies for
motor & generator cores, die-cast rotors and machined casted & fabricated parts
and shafts. The Company supplies a range of engineering products to vastly diversified
segments like hydro and thermal generation, windmill, mining, cement, steel, sugar,
construction, lift irrigation, freight rail, passenger rail, mass urban transport,
E-mobility, appliances, medical equipment, oil & gas and several other Industrial
applications. Our products finds a suitable application in almost all engineering
application.
Financial Results
The standalone financial performance of your Company for the year ended
31 st March 2022 is summarised below:
| Particulars |
2021-22 |
2020-21 |
| Net Revenue from Operations |
95,382.38 |
51,816.71 |
| Other Income |
1,644.02 |
2,049.93 |
| Profit before Finance Costs, Depreciation, Amortisation and
Tax |
14,907.10 |
9,854.85 |
| Less: Finance Costs |
3,960.39 |
2,960.02 |
| Profit before Depreciation, Amortisation and Tax |
10,946.71 |
6,894.83 |
| Less: Depreciation & Amortisation |
3,886.66 |
3,038.17 |
| Profit before Tax |
7,060.05 |
3,856.66 |
| Less: Tax expenses |
1,870.59 |
978.82 |
| Profit after Tax |
5,189.46 |
2,877.84 |
| Add: Other comprehensive income |
2.60 |
(76.40) |
| Total comprehensive income for the year |
5,192.06 |
2,801.44 |
| Add: Surplus at the beginning of the year |
13,121.64 |
10,320.20 |
| Less: Interim dividend paid |
(376.59) |
- |
| Less: Transferred to General reserve |
- |
- |
| Surplus carried to Balance sheet |
17,937.11 |
13,121.64 |
Operating Results and Business
The Indian Economy, like the global and other individual economies,
continues to face several headwinds. Post some relief from Covid-19 induced challenges,
the geopolitical uncertainties aggravated the subdued roadblocks such as supply chain
disruption and runaway inflation. However, despite the challenges, your Company remained
resilient and made steady progress towards its vision by leveraging its core capabilities.
During the year under review, your Company continued to expand its scale by enhancing its
capacities, diversifying its offerings through pioneering the shafts, copper build-up
rotors and gear cases sector and continues to gain customers? confidence. This
resulted in best-ever financial performance in the history of your Company.
In line with growing industry opportunities and demand for products,
the Company has been enhancing its capacities. It is also re-organising its facilities to
produce majority of sheet metal at Aurangabad facility and undertake majority machining at
Hyderabad facility. The Company has spent Rs 137 Crore out of the planned Capex of Rs 270
Crore, and the balance amount will be spent on automation and capacity expansion at both
Hyderabad and Aurangabad, by FY23. This will be followed by an additional investment of Rs
197 Crore between FY23 and FY25, for capacity expansion, reorganisation and automation.
The net revenue from operations for the financial year 2021-22 was Rs
953.82 Crore as against Rs 518.17 Crore in the previous year and the total comprehensive
income for the period was Rs 51.92 Crore as against Rs 28.01 Crore in the previous year.
The total debt as on 31 st March 2022 was Rs 325.49 Crore which
includes Rs 110.19 Crore long-term debt and Rs 215.30 Crore of short-term debt. Cash and
cash equivalents at the year end was Rs 35.03 Crore resulting in a net debt position of Rs
290.46 Crore. We continued to maintain a conservative leverage profile with a total debt
to equity ratio of 1.15x.
Subsidiaries, Associates and Joint Ventures
Pitti Rail and Engineering Components Limited a Wholly Owned Subsidiary
(WoS) was incorporated on 5th October 2020 to carry out the business of manufacture of
engineering products/ components to leverage growth opportunities. There were no
significant operations carried out in the WoS during the year ended 31st March 2022.
Your Company does not have any joint venture or associate companies.
There has been no material change in the nature of business of the subsidiary. A report on
the performance and financial position of the subsidiary set out in the prescribed form
AOC-1 in terms of proviso to Section 129 (3) of the Companies Act, 2013 is provided as
Annexure to the consolidated financial statements and hence not repeated here.
Consolidated Financial Statements
The Audited Consolidated Financial Statements of the Company as on 31st
March 2022, which forms part of this Annual Report, have been prepared pursuant to the
provisions of SEBI Listing Regulations and applicable Indian Accounting Standard (IndAS)
on Consolidated Financial Statements (lndAS-110) as notified by the Ministry of Corporate
Affairs.
The annual accounts of the subsidiary companies are kept for inspection
by any member at the Registered Office of the Company as well as at the Registered Office
of the subsidiary company and also available on the website of the Company, www. pitti.in
Any member interested in a copy of the accounts of the subsidiary may write to the Company
Secretary at the Registered Office of the Company.
Material Changes
There have been no material changes and commitments affecting the
financial position of the Company between the end of the financial year of the Company to
which the financial statements relate and the date of this report. Further, it is hereby
confirmed that there has been no change in the nature of business of the Company.
Transfer to Reserves
The Company has not transferred any amount to the General Reserve out
of the amount available for appropriation during the financial year ended 31st March 2022.
Dividend
Your Directors are pleased to recommend a final dividend of 85 paisa
(17%) per equity share of face value of Rs 5/- each for the financial year ended 31st
March 2022, subject to the approval of members. The final dividend, if declared by the
members at the ensuing 38th Annual General Meeting will be paid within 30 days from the
conclusion of 38th AGM subject to deduction of tax at source as applicable to the members
whose names appear on the Company?s register or member as on 16th September, 2022 and
in respect of the shares held in dematerialised mode to the members whose names are
furnished by the National Securities Depository Limited and Central Depository Services
Limited as beneficial owners as on that date.
The recommended final dividend is in addition to the following interim
dividend declared and paid during the year ended 31st March 2022.
| Particulars |
First interim dividend |
Second interim dividend |
Third interim dividend |
| Dividend Amount per share |
37.50 paisa |
40 paisa |
40 paisa |
| Dividend % |
7.50% |
8.00% |
8.00% |
| Date of declaration |
5th August 2021 |
8th November 2021 |
11th February 2022 |
| Date of payment |
30th August 2021 |
30th November 2021 |
7th March 2022 |
The total dividend for the financial year, including the proposed final
dividend, amounts to Rs 2.025/- (40.50%) per equity share and will absorb Rs 6.49 Crore, a
payout of 12.51% of the profit after tax of the Company, which is in line with the
dividend distribution policy of the Company.
In terms of Regulation 43A of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the Dividend distribution policy is available
on the Company?s website at www.pitti.in.
Share Capital
During the year under review there has been no change in the authorised
and paid-up share capital of the Company. The
Company has not issued shares with differential voting rights, employee
stock options and sweat equity shares.
Public Deposits
During the year under review, your Company has not accepted any deposit
within the meaning of Section 73 and 74 of the Companies Act, 2013 read with Companies
(Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or
re-enactment for the time being in force.
Pursuant to Rule 2(c) (viii) of the Companies (Acceptance of Deposits)
Rules, 2014, the Company has received unsecured loans from its Directors. The details of
which are provided in the Financial Statement and under transactions with related parties
which forms part of this report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Companies Act,
2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed as an
Annexure-1 and forms an integral part of this report.
Significant and Material Orders Passed by the Regulators or Courts
There are no significant and material orders passed by the regulators /
courts that would impact the going concern status of the Company and its future
operations.
There are no proceeding pending under the Insolvency and Bankruptcy
Code, 2016 and there are no instances of onetime settlement with any Bank or Financial
Institution.
Director?s & Key Managerial Personnel
In accordance with the provisions of Section 152 of the Companies Act,
2013 Shri Akshay S Pitti, Vice-Chairman & Managing Director retires by rotation and
being eligible offers himself for reappointment.
None of the Directors of the Company are disqualified under the
provisions of the Companies Act, 2013 and SEBI Listing Regulations, 2015. The certificate
of non-disqualification of Directors pursuant to SEBI Listing Regulation is annexed to
this Report.
The Independent Directors of the Company have submitted a declaration
confirming that they meet the criteria of independence as provided in Section 149(6) of
the Companies Act, 2013 and Regulation 16 (1) (b) of the SEBI Listing Regulations and that
they are not aware of any circumstance or situation, which exist or may be reasonably
anticipated, that could impair or impact their ability to discharge duties with an
objective independent judgment and without any external influence. In the opinion of the
Board, all Independent Directors are independent of the management.
In terms of Section 150 of the Companies Act, 2013 read with Rule 6 of
the Companies (Appointment and Qualification of Directors) Rules, 2014, all the
Independent Directors of the Company have registered themselves with the databank
maintained by the Indian Institute of Corporate Affairs. Further all Independent Directors
are exempted from the requirement to undertake online proficiency self-assessment test as
required under the said rules.
Shri Nand Kishore Khandelwal, President Corporate Resources & CFO
has resigned from the Company with effect from 13th April 2022. Shri Akshay S Pitti has
been appointed as the Interim Chief Financial Officer of the Company with effect from 14th
April 2022 in addition to being the Vice-Chairman & Managing Director.
The following are the Key Managerial Personnel of the Company as on the
date of this report.
Shri Sharad B Pitti, Chairman & Managing Director, Shri Akshay S
Pitti, Vice-Chairman & Managing Director and Interim CFO and Ms. Mary Monica Braganza,
Company Secretary & Compliance Officer
Meetings of the Board
Five meetings of the Board were held during the year. The details of
composition of the Board, particulars of meetings held and attended by each Director are
detailed in the Corporate Governance Report, which forms part of this Report.
Committees of the Board
Detailed composition of the Board committees, number of meetings held
during the year under review and other related details are set out in the Corporate
Governance Report, which forms a part of this Report.
Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing
Regulations, the Board has carried out the annual evaluation of the Directors as well as
the evaluation of the Board and its Committees. The performance evaluation of the
Independent Directors was carried out by the entire Board, except the Director being
evaluated. The performance evaluation of the Chairman & Managing Director and the
Vice-Chairman & Managing Director was carried out by the Independent Directors. The
process was carried out by circulating questionnaires on the functioning of the Board, its
Committees and Individual Directors on parameters approved by the Nomination and
Remuneration Committee.
As an outcome of the above exercise, it was noted that the Directors
come with background of finance, law, banking, energy and HR as well as corporate and
governance experience. As a mature Board it has helped in strategizing actions and
effectively monitoring the progress. The Board has ensured compliance with all statutory,
legal and financial norms and stipulations. The Board has functioned as a cohesive and
focused body and has guided the management. It was also noted that the Committees of the
Board are functioning well, and satisfaction was expressed on the performance of
Independent Directors and the Executive Directors of the Company.
Particulars of Employees and Related Disclosures
The information relating to remuneration and other details as required
pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is
provided as an Annexure-2 to this report.
There are no employees who draw remuneration in excess of the limits
prescribed in Rule 5(2)(i), (ii) and (iii) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014. Pursuant to the provisions of the first proviso to
Section 136(1) of the Act, the annual report excluding the remuneration details of top ten
employees is being sent to the Members of
the Company. The said information is available for inspection on all
working days, during business hours, at the Registered Office of the Company. Any member
interested in obtaining such information may write to the Company Secretary and the same
will be furnished on request.
Directors? Responsibility Statement
Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors
of your Company confirm that:
a) in the preparation of the annual accounts for the financial year
ended 31st March 2022, the applicable Accounting Standards have been followed and there
are no material departures from the same.
b) such accounting policies as mentioned in the notes to the financial
statements have been applied consistently and judgements and estimates that are reasonable
and prudent have been made so as to give a true and fair view of the state of affairs of
the Company as at 31 st March 2022 and of the profit of the Company for the year ended on
that date.
c) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act, 2013
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities.
d) the annual accounts have been prepared on a ‘going
concern? basis.
e) proper internal financial controls laid down by the Directors were
followed by your Company and that such internal financial controls are adequate and
operating effectively and
f) proper systems to ensure compliance with the provisions of all
applicable laws were in place and that such systems were adequate and operating
effectively.
Industrial Relations
The Company enjoyed cordial relations with its employees during the
year under review. Your Company has always considered its workforce and their skills as
its valuable asset and continues to enhance their performance with emphasis on aligning it
with the changing business requirements. The periodical trainings, incentives, increments
and other welfare measures ensure healthy industrial relations. The total number of
employees on rolls as on 31st March 2022 was 1320.
Prevention of Sexual Harrassment
Your Company has formulated a policy for the prevention of sexual
harassment at the workplace. It ensures prevention and deterrence of acts of sexual
harassment and communicates procedures for their resolution and settlement. The Company is
committed to creating and maintaining a healthy working environment that enables employees
to work without fear or prejudice, gender bias and sexual harassment. The Company believes
that all employees have a right to be treated with respect and dignity and has zero
tolerance towards violations of its code of conduct, in general, and its sexual harassment
policy, in particular. During the year, no complaint under the sexual harassment policy
has been received by the Company. The Company has complied with the provisions relating to
the constitution of internal complaints committee under the Sexual Harassment of Women at
Work Place (Prevention Prohibition and Redressal) Act 2013.
Vigil Mechanism / Whistle Blower Policy
The Company has adopted a whistle blower policy and has established
necessary vigil mechanism as defined under Regulation 22 of the SEBI Listing Regulations
and section 177 of the Companies Act, 2013 for stakeholders including directors and
employees to report their concerns about unethical behavior, actual or suspected fraud or
violation of the Company?s code of conduct or ethical policy. The policy provides for
adequate safeguards against victimization of employees who avail of the mechanism.
During the year under review, no personnel was denied access to the
Audit Committee. The policy is posted on the website of the Company at www.pitti.in.
Internal Control Systems and their Adequacy
Your Company has an effective internal control and risk mitigation
system, which are constantly assessed and strengthened with new / revised standard
operating procedures. The Company?s internal control system is commensurate with its
size, scale and complexities of its operations. The internal audit is entrusted to M/s.
SVD & Associates, Chartered Accountants. The main thrust of internal audit is to test
and review controls, appraisal of risks and business processes, besides benchmarking
controls with best practices in the industry.
The Audit Committee actively reviews the adequacy and effectiveness of
the internal control systems and suggests improvements to strengthen the same. The Company
has a robust Management Information System, which is an integral part of the control
mechanism.
Further, the Statutory Auditors of the Company have also issued an
attestation report on internal control over financial reporting (as defined in section 143
of Companies Act, 2013) for the financial year ended 31st March 2022, which forms part to
the Statutory Auditors Report.
Risk Management
Risk management is embedded in your Company?s operating framework.
Your Company believes that managing risks help in maximizing returns. The Company?s
approach to addressing business risks is comprehensive and includes periodic review of
such risks and a framework for mitigating controls and reporting mechanism of such risks.
The risk management framework is periodically reviewed by the Board and the Audit
Committee.
However, some of the risks which may pose challenges are set out in the
Management and Discussion Analysis which forms an integral part of this report.
Corporate Social Responsibility
During the year under review, your Company has spent Rs 138.86 lakhs on
CSR activities, which is 4% against the mandated 2% of the average net profit of last
three years as required under section 135 of the Companies Act, 2013. The excess amount of
Rs 69.48 lakhs is being set off against the CSR spend for the financial year 2022-23 as
approved by the Board.
The Annual report on CSR activities as required under Rule 8 of the
Companies (Corporate Social Responsibility Policy) Rules, 2014 read with section 134(3)
and 135(2) of the Companies Act, 2013, as amended, has been annexed as Annexure-3 and
forms an integral part of this report.
The policy for Corporate Social Responsibility is available on the
website of the Company, www.pitti.in.
Particulars of Loans, Guarantees and Investments
The Company has not given any loans, guarantees or security in
connection with loans or made any investments during the year under review.
Related Party Transactions
All transactions entered into with related parties during the year
under review were on arm?s length basis and in the ordinary course of business and is
in accordance with the provisions of the Companies Act, 2013 and the SEBI Listing
Regulations. The material related party transactions entered into by the Company are made
with the approval of the Members. The information on transactions with related parties is
given in Annexure-4 in Form No. AOC-2 and the same forms part of this report.
All related party transactions are placed before the Audit Committee
and omnibus approval is obtained for transactions which are of repetitive nature.
The policy on related party transactions as approved by the Board of
Directors has been uploaded on the website of the Company, www.pitti.in.
Extract of Annual Return
Pursuant to the provisions of Section 92(3) and Section 134(3) of the
Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration)
Rules, 2014 as amended, the Annual Return of the Company as on 31 st March 2022 is
available on the Company?s website, www.pitti.in under the section ?Investor
Desk?.
Secretarial Standards
During the year under review, your Company has complied with all the
applicable secretarial standards. The same has also been confirmed by Secretarial Auditors
of the Company.
Management Discussion and Analysis
The Management Discussion and Analysis Report on the operations of the
Company as required under SEBI Listing
Regulations is provided in a separate section and forms an integral
part of this Report
Business Responsibility Report
As per the market capitalization as on 31 st March 2022, your Company
forms part of the top 1,000 listed companies, hence the Business Responsibility Report as
stipulated under Regulation 34 (2)(f) of the SEBI Listing Regulations is applicable to
your Company for the financial year ended 31st March 2022 and the same forms an integral
part of this Report.
Corporate Governance
As per Regulation 34(3) read with Schedule V of the SEBI Listing
Regulations, a detailed report on corporate governance, together with a certificate from
the Company?s Auditors confirming compliance forms an integral part of this Report.
Auditors and Auditor?s Report
Statutory Auditors
In terms of Section 139 of the Companies Act, 2013 and the rules made
thereunder the term of the present Statutory Auditors of the Company, M/s. Laxminiwas
& Co, Chartered Accountants (Registration No. 0111685), will be expiring at the
conclusion of the ensuing 38th Annual General Meeting of the Company. The Board of
Director place on record its appreciation for the services rendered by M/s. Laxminiwas
& Co, Chartered Accountants during their tenure as Statutory Auditors of the Company.
The notes on financial statement referred to in the Auditor?s
Report are self explanatory and do not call for any further comments. The Auditor?s
Report does not contain any qualification, reservation, adverse remark or disclaimer.
The Statutory Auditors of the Company have not reported any fraud under
Section 143(12) of the Companies Act, 2013.
In terms of Regulation 33(3) of the SEBI Listing Regulation, the
unaudited results for the quarter ended 30th June 2022 shall be subject to limited review
by the existing statutory auditors, M/s Laxminiwas & Co, Chartered Accountants who
have confirmed their consent and eligibility for conducting the Limited Review for the
said quarter.
The Company is in the process of considering various firms for
appointment as Statutory Auditors. Necessary resolutions for appointment of Statutory
Auditors shall be provided in the notice of the ensuing 38th AGM seeking approval of
members for the same.
Cost Auditors
The Company is required to maintain cost records as specified by the
Central Government under section 148(1) of the Companies Act, 2013 and accordingly such
accounts and records are maintained by the Company.
The Board of Directors, on the recommendation of Audit Committee has
appointed M/s. S S Zanwar & Associates, Cost
Accountants (Firm Registration No.100283) as the Cost Auditors to audit
the cost accounts of the Company for the financial year 2022-23. As required under the
Companies Act, 2013 a resolution seeking Member?s ratification for the remuneration
payable to the cost auditor forms part of the notice convening the 38th AGM.
Secretarial Auditor
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and rules made thereunder, the Board has appointed Shri Ajay Kishen, Practicing Company
Secretary (CR No. 5146) to conduct Secretarial Audit for the Financial Year 2021-22. The
Secretarial Audit Report for the financial year ended 31 st March 2022 is annexed to this
Report. The Secretarial Audit Report does not contain any qualification, reservation,
adverse remark or disclaimer.
Cautionary Statement
Statements in this Directors? Report and Management Discussion and
Analysis describing the Company?s objectives, projections, estimates, expectations or
predictions may be "forward-looking
statements" within the meaning of applicable securities laws and
regulations. Actual results could differ materially from those expressed or implied.
Acknowledgement
Your Directors wish to place on record their appreciation for dedicated
service and contribution made by the employees of the Company at all levels. Your
Directors would also like to place on record their appreciation for the continued
co-operation and support received by the Company during the year from its customers,
suppliers, bankers, financial institutions, government authorities, business partners and
other stakeholders.
|
For and on behalf of the Board of Directors |
|
Sharad B Pitti |
| Place : Hyderabad |
Chairman & Managing Director |
| Date : 23rd May 2022 |
DIN: 00078716 |
|