PRITIKAUTONSEQ4 FY23May 22, 2023

Pritika Auto Industries Limited

5,178words

116turns

7analyst exchanges

0executives

Key numbers — 40 extracted

rs,

year and secondly because of good prices of agriculture products leading to good demand for tractors, The OEMs we cater to continue to rely on us for our execution capabilities, namely consistent quali

INR9.5 crore

successfully completed the IPO for our subsidiary Pritika Engineering Components, thereby raising INR9.5 crores. ‘The response from the investors has been overwhelming with the issue being over subscribed b

INR30 crore

e industry cycle suecesslully. In March 23, the Shareholders passed a resolution to raise about INR30 crores through preferential warrants at INR19. | am happy to state that first tranche of 25% money has

INR19

the Shareholders passed a resolution to raise about INR30 crores through preferential warrants at INR19. | am happy to state that first tranche of 25% money has already been received through subscripti

25%

ut INR30 crores through preferential warrants at INR19. | am happy to state that first tranche of 25% money has already been received through subscription. The funds shall be used for enhancing capac

rs, million

industry, the Indian tractor industry grew substantially in FY23, producing about a million tractors, million units for the first time ever and also giving highest ever domestic sales. Financial 23 saw 12% g

12%

llion units for the first time ever and also giving highest ever domestic sales. Financial 23 saw 12% growth in domestic tractor volumes with 9,45,000 tractors compared to 8,42,000 in FY22 according

200 billion

ason. Moreover, as per industry reports, India's auto component industry is expected to reach USD$200 billion by 2026 and aftermarket of the industry is expected to reach 32 billion. PRIT I KA Auto Ind

32 billion

is expected to reach USD$200 billion by 2026 and aftermarket of the industry is expected to reach 32 billion. PRIT I KA Auto Industri Crating - Forging - Mecl 8 The growth will be backed by strong

23%

The growth will be backed by strong export demand which is expected to rise to an annual rate of 23% to reach USD 80 billion by 2026, The growth of global OEMs sourcing from India and the increase i

80 billion

be backed by strong export demand which is expected to rise to an annual rate of 23% to reach USD 80 billion by 2026, The growth of global OEMs sourcing from India and the increase in designation of global

INR88.2 crore

ming to the financial performance, fourth quarter, 31 March our company achieved a net revenue of INR88.2 crores which was an increase of 54.7% year on year. During the quarter there was a price reduction by O

Guidance — 20 items

Harpreet Singh Nibber

opening

“PRIT I KA Auto Industri Crating - Forging - Mecl 8 The growth will be backed by strong export demand which is expected to rise to an annual rate of 23% to reach USD 80 billion by 2026, The growth of global OEMs sourcing from India and the increase in designation of global OEMs is turning the country into a preferable designing and manufacturing base.”

Harpreet Singh Nibber

opening

“Looking ahead, we anticipate the demand of our products will remain strong, driven by growth in tractor and commercial vehicle industries.”

Neha Jain

“So, about the seasonal fluctuations in the business, related to that, how do we plan to manage that scasonality in our business in terms of volumes and sales?”

Harpreet Singh Nibber

“Ma'am, this is a long-drawn process, because once we start diversifying into product, it takes a few years, But we plan to increase our margins by at least, say, 2%, in the coming two years to three years.”

Harpreet Singh Nibber

“And with this amalgamation, there will be another 2 basis point to 3 basis point increase in the EBITDA margins and PAT margins also.”

Harpreet Singh Nibber

“So, because top line there won't be any major increase, because materials being bought from this unit only and machined and sent, dispatched to (he customer, So, there will be a good amount of increase in bottom line and in the bottom line.”

Basant Pandey

“So, top line there will be no real increase, even though I see...”

Harpreet Singh Nibber

“Yes, this will be used mainly for expansion.”

Harpreet Singh Nibber

“We should be operational by June end of July first week So, we intend to go for higher value addition products:”

Daniel Jacob

“Okay, and you said, in terms of buying strategy, cost will be, you will be helping in reducing the cost.”

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Risks & concerns — 2 flagged

During the quarter there was a price reduction by OEMs on account of volatile raw material price.

— Harpreet Singh Nibber

The reduction of both Q3 and Q4 was adjusted during the current quarter leading to pressure on our margins, EBITDA was INR8.9 crores as against INR7.13 crores in FY22.

— Harpreet Singh Nibber

Q&A — 7 exchanges

Hello. Good evening, sir. I just wanted to understand a couple of things. So, about the seasonal fluctuations in the business, related to that, how do we plan to manage that scasonality in our business in terms of volumes and sales?

Harpreet Singh Nibber

Normally, if you see the tractor industry, the sale is during 6 to 7 months only, from April to November, These are the 8 months where the maximum sales happen from one Navratras to Diwali. That is the time when the maximum sale happens. So, rest of the time, what the OEM’s does, OEMs builds up certain volumes for the season. So, this is how this industry moves. Now, what happens is that this industry is very good in Q1 and Q2. And it is bad in Q3 and Q4. So, what we are doing is to take care of the volatility in Q3 and Q4. We are increasing our share of business in commercial vehicles. So, co

Good evening, sir, Sir, 1 would like you to shed some light on the scheme of amalgamation, which is expected to happen, and how will it affect the top line and bottom line and the book value, especially? Harpreet Singh Nibber: = Okay. See, this scheme is under almost final stages at NCLT. We were expecting order in last week of March. But you know, because NCL is heavily loaded, so every time it is getting delayed, I think so, March we got delayed, got delayed in April. April we got on for 17th May. Now it is on 2nd of June, 2nd or 3rd of June. What is, but it is all because, Tyagi ji, if you

Tyagi

2nd June, sir. = 2nd June. So, it is almost final. There are no objections from any of the department, shareholding meeting and secured credit, everything is done. So, only the government department, that is also no objection we have received from all the departments. So, it is just a formality, which can be done, which should be done, should happen any time. So, maybe whenever it comes up for listening in front of the Judge, | think it should be done. So, we are expecting 2nd June, we should, it should get. And with this amalgamation, there will be another 2 basis point to 3 basis point incre

Yes, congratulations on a good start of numbers, sir, Sir, actually the commentary was a bit fast, so | couldn't pick the number which you said the amount of fund raised this quarter. If I'm not wrong, it is around INR30-odd crores?

Harpreet Singh Nibber

TNR30 crores, warrants have been issued, INR30 crores, Okay, so can you throw some light like how are we going to use this fund, like in terms of expansion or product diversification? Yes, this will be used mainly for expansion. I mean, already we are in under process of expansion. And after it is done, so we are planning one more round of capacily enhancement. And we are in quite advanced stages with our customers for new orders, And so we plan one more expansion in another two years, one and a half or two years. Nikhil Arora; So, sir, are we looking for any further gcographical expansion or

Hi, sir, In terms of EBITDA per ton margin, what are your future plans to improve on EBITDA per ton margin?

Harpreet Singh Nibber

Sir, EBITDA, like I told you earlier also, we are planning to, we are adding new components which we are adding are with higher value addition. So, that we will improve our margins. And we are moving into big casting, large casting where margins are better. Margins per ton are better, So, I mean, do you have any strategic plan for such expansions? PRITIKA Auto Industries Grating - Porging - Mach Yes, we are already in process of expanding. We are expanding, already expanding. A plant is coming up, new plant is coming up. We should be operational by June end of July first week So, we intend to

Yes, good afternoon, sir. Thanks for the opportunity. Sir, as you are expanding your capacity, so wanted to know, sir, how much this will increase the overall capacity in terms of percentage? And what kind of capex you have done for this and what will be the, asset turnover in that?

Harpreet Singh Nibber

See, the one capacity is green field and some brown field capacity is increasing rapidly. So ereen field is 12,000 metric tons per annum, say, 1,000 tons per month, And brown field is roughly, we are adding 700 tons per month, So 700, well, it's roughly 8,400 tons we are adding as a brown field. So, I mean, these two we are adding and Lor this, the capex is, in casting is roughly TNR30 crores, another INR15 crores for machine shop, So roughly INR40 crores we are adding, Okay. And so what kind of asset turnover we expect in this? See, with this INR40 crores, this -- another, say, we plan to add

Sir, | just have couple of follow-up questions to the previous question. So, sir, you mentioned about couple of the competitors in the market. I just wanted to know what's our market share in the industry?

Harpreet Singh Nibber

I mean, this we cannot say in the industry, because it's a very, very big industry, very huge demand. But whatever components we give to a customer, our target is that we have minimum 30% share of business for that particular component, for that particular plant of the customer, So, I mean, if you see, our main product is Axle housings. For Axle housings, our, | mean, if you sec, as a complete, full of India, full India, we have roughly 25%-26% market share in that. For, if you see M&M, their plant in Pantanagar, we have roughly 85% market share. Similarly, for others, for Tafe, for their Bang

I would like to thank you for taking time out and attending this call. I am also thankful to each member of Pritika family, as well as our clients, creditors, banks, financial institutions, and all other stakeholders. For any other further queries or comments, please get in touch with our investor relations team at Adfactors. Thank you. Thanks a lot, everyone.

Management

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Speaking time

Harpreet Singh Nibber

Dhiral Shah

Neha Jain

Moderator

Daniel Jacob

Basant Pandey

Nikhil Arora

MODERATOR

Tyagi

Harprect Singh Nibber

Opening remarks

Harpreet Singh Nibber

Earnings Conference Call. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call, These statements and other guarantees of future performance may involve risks and uncertainties that are difficult to predict As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes, Should you need assistance during this conference call, please signal an operator by pressing star and zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Harpreet Singh Nibber, Managing Director from Pritika Auto Industries Limited. Thank you and over to you, sir. Thank you, Good evening everyone and welcome to Pritika Auto Industries’ maiden Earnings call for the fourth quarter and full year ended March 31, 2023. 1 would like to begin b

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Pritika Auto Industries Limited

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