Pitti Engineering Ltd
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Pitti Engineering Ltd
Earnings Call Analysis
Q2-2025 Analysis
Pitti Engineering Ltd
Pitti Engineering has exhibited robust growth in its financial performance for the second quarter and half-year of FY '25. Consolidated revenue surged to INR 455 crores, demonstrating year-over-year growth of 44.39%. The EBITDA for the quarter reached INR 66 crores, up by 48.27%, while PAT climbed to INR 38 crores, which is a substantial increase of 72.74%. This growth trajectory has resulted in an EPS of 7.2.
Over the first half of FY '25, consolidated revenue peaked at INR 850 crores, a 37.1% increase compared to the previous year. The EBITDA for H1 was reported at INR 124 crores, up 59.83%. PAT showed a staggering increase, hitting INR 57.38 crores—a 105% increase compared to H1 FY '24, with an EPS of 16.04.
Pitti Engineering is on the brink of significant capacity expansion, especially at the Aurangabad facility, which will add 72,000 tonnes when fully operational by December FY '25. The company's lamination capacity will reach a consolidated total of 90,000 tonnes, alongside a newly expanded casting capacity of 18,600 tonnes. Machining capabilities will also see an increase from 500,000 machine hours to 650,000 by March FY '25.
Looking ahead, the company is targeting consolidated revenues in the range of INR 1,900 to INR 2,000 crores for FY '25, with an expected EBITDA margin around 15% to 16%. Full year sales volume is projected at approximately 62,000 to 64,000 tonnes, placing the company on a strong trajectory for sustainable growth.
While Pitti Engineering is on a growth path in several sectors, there is a noted slowdown in low-voltage motors due to competitive pricing pressures, especially from imports. This segment's contribution to overall revenue has decreased from 13.5% to 11.5%, but the company’s diversification into other growing sectors like renewables and locomotives provides a buffer against these pressures.
The company experienced a noteworthy doubling in its income from data center-related products, which is projected to continue its upward trend. Management is optimistic about this sector's contribution to future revenues, indicating a potential growth rate of at least 100% from current levels.
As Pitti integrates its recent acquisitions, the company is focusing on reducing working capital requirements. Expected efficiency improvements will enhance inventory management and stabilize trade receivables, fostering financial robustness. Net debt is forecasted to be reduced to about INR 200 crores by the end of FY '25.
Management remains focused on stabilizing and integrating recent acquisitions. Future CapEx plans, totaling around INR 40 to 50 crores over the next two years, aim to strengthen existing facilities rather than pursuing new acquisitions in the immediate term. The longer-term forecast looks promising with consolidated revenue projections for FY '27 targeting between INR 2,300 to 2,400 crores.
Pitti Engineering is benefiting from government incentives, expected to total around INR 30 crores in FY '25, with the recent quarter already accounting for INR 25 crores. The incentives are integral for enhancing operational efficiency and overall profitability.
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Ladies and gentlemen, good day, and welcome to Pitti Engineering's Q2 and H1 FY '25 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being 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 conference over to Mr. Akshay Pitti. Thank you, and over to you, sir. Thank you.
Good evening, and a warm welcome to the earnings call for Q2 and H1 FY '25. We will begin with a brief overview of the performance during the quarter, followed by the Q&A session. The past 6 months have been quite eventful for our company. As you know, we have completed the acquisitions of both Bagadia Chaitra Industries Private Limited and Dakshin Foundries Private Limited.
We have also completed the merger of Pitti Castings Private Limited with Pitti engineering Limited. Further, during the H1, we have raised INR 359.99 crores through QIP on the back of these developments, we have reported our best consolidating performance in H1 FY '25. Consolidated revenue grew by 37.1% to INR 850 crores. EBITDA was up by 59.83% at INR 124 crores. And reported PAT was higher by 105% at INR 57.38 crores. EPS was 16.04.
On a stand-alone basis, our revenue in H1 was INR768 crores. Our EBITDA was INR 115 crores and PAT was INR 62.57 crores. Sales volume from lamination and its assemblies was 24,962 tonnes. Sales volume from casting and machine components was 5,636 tonnes.
Now coming to the Q2 FY '25. Our consolidated revenue was INR 455 crores. EBITDA was INR 66 crores. PAT was INR 38 crores, registering Y-o-Y growth of 44.39%, 48.27% and 72.74%, respectively. EPS was 7.2.
On a stand-alone basis, for quarter 2 FY '25, our revenue grew by 28.44% to INR 404.97 crores. EBITDA was INR 59.49 crores, up by 33.51%. And PAT was INR 34.05 crores, higher by 54.7%. Sales volume for the quarter for lamination and its assemblies was 12,514 tonnes. Sales of casting and machine -- was 1,900 tonnes. The funds placed for QIP have been fully utilized towards the object as stated in the placement document. Consolidated net debt as of 30th September was INR 330 crores.
Looking ahead, I'm confident on further improvement in operating and financial performance as our new capacities become operational, and we continue to derive synergies from our recent acquisition and merger.
On that note, I would like to now start our Q&A session.
[Operator Instructions]. The first question is from the line of Deepak Saha from K.R. Choksey Shares and Securities Private Limited.
Good afternoon. Congrats on good set of numbers. So a couple of things. First, if you can help me understand the current capacity expansion that we are doing in Aurangabad facility. So once that is done, would be our consolidated capacity overall?
So for the lamination part of the business, once you full capacity, Aurangabad done -- or Aurangabad 72,000 tonnes. [indiscernible], the lamination facilities will be decommissioned and the capacity in Pitti Industries Private Limited also in Bagadia Chaitra industries will be 18,000. So consolidation lamination would be 90,000 tonnes.
Coming to the casting part of the business, the casting has a capacity of 14,400 tonnes and the wholly owned subsidiary, Dakshin Foundries has 4,200 tonnes. For the foundry side of the business, we'll have 18,600 tonnes as a consolidated capacity. And the machining capacity will increase from 500,000, 47% machines to 650,000 machine hours by the end of March.
Okay. Okay. And what would be our listing capacity overall for the lamination right now?
Consolidated basis would be 64,000 plus 18,000, so roughly about 82,000 tonnes.
Okay. And the 72,000 lamination that we are talking for an Aurangabad facility, it would be commissioned by FY '25, right?
By December, it should be commissioned. We are under commissioning right now. So by December, the 72,000 will be commissioned in Aurangabad.
Okay. Okay. Sir secondly, now we have traveled quite a journey, and that's kudos to the entire team for where we are today. So when we look to 2, 3 years down the line, so what kind of -- I mean, [indiscernible] numbers we should look in terms of EBITDA per tonne or say, volume and PAT. Some color if you can share that, say, 2 to 3 years down the line, what are the numbers that we're looking for, for these specific metrics like EBITDA per tonne -- qualitative right now and volume and PAT. So how can we be comparing this particular part going 3 years the line?
Yes. So on the lamination side of the business on a consolidated basis for FY '27, we see looking at about 72,000 tonnes as our sales number. On the machine component side, we should be looking closer to about 15,000 to 16,000 tonnes as sales number by FY '27. And the EBITDA per tonne be a bad barometer going forward since we have the casting, machining and lamination now, which are very large parts of the overall business compared to lamination. The revenue projection on a constant raw material base for this operating level would be in the vicinity of INR 2,300 crores to INR 2,400 crores on a consolidated basis. And your EBITDA margin should be around 15% to 16% of revenue.
That is over the long term, that 15% to 16% because I understand this. There will be certain moderation because all the things coming and upfront cost is getting born initially. So that 15% to 16% probably FY '26, FY '27, we should look for, right?
Yes.
Okay. Okay. And sir, I mean, as a understanding, we are probably already into the entire value chain of this motors, 40% or 35% to 40%. Now is there further plan to deeper and [indiscernible] to our journey on the copper winding side as well?
We are open to doing that activity. We are waiting the right customer to partner with to explore that opportunity. The low voltage motors or the industrial motors -- the competition is very intense in the motor industry in January. So that's something we're not interested to take up because the margins will be compressed. We'd be more inclined to do it for something like renewable energy or power generation or locomotives. So we are just waiting for the right kind of customer to partner with on that activity?
Okay. And as you said, there is some kind of -- you're looking for more of a margin accretive penetration going ahead. So given the current context, what is the trend you are picking largely from the big players within the motor space across different industries. Is there any slowdown or any sort of activity that your moderated activity that you are sensing from global OEM?
So, first, let's talk of India specifically and then globally, barring the low-voltage motors, which is more like a commodity product. We are not seeing any kind of slowdown per se in any of our customer segments. If you look at renewable energy that is growing minus growing, locomotive part of the business also is growing. So only it is on the industrial motor side, where you have seen a slit amount of slowdown, purely on account of price.
Coming to the global scenario, we are predominantly exporting for locomotive business in North America and renewable business in Europe and North America. So there, we continue to see growth as those countries are investing in energy as well as their transportation networks.
Okay. And that's absolutely helpful. Sir, last question before I fall back on the queue. For the full year, I mean, 2 things, I think initially, you alluded to the overall volume number that, once again, if you can say, I probably missed it. And secondly, for the full year, FY '25, what kind of numbers you are looking in terms of top line and bottom line. Some color if you can share, that would be really helpful and thanks a lot for answering all questions in detail.
So on the volume side for the full year on a consolidated basis would be about 62,000, 64,000 tonnes. We're pretty much on track to achieving those numbers if you see H1. On the revenue side, along with Dakshin Foundries and demerger, it's about INR 1,900 crores to INR 2,000 crores top line provided that the raw material prices [indiscernible]. And if that is the case, you should be looking at an EBITDA margin roughly in the facility of 60.5%. On a stand-alone basis and on a consolidated basis, it should be -- I would say around the same. It will not make much of a difference.
And sir, for the quarter, if you can just give us the volume or capacity utilizing numbers?
So for the quarter, on a stand-alone basis, we did 12,500, we did stand-alone and consolidated would be 16,500.
We'll take the next question from the line of Charwin from Share India.
So my question was, what is the current order book or the timing of it execution? And any guidance on the future order book?
Order book is not exactly relevant to our industry as i've explained in the past also in the conference call, more of a B2C kind of a customer supplier to our customers, where we get our short cycle orders in the domestic side of the business. And on the export side, we have longer visibility. Overall, if I have to just give you a number on order book, it should be about INR 800-odd crores of revenue, worth of order book executable over the next 8 to 12 months.
However, we do the customer forecast, which are quite accurate. So that's not exactly order book. It is a forecast that we received from customers beyond which we do our capacity planning. So if I look at that slightly towards a longer-term horizon, as I mentioned in my previous answer, we are looking about 72,000 tonnes of sales by FY '27. On the lamination side and about 15,000 tonnes on the casting side.
Okay, and my next question was, what is the expected volume growth in sheet, metal and castings for the second half of FY '25?
Sorry, your line was not clear, I couldn't understand the question.
Am I audible now? So I wanted to know what is expected volume growth in sheet, metal and castings for the second half of FY '25.
So in H2, we would look to about 25,000 tonnes from our own standalone basis, sheet metal. And at Pitti industry sheet shipment and volume should be roughly about INR 6,500 for H2. In terms of casting sales, consolidated casting sales should be about INR 5,000 for H2.
[Operator Instructions]. We'll take the next question from the line of Sani Vishe from Axis Securities.
Congratulations on another set of strong numbers. I think you have answered a lot of questions in detail. So I'll take two -- one couple of questions. What are your expectations in terms of the working capital require because given that there has been some restatement. So, I would ask a question on absolute terms, so do we see the numbers for trade payables and receivables and inventory to be constant or similar around the current level?
We should see a reduction from here on. If you see we've kind of just recently bought Bagadia and recently bought Dakshin. So as we integrate these companies, we shall be reducing the overall working [estimate] in all our facilities, through our synergy process. So going forward, you should see the inventories coming down. Trade payables more or less remaining stable as well as your trade receivables remaining more or less stable. The inventory side should come down going forward.
Understood. Understood. And lastly, what are our dates expectations for [the year]? I think we are already seeing some reduction in this quarter for the full year, where do we see?
We estimate that our net debt at the end of the year should be about INR 200-odd crores.
[Operator Instructions]. The next question is from the line of Sanjeev Zarbade from DreamLadder.
I wanted to ask regarding the incentive part, what much more incentives can be booked in the remaining part of the fiscal, that's what I wanted understand.
So we are eligible for a INR 30 crore incentive on an annual basis up in FY '26, we have accounted INR 25 crores already. Remaining INR 5 crores is we accounted in 2 tranches which will be about INR 4 crores would be the second tranche and the third tranche would be about INR 1 crore based on the filing system with the Maharashtra government.
Okay. And what are the various segments that are really driving the user segment basically. Which is driving demand for the motors?
So for us, the generators in data centers, wind turbine and compact hydro mining locomotives. These 3 segments are driving the maximum amount of growth as of now. And how is the demand shaping up from the IC and EV motors -- EV vehicles. So we have started with the IC product largely the EV products are now getting developed. Dealer demand ratio of 75% to 80% from IC and about 20% from EV.
The next question is from the line of Herman from Dalmus Capital Investment LLV.
Congratulations on the good set of numbers. My question was more on the consolidated volume number if we see Q-on-Q, it's largely -- volumes are flat and the numbers in that -- H2 as well are somewhat similar. So do you see the trend that volumes are going to be flat for like 2 quarters around 12,500 stand-alone?
Yes. So if you take our annual target Dharmil as what we had guided to earlier, 48,000 tonnes on a stand-alone basis and about 14,000 at Bagadia. So if you see, we have this time for surprising the quarter very equated quarterly number for annual target.
Right. So that's a departure from the past and that 640% was H1 and 60% for H2. This year, it's like all the growth is kind of equally split across all the quarters.
And that is largely because of the product mix, again, changing. If you see like Bagadia Chaitra, we have the pump business, which typically works pre-monsoon that has given volume in H1 and that will dissipate, but then the appliance businesses would pick up. So the seasonality of some of the smaller segments have played very well in this consolidation.
Understood. So would it be fair to arise [indiscernible] so this could be -- I mean, this would remain constant for coming years as well, right? I mean, the seasonality...
We hope so if some of our other businesses, like say example, wind energy picks up then again that imbalance on that seasonality would come. But if this product mix continues, we should see stability going forward as well.
Understood. And again, I wish the part you mentioned about the other income. So there was some INR 25 crore other income product during the quarter, INR 26 crores. Was this pertaining to the incremental income from Maharashtra government or if you can just quantify again.
Yes, INR 25 crores is the incentive income from Maharashtra government out of the INR 25.59 crores of total other income.
Okay. And how much would be booked in the remaining...
The remaining one, cumulatively INR 5 crores will be booked.
The next question is from the line of Akash Singhania from AART Ventures.
Congratulations for a great set of numbers. My question is on the sales breakup which you have given in the presentation. So I have 2 queries over here. One is I'm seeing that the high value-added assemblies have been declining over the last 2 years, whether it's on a quarter basis or a half year basis, whereas the low value-added assemblies have been increasing. So any reason about the decline in high value add because we were thinking that there would be a better and a richer mix.
And secondly, if you can also explain about cycling coils, which has been mentioned, which is the biggest component of the sales breakup. Like what kind of value add is there? And how does it compare with these -- between high value add and low value-added SMBs.
I think that's a good question. We wanted to actually bring some insight on this entire sales breakup that [you] try to do now if you see reason of the past data, what we started giving now, we have broken up the sales of lamination into the laminate content and the child part and shaft content as well. So it gives you a clearer understanding as to how much shafts you are making and where it is going in terms of the assembly.
So earlier the weight of child part and shaft will be bunched into the high value-added SMBs, we have tried that out and segregated it. That's why you see in quantitative terms in the prior period, it might look like a decline. But if you see this breakup that we have given, there's a Y-o-Y increase only taking place? If you see in FY '23, there's NA for shaft and child part because we [indiscernible] about.
So the top 5 line items would be the lamination SMBs in total. Now as you come to the second part of the data, we did 1,057 tonnes of machine components in Q2 635 tonnes of the raw Casting sold, 213 tonnes of castings went in SMB of the state of sales. Because if you see that item, it's a combination of casting, shaft, lamination, machining and child part. So if you kind of add that up in that line item, it would not be fair representation of the capacity in place, we kind of laminated it with the casting business.
And then the last line item is craft and [indiscernible]. If you look at our manufacturing processes, peak [indiscernible] input output ratio is 1.75 for every ton of lamination produced about 0.75 per scrap also is generated. So that's what we call it the byproduct or scrap.
The cycling coils are if you take the big coil, which we used to buy from our steel suppliers, they typically come and say, 1,200 or 1,300 [minimum] coil size. So we cut it to the size that we require for our lamination and the 5 trends, say, 100 ml, 200 ml, 300 ml, aren't usable in our product or our product mix. So those used to be sold in the market. These are the coils that we are now selling in the market, selling to Bagadia and they are using it as raw material, thereby their profitability in it.
Okay. Understood.
And very clear, i think breakup, it would be very clear and transparent we are explaining to everyone the complexity of our business. And why the EBITDA is not exactly a good barometer going for 2 subsidiaries and the merger.
Okay. I think this is very useful. There's very granular final picture. I have one more question on the subsidy part or the incentive part. I think last year, we had achieved the incentive in the March quarter. This time, it looks like we have received it earlier in the September quarter. So just to understand, this year, overall, the incentive will be around INR 30 crores out of which we have received INR 25 crores. Is that correct?
Yes, Yes. Let me just take you one step back. If you see in Q2 FY '24, we had accounted INR 12 crores, INR 70 lakh of other income. So that was also the incentive income. For our Aurangabad project, we had Phase 1A and 1B. So Phase 1A was running at the rate of INR 12 crores per year for 4 years -- 7 years. 1B was running at the rate of [indiscernible] for 4 years. So the eligibility certificate for 1B has not been received earlier, but to finish the capacity addition and then apply for the incentive claim.
So last year, we accounted INR 12 crores in September quarter and in one shot in the March quarter, we accounted 2 years' worth of incentives for FY '23 and FY '24, INR 18 crores into 2 INR 36 crores in March. Hereafter for current year and next year, it will be INR 30 crores only.
Okay. So FY '25 and '26 will be INR 30 crores.
Yes. And the way it works is we get to account 75% on application and the remaining with the audited balance sheet and tax return and GST return. The remaining 25%, so that would typically be done in the second half of the year.
And post FY '26, '27 onwards, will the incentive be available? I think was it for 5, 7 years or 10 years or it expires after FY '26.
No, the Phase 1B will be finished, then the Phase 2 will start. The ongoing CapEx, which will be capitalized by December, we are eligible to claim that starting for FY '27 for 9 years, that will be roughly about INR 40 crores per year.
[Operator Instructions]. The next question is from the line of [indiscernible] from Share India.
So, I wanted to ask like what is your current EBITDA per tonne? And what will be the expected EBITDA for tonne for the second half of the year?
I'll give you the current EBITDA per tonne. But if you take on the same barometer as we took last time because we didn't have the subsidiary or the merged business. If you take the current EBITDA and take by the connect, it will not be very indicative. We did about INR 49 -- INR 59.49 crores of EBITDA on a stand-alone basis. And our stand-alone tonnage was 12,541 tonnes. So the EBITDA per tonne works out to about INR 47,436.
But going forward, this would not be the right barometer. The barometer should be more like EBITDA margin on a constant raw material cost basis. We will be looking at about 15% to 16% EBITDA margin going forward.
The next question is from the line of Ishpreet Kaur from Relax Capital.
Akshay, good set of numbers, congratulations. I just wanted to check, so leaving apart the new acquisitions, what would have been the sales growth apart from the new acquisitions?
Sales, sorry?
The sales growth number apart from the new acquisitions?
On a stand-alone basis, we did about INR 379 crores of revenue.
Okay. So just seeing the stand-alone numbers -- okay. Got it. So that would be the like-to-like...
Stand-along would also be the merged revenue of Pitti casting, which would be coming in. There's no way to actually look at it without Pitti casting revenue now. [indiscernible] in [ April ] 23.
But September 23, the reported numbers would they also have the Pitti casting?
Yes, they are all restated. If you see the financials, they have all been restated. But that's like 1,423.
Okay. Right. And just on the incentive part that you were explaining. So from FY '26 onwards, did you mention that it would be INR 40 crores incentive for the next 9 years.
Effective FY '27. We will be claiming for FY '26 in FY '27. So the accounting treatment would be given in FY '27 onwards.
Till FY '26, you're saying it could be INR 30 crores and the Phase 1 would get over and the new phase would come in with the new CapEx that you're coming up with?
Yes. It is estimated to be INR 40 crores per year depending on the final CapEx that we actually end up spending.
Including the 1v1 that you just mentioned, INR 12 crores [indiscernible] above that.
No, excluding of that. The one would be Phase 1A and B will close by FY '26.
2 will start effective '26, but the accounting would be done in '27. We have to finish the sales and then raise a claim on the government.
Okay. Great. Got it. And are there plans for any further acquisitions or any white spaces that you see, like you mentioned, maybe if you want to up the value chain in terms of the motors? Or is there any other space that you feel that you can get into organically or inorganically?
For the foreseeable future, I think we have our hands full with the 2 acquisitions and their integration and the merger. We see great potential in kind of growing this business over the next 1.5 years. The only CapEx that we would be looking at would be to strengthen our [tool] room about INR 40 crores, INR 50 crores, that too over the next 2 years.
We look at any more opportunities about a year later once we have this in our control and stabilize all these parameters.
The next question is from the line of Balasubramanian from Arihant Capital.
Congratulations for a good set of numbers. Sir, my question is regarding value chain. We are seeing some slowdown on execution side, especially in our value returns, our metro coaches and our [indiscernible]. So is there any impact on our business? So what's your view on that?
We are not seeing any impact as of now on our business? And also, any projections that you have received from our customers continue to remain encouraging. On the contrary, in absolute revenue terms, we are seeing a growth in our locomotive and Metro rail businesses.
Okay, sir. Sir, on the EV side, like we are engaged in a discussion with few of the customers EV side. So what's the progress on that?
So on the EV, it is automotive in general. We are not saying we want to IC-related products. The order books are encouraging on the automotive side, if you see year-on-year, quarter-on-quarter, our automotive revenue continues to grow.
Okay, sir. Okay. Sir, like in recent con calls whether it's a [indiscernible], these are mentioned we have witnessed to strong demand from data center side like perfect traction on that side. As of now, right now, it's around 2% to 3% kind of overall top line. So that -- we can see in coming years?
If you see on a consolidated basis Y-o-Y, our data center related business has more than doubled on the higher revenue that too. So we continue to see that growth. And you're right, the [indiscernible] and all of them are very bullish on this product. We have received similar indications of growth on that product line. In absolute terms, data centers, we see growing at least 2x further from here on.
We'll take the next question from the line of Mayank Chaturvedi from HSBC Mutual Fund.
Congratulations on a great set of numbers. I just wanted to draw more of your insights on this comment that you made that you're witnessing a slight amount of slowdown in the steady motors purely because of price. Maybe if you can elaborate a bit on that. Where exactly is the pain point coming from? Because as we understand, prices for low voltage motors have been subdued for the last 6, 7 months. And is there an uptick that you're seeing which is causing the slowdown? Any comments on that?
So the prices of those motors continue to remain at rock bottom and therefore, the customer expectation on pricing also remains a lot potent. We are seeing a lot of import possibilities from China, the raw material prices have kind of fallen off in China, and that typically affects this segment because this is more of a commodity, like I mentioned. If you see the consolidated revenue it's at about for 13.5% of -- sorry, 13.5% of revenue last year, Q2, it has shrunk to 11.5%. So while it does in absolute terms, not degrown, it has not grown like how the other sectors have grown such as power generation, data centers, renewables, mining, oil and gas. We are just slightly cautious about this segment going forward. While we are not perturbed by it because the growth in the other segments more than offsetting any potential losses in the future from this segment.
For sure, I'm not concerned about revenue potential at the other segments do hold for you. I'm trying to make an analysis of the broader market trends for the Industrial Motors through your revenues. So just wanted to know if there's a volume shift that you're seeing?
At a broader level, the competition is intense. I mean, between our customers, I would not want to name them, but a lot of them which offered in the low-voltage space. There is a market share moving from customer A to customer B and that's kind of causing a lot of churn in the whole -- industrial whole in the LV space.
Okay. But on the broader overall volumes, you're not witnessing anything as a -- would that be a right understanding?
Yes, that's absolutely right. Overall volume is not much a concern. But within the customer's space, there is a churn.
The next question is from the line of Akash Singhania from AART Venture.
Just 1 more query. You mentioned that the debt would be increasing, I think, from INR 330 crores down to INR 400 crores -- to INR 400 by the end of the year. So how much of CapEx we are doing second half and next year? And what is leading to the increase?
No, no, it will come down to INR 200, Akash.
Okay. Sorry. It will come down to INR 200.
The way we look at it, the incentives claim that we've done in April. So in March, we have yet to receive from the comment. We typically receive it by December, March. So that money will come in while it's accounted the capital has not come in yet and the cash accruals on a consolidated basis, along with the inventory reduction will contribute about INR 150 crores to INR 160 crores of cash coming in. Of which about INR 3 crores is capital expenditure. So we see about INR 100 crores, INR 120 crores of net debt reduction taking place as a result.
[Operator Instructions]. Ladies and gentlemen, as there are no further questions, we have reached the end of the question-and-answer session. On behalf of Pitti Engineering, that concludes this conference. Thank you all for joining us.
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