This document summarizes the turnaround story of Pitti Laminations, a Hyderabad-based manufacturer of electrical laminates that was declared sick in 2000 but underwent a successful turnaround beginning in 2002. It describes Pitti's product portfolio, manufacturing process, major customers, sales and profit growth between 2000-2013, and export focus. While it notes weaknesses like low margins and reliance on few large clients, it recommends buying Pitti's stock due to its market leadership, consistent dividends, promoter reputation and governance.

1. Pitti Laminations – The Great Turnaround story
- Hyderabad based manufacturer of electrical
laminates and other capital goods
- Company was declared “sick” in the year 2000
- BIFR (Board for Industrial and Financial
Reconstruction) intervened in 2002 and a one time
settlement was instituted between IDBI and DCB
(Development Credit Bank)
The company`s great turnaround began from 2002

2. Product Profile
Laminations Die Cast Rotors
Stator Core
assemblies
Rotor Core
assemblies
Casting and
Machine
components
Power Generation, Locomotives, Industrial Motors, Oil & Gas and other
Industrial sectors are End Users
Source: Pitti Earnings Presentation Q1 FY 2014
Laminations, Tooling, Casting and Machining: All under
one roof

3. THE LAMINATE PRODUCTION PROCESS
Buys Domestic
and Imported
Raw Material
(mostly Silicon
Steel)
Material is cut And pressed
Notch,
Cleat, Rivet
and Weld
Company
makes 50-
1200 mm
diameter
laminations
32000 MTpa plant located in
Hyderabad

4. Star Studded Customer Base
Customers Laminations Machining Casting
Source: Pitti Earnings Presentation Q1 FY 2014

5. Company Time Line
2000
• Writes off Rs 3 Crs of bad loans
• Reports loss of Rs 8 Crs leading to bankruptcy
2002
• BIFR intervenes and initiates a one time settlement
• Promoters bring in Rs 2.1 Crs
2003
• Debt service charge reduces to Rs 1.3 Crs from Rs 3.6 Crs thanks to restructuring
• Reports PAT of Rs 1.3 Crs after 5 years of making losses
2004
• Record PAT of Rs 3.8 Crs and good cashflow brings total debt down to Rs 6 Crs,
from Rs 10 Crs, an year back
• Company plans expansion

6. Company Time Line (contd)
2005 – A Record Breaking Year
- Manufacturing unit`s capacity utilization tops 110%
- Company starts supplying to GE (USA)
- 90% of company`s export volume to GE (USA)
- 15% dividend on 10 rupee share
- Promoters buyback IDBI`s 14% stake
- Rs 24 Cr expansion underway
Promoter`s strong backing was main cause of this excellent performance

7. 0
50
100
150
200
250
300
350
400
450
2000 2002 2004 2005 2006 2008 2009 2010 2011 2012 2013
Total Sales (Rs Crs)
PAT (Rs Crs)
Company`s Sales and PAT progression
Low PAT margins
RsCrs

8. 0
5000
10000
15000
20000
25000
30000
2000 2002 2004 2006 2008 2009 2010 2011 2012 2013
Total Laminate
Sales Volume
(MT)
Consistent growth in Laminate Sales Volume
Company has added Motor housings/Stator Cores (not shown in graph) to product line in
2008. Rs 70 Crs of revenue in first year from this product.
Company`s Laminate Sales Volume (MT)

9. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Export Value as % of Total Turnover
Export Value as % of
Total Turnover
A Star Exporter
Export oriented company
Siemens
only client
Company starts
supplying to GE

10. Company Claims That it...
- Holds 90% market share in Indian electrical laminates
industry
- Is one of the few companies in the world to have
laminations, tooling, casting and machining under one
roof
- Is the First Indian Laminates Company to have initiated
an Oracle based ERP driven environment
- Is the First Indian Laminates Company to have ISO
accreditation in quality systems
- Received Best Supplier Award from GE Transportation in
2012
Company is a pioneer in this sector

11. And the Weaknesses
- Very low PAT margins
- 50% of total sales dependant on GE Transportation, GE
Energy and GE Industrial
- Capital goods sector worst hit, both in India and abroad
- Very low liquidity makes it difficult to buy the stock
Manageable Weaknesses

12. The BUY recommendation
Market Valuation/Promoter Reputation and good
Corporate Governance are main factors
- At CMP of Rs 33 and current market cap of Rs 45 Crs and working
cap requirement of Rs 170 Crs, the stock is a net-net
- Company`s products are ubiquitous in energy, railways and major
industrial sectors
- Company is a pioneer and market leader in its industry
- Consistent dividend payout in last 8 years
- Promoters hold 60% stake and have ridden with the company`s ups
and downs
- Promoters have not pledged any shares for personal purposes*
- Manageable Debt-Equity ratio of 1.4x
- Current P/E stands at 4.5x
* Source: Pitti Earnings Call Transcript Q3 FY 2013
FII`s hold 0% stake (remember Avanti Feeds)

13. Thank You – The Pokaran Money Manager
* Source: WSJ.com, Mr Buffet and his Elephant gun