Financial Daily from THE HINDU group of publications
Saturday, Jan 24, 2004
LMW bullish on growth prospects
Mr Sanjay Jayavarthanavelu, Wholetime Director, LMW
Coimbatore , Jan. 23
AFTER prolonged recession, the city-based textile machinery manufacturing major, Lakshmi Machine Works (LMW), appears to be back on the growth track.
Having established a strong brand for its product range to cater to the entire machinery needs of the industry, LMW is bullish about the growth prospects and market response.
The signs of recovery in the textile sector and emphasis on modernisation appear to have triggered growth, though to a large extent in the replacement segment. Further, with the impetus given to the Technology Upgradation Fund scheme by the Textile Ministry extended up to March 2007, the investment climate in the textile sector also looks positive, which possibly could propel LMW's prospects.
That is not all. LMW is also into manufacture of hi-tech castings. The castings from the company's stable for the automobile and engineering sector are predominantly for the markets abroad.
What has been the impact of the TUF scheme?
The Rs 25,000-cr TUF scheme has had little response till now on account of stringent eligibility norms. We are hoping that with the relaxation of norms and extension of the scheme for a further period of three years, the investment climate in the textile sector will improve.
Though it would be difficult to quantify the investment spin-off under the scheme, there is no denying that newer projects are coming up. There exists tremendous scope for expansion of the textile industry, considering favourable factors like sophisticated technology coupled with lower cost of production. The sector is poised for a positive growth.
What has been the impact of second-hand machinery imports on domestic machinery manufacturers?
The share of the indigenous industry in the domestic market has slipped to less than 30 per cent because of anomalies in the rates. The lop-sided Government policy favours indiscriminate import of machinery, particularly second-hand machines.
The contention that the Indian machinery industry is incapable of providing items of required technology and standard is baseless. The industry is at present selling 40 per cent of its turnover in the overseas market, confirming its claim that its products are world-class.
The customs duty levy on components and accessories are much higher than that on finished goods. This is detrimental to the interest of the domestic players. It encourages import of more machines, thus denying a level-playing field for the local manufacturers.
Has the technology costs gone up because of rising import of machinery?
Overseas competitors are making all out efforts to market their products directly in India, but are not willing for transfer of technology for the manufacture of technologically superior machines. We have, over the last decade strengthened our R&D with infrastructure and human resources.
While we have a Government-approved R&D centre at LMW, I should say that our research efforts have resulted in introduction of latest spinning machinery such as the advanced blow room line with automatic bale plucker and cleaning machine for processing man-made fibre and cotton, high production card model, twin delivery auto levelling draw frame model, suspended flyer speed frame and a ring frame model with auto doffer.
The weaving and processing sectors have now become crucial. Will LMW make a foray into this space?
We have no plans of getting into the weaving and processing sector. Our core-strength lies in the spinning machinery space from blow room to ring spinning, CNC Machine Tools and manufacture of hi-tech castings, primarily for the export market.
How do you see the replacement market?
Though the unviable textile mills are closing down, additional spindleage is created by other existing ones, either by forward or backward integration. The replacement market is huge. The order book is good. But yes, with the financial institutions still reluctant to support the textile sector, most of the units are compelled to buy the machinery with their own funds. But the market is looking up, albeit slowly.
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