The Hindu Business Line : `Technology-wise, LMW constantly upgrading products `

THE textile sector's buoyancy has triggered hopes for the textile machinery-manufacturing sector. And Lakshmi Machine Works Ltd (LMW), which is into manufacture of the entire range of textile spinning machinery, is no exception. Its proximity to the user industry (with textile units coming up or expanding spindleage in and around Tirupur and Coimbatore) has among other things, raised its hopes.

The company though, is not concentrating only on this region. It has over the years increased its presence in select countries abroad. Its overall exports grew by 68 per cent in 2003-04, driven by project exports in textile machinery.

`India is the only country barring Japan, to have the technological and technical ability to produce the entire range of textile machinery in Asia. In the quota-free regime the demand pick-up is good' Mr Sanjay Jayavarthanavelu, Wholetime Director, LMW, told Business Line.

A glance at India's textile machinery market statistics shows that imports (both new and second-hand) have risen from Rs 1,361 crore in 2000-01 to an estimated Rs 2,575 crore in 2004-05, but exports have not gone up comparatively. It has increased from Rs 447 crore in 2000-01 to around Rs 581 crore in 2004-05 fiscal.

The demand has also soared during this period to an estimated Rs 3,765 crore from Rs 2,022 crore in 2000-01.

It is clear that there is potential for incremental growth for this sector. But how is LMW planning to sustain its position?

Excerpts from an interview with Mr Sanjay Jayavarthanavelu:

In the emerging scenario, how is your company planning to combat competition?

We are into the manufacture of the entire range of spinning machinery and it is our endeavour to give our customers best technology products and exceptional service. Do you perceive any threat with China entering the textile machinery manufacturing market?

It's still early to say because they have just started coming in. But we are confident because we have established an excellent service network. Technology-wise, we are not clear about China, but we are constantly upgrading products in the areas where technology gaps existed. LMW's technical capabilities are on par with world majors.

However, we do realise that China has taken steps for a quota-free regime far ahead of us. In 2003-04, China's spindleage stood at 4.3 million, whereas India's hovered around 9,00,000 only. Look at the developments in Tirupur. Every other unit is planning to expand. How are we going to cater to their requirement? It's a Catch 22 situation!

Are you planning to tie up with any other Indian manufacturer to strengthen your product line?

We have adequate manufacturing capacities. We are not envisaging any tie-up. Even in the global arena, there are limited players in the textile machinery-manufacturing field and they have already tied up with Indian companies.

What is your capacity utilisation at present?

At present, it ranges between 75 and 80 per cent and we are not planning to expand. It can be difficult to strengthen capacities overnight. But we are constantly upgrading or modernising the mother machines for productivity improvement and quality enhancement.

How is the order position?

We are quoting 10-12 months for projects. For unit demand, it is longer, ranging between 16 and 18 months. Because of the sudden spurt in demand, we have also sensed the need for increasing our 4production capacities. We intend to outsource and sub-contract some jobs to avoid delivery stretch. We are already outsourcing some jobs, but are looking at increasing it by another 5 per cent this year. About 20 per cent of the jobs will either be outsourced or sub-contracted. Delivery is a critical issue.

Have you revised the price-line because of the rising demand?

Only last year, we revised the rates upwards. We intend to announce another revision in June this year. Customers are acceptable to this and it is not really high. It is less than 5 per cent.

Have you sought any fund from the Centre towards technology upgradation for the textile machinery-manufacturing segment?

Both the CII and the TMMA (Textile Machinery Manufacturers Association) have made representations to the Government. The industry has estimated the requirement at Rs 1,500 crore spread over 3 to 4 years. It is like the technology upgradation fund (TUF) for the textile sector.

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