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L.N. Revathy

Coimbatore, Oct. 31 The slowdown has not deterred textile machinery manufacturing major Lakshmi Machine Works Ltd from going ahead with its project in China.

It has formed a company — LMW Textile Machinery (Suzhou) Company Ltd — after taking over a readymade factory on lease at Suzhou.

Sharing details with Business Line, the Chief Financial Officer of LMW, Mr Rajendran, said that they had got the green signal from the Chinese Government for commencing business.

“We have the business licence but plan to start operations only during the next fiscal. Initially, we will take to manufacture of ring frames by supplying technology from here,” he said.

Market conditions were not conducive there either, he added, but the company could not afford to ignore China.

Referring to its performance, Mr Rajendran said the slowdown, coupled with deferment of deliveries by the consuming sector (namely the textile mills), was taking its toll on the machinery manufacturing industry.

The company’s net profit dipped by half for the quarter ended September 30 to Rs 37.87 crore against Rs 74.59 crore during the corresponding quarter of the earlier fiscal.

Its income from operations fell 24 per cent to Rs 441.75 crore (Rs 582.74 crore) with the textile machinery division accounting for 89 per cent of the total sales. The balance was from the machine tools and foundry divisions.

Its other operating income also witnessed a downward slide to Rs 4.64 crore (Rs 12.04 crore).

According to the Chief Financial Officer, the textile mills, particularly those in Tamil Nadu, were resorting to postponement of machinery delivery schedule.

“Most units that sought to expand and committed to machinery purchase earlier, have either stalled their proposal for the present or were going slow. Delivery is no longer an issue for us, but the market is not ready to absorb,” he added.

The company, meanwhile, has curtailed its operations to two shifts since August.

To a query on order flow, he said: “The inflow is less as compared to the earlier year. But we have orders worth Rs 3,800 crore to be executed.”

It has squeezed its delivery schedule to less than 6 months from the 18 to 24 months that it was quoting earlier.

Out of its installed capacity of 3.5 million spindles, the present utilisation level is said to be just over 60 per cent.

More Stories on : Outlook | Textile Machinery | Overseas Investments

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