The Hindu Business Line : Rieter in talks with LMW to resolve row over plans for new facility

SWISS textile machinery manufacturer Rieter is in talks with its Indian joint venture partner Lakshmi Machine Works (LMW) to settle differences over Rieter's plans to set up a new manufacturing facility in the country.

Attempts towards a reconciliation between the two players come in the wake of increased competition from Chinese equipment manufacturers, who have been taking advantage of the ongoing shortage of machines in the country to bag several big orders from domestic textile players.

"We are in talks with LMW and are hopeful of a solution," Rieter India Private Ltd's CEO, Mr Ajay Vats, said.

On whether Rieter would consider investing in the country through the existing joint venture with LMW, he said it might be one of the options before the company.

Rieter had earlier sought the Government's nod to expand the activities of its wholly owned subsidiary, Suessen India.

LMW had invoked Press Note 1 to stop it from setting up a spinning machinery manufacturing facility since Rieter holds about 13 per cent in LMW.

The Press Note 1, an amended version of Press Note 18, restricts foreign companies with more than three per cent equity in a venture in India to get a no-objection certificate (NOC) from its partner for setting up another venture in the same line of business.

In a representation to the Government, LMW has claimed that Rieter's proposal to manufacture textile-spinning machinery would affect it adversely.

The application of Rieter is now with the Foreign Investment Promotion Board, which has asked it to get a NOC from LMW.

The Whole-time Director of LMW, Mr Sanjay Jayavarthanavelu, said the issue of providing NOC was not "that simple." "A lot of investment in the textile industry has been due to the Technology Upgradation Fund Scheme (TUFS).

TUFS expires in 2007 and we are looking at post-2007 scenario. Then there is a question of livelihood of so many people," he said.

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