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Lakshmi Machine Works (LMW) seems to have withstood the turmoil in the textile industry during the first quarter of the current fiscal by showing some improvement in its top line growth and a 37 per cent increase in its net profit as compared to the corresponding quarter of the earlier fiscal.
The net profit of the textile machinery manufacturing major rose to Rs 41.14 crore (Rs 30.09 crore), while its net sales or income from operations crossed Rs 500 crore to reach Rs 502.14 crore against Rs 334.06 crore during the corresponding quarter of the earlier fiscal.
“The improvement in performance is mostly on account of execution of projects than stand-alone or unitary machines,” LMW's Director (Finance), Mr Rajendran, told Business Line .
Textile machinery division accounted for a major chunk of the revenue at Rs 438.14 crore (Rs 302.96 crore).
He said that there was some pressure on profits due to the increase in the input cost of raw material, labour and power among others. “This is despite the revision we effected on machine cost. This revision in the price list was however effected only in June, at the fag-end of the first quarter.”
Total income, including other operating income, increased to Rs 511.15 crore (Rs 345.58 crore), while total expenditure stood at Rs 465.07 crore (Rs 314.09 crore).
Employee cost during this quarter touched a high of Rs 44.14 crore (Rs 36.79 crore). According to Mr Rajendran, this steep increase was mainly due to wage revision, hike in dearness allowance and profit incentive.
Despite the pressures the textile industry is facing, the order position, the Director (Finance) said, ‘is comfortable'. LMW's order book position has increased from Rs 4,600 crore to Rs 4,900 crore this quarter.
“This though is not an indication of the wellness of the textile industry. We are more concerned about our customers. Due to the inflationary pressures and rising interest costs, their priorities might switch to immediate requirements such as working capital finance, forcing them to postpone their purchase of the textile machinery,” he added.
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