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Textile machinery maker Lakshmi Machine Works' net profit has declined to Rs 39.65 crore, down Rs 6.17 crore from the corresponding quarter of the previous fiscal. On a sequential basis, net declined by Rs 9.59 crore compared with the quarter ended September 30, 2011.
The total income, however, rose to Rs 538.26 crore from Rs 490.88 crore during the corresponding quarter of the earlier fiscal, but dipped by Rs 43.12 crore compared with the quarter ended September 2011.
Specific requirements
When asked to comment on the performance, LMW's Director (Finance), Mr R. Rajendran, said the decline in profits was on account of the ‘reduction in schedule'.
The company's manufacturing programme is based on specific requirements from the customer. “If the customer does not confirm the specific requirements and the time within which he would take delivery of the machine, then we wait for the customer to revert on this,” Mr Rajendran said.
The plant utilisation level at present is said to be around 80 per cent and the company works two shifts and follows the six-day week schedule.
While conceding to the steep decline in order bookings, more so in recent months, but quite unwilling to quantify on the order book position, the LMW spokesperson said, “the order book is both an indication of the market demand as well as otherwise. I can at this juncture say that the existing orders are active and we have been supplying the project orders booked during 2010-11”.
Textile industry
According to him, the textile industry has neither been very enthusiastic about upgrading their plant and machinery nor were they looking at newer project proposals in recent months. ‘This is basically because of the losses many mills incurred during the last two quarters because the cotton procurement cost had spiralled.”
To a query on future expectation, he said, “this situation is not new. The demand will improve based on market requirement.”
The company seems to have done well on the export front. Without divulging the export figures, Mr Rajendran said, “select countries had gone ahead with their projects, but the market sentiments are bad, worldwide.”
On LMW's China project, he said, “the order inflow has been good and we are concentrating on localisation due to price pressure. We expect to break-even, even make profit in the next fiscal.”
While the Chinese venture is only engaged in the making of ring frames at present, Mr Rajendran hinted that there were plans to add more products in the days to come.
Asked if the company had revised its pricing, Mr Rajendran said, “our last revision happened on April 1, 2011, and we plan to hold on for some more time. There is definitely a pressure on margins because of rising input cost, but today, we have to go by market acceptable pricing because of competition.”
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