Coimbatore-based Lakshmi Machine Works Ltd (LMW), the largest textile machinery manufacturer in India, with a turnover of more than ₹2,50 crore last year, has registered rather subdued growth in the July-Sept 2014 quarter, with the turnover up by only around 5 per cent over Q2 of last fiscal. The company, which has expanded to China, does not expect to make any fresh investment in capacity addition this fiscal, reflecting the challenging times the textile sector is facing.But the boom in the automobile industry and the Centre’s recent push to the domestic manufacturing sector by clearing Defence projects valued at ₹80,000 crore has come as a relief. LMW, which has a Machine Tool & Foundry division, expects to benefit from the Defence push. In an interview to BusinessLine , R Rajendran, Director-Finance, LMW, explains the difficult situation the textile machinery sector is facing and the steps LMW is taking to cushion its impact. Excerpts:

What were the reasons for the rather muted performance by LMW in Q2 this year?

Due to VRS costs of ₹6.58 crore, there was a drop in net profit. Further, input cost increases also resulted in reduction of net profit in spite of turnover growth of 5 per cent.

The textile machinery division has maintained the same turnover as mills find it difficult to get funds for their greenfield projects. In respect of the machine tools division, on account of the buoyancy in the automobile sector, the auto and auto ancillary industries are adding investments to enhance capacity.

The Centre has cleared about ₹80,000 crore worth Defence projects (purchases). Do you expect to gain from that?

On account of support to the manufacturing sector by the Government, the prospect of growth is possible in the near future. Our Machine Tool Division is already catering to the Defence sector. There is scope for further share of revenue from the Defence sector.

How will the technology transfer agreement LMW had signed recently with Veejay Lakshmi Engineering Works Ltd (VeeJay) help?

Veejay has developed an automatic cone winding machine, which LMW would like to manufacture through the technology transfer agreement. The project details are being worked out and we may come out with production in a year.

Are you planning capital expenditure this year?

The current capacity of all our divisions is sufficient to meet the demand and, hence, there is no proposal to increase capacity.

How is the China venture doing? Are you looking at more overseas investments?

The wholly-owned subsidiary LMW Textile Machinery (Suzhou) Co Ltd is in the process of introducing another product, Draw Frame, in addition to Ring Frame. Our capital investment is limited to $12.5 million. No further investment from the parent company is envisaged. At present, we have no plans to add a manufacturing facility elsewhere.

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