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Lack of firm schedules for delivery of textile machinery coupled with the frequent outages in power seem to impacted the performance of the textile machinery manufacturing major Lakshmi Machine Works.
This Coimbatore-based company has reported a steep slide, almost by half in its net profit to Rs 20.36 cr for the quarter ended December 2012 from Rs 39.65 cr during the corresponding quarter of the previous fiscal.
The company’s total income from operations fell from Rs 530.72 cr as at end December 2011 to Rs 393.30 cr during the corresponding three months of the current fiscal.
‘Market condition was also not condusive. The mill sector could not give us a firm commitment about taking delivery of their orders. New projects did not come up in a big way and on the existing project expansion proposals, there seemed to be some delay in getting the finance. So, our customers started deferring/ postponing their delivery schedules,’ Mr Rajendran, Director (Finance), LMW told Business Line.
‘Due to poor offtake of machinery, the plant capacity utilisation levels also dropped to 60 per cent, Rajendran said, adding ‘costs surged due to low capacity utilisation, rising power cost and the increase in diesel prices’.
To a query on order book position, he did not quantify, but maintained that there was some improvement. ‘These orders are however executable only in the 2013-14 fiscal’.
While project proposals accounted for 70 per cent of the total order, the rest, he said were for unitary machinery.
Besides the hit on the production side, LMW’s bottom line also suffered because its Advanced Technology Centre (as a segment) was incurring a loss. ‘ATC’s fixed cost also brought down our profit,’ the Finance Director said.
On the China arm, he said ‘it’s a turnaround story there. The operations are limited as it only caters the local requirements.
While Rajendran expressed some scepticism about the future, the Managing Director of Loyal Textiles and Chairman, Texprocil Manickam Ramswami told this correspondent in a recent chat that the market sentiment for the textile sector looked good. ‘It’s not orders, but lack of power that is disrupting production.’
The State, according to TN’s Minister for Electricity and non-conventional energy development would be a power surplus state by 2014.
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