The Hindu Business Line : Lakshmi Machine in modernisation mode

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Coimbatore Feb. 6 Having enhanced its capacity with the acquisition of a sick industrial unit, Jeetstex Engineering Ltd, last year, textile machinery manufacturing major Lakshmi Machine Works Ltd (LMW) is now strengthening its capital investment to modernise and improve productivity.

Speaking to Business Line, its Chief Financial Officer, Mr D. Rajendran, said the company invested Rs 180 crore over the last two years in plant modernisation and would spend a similar sum in 2007-08. "The efforts are aimed at improving our productivity levels. The sums have been mopped up through internal accruals," he said.

The company has, on date, orders worth Rs 5,500 crore for execution.

According to Mr Rajendran, the positive outlook in the capital goods segment is accelerating the growth.

"We are also gearing up to increase our production volume, not through the acquisition route for now," he said.

The growing demand for textile machinery, long delivery schedule and the urge to retain its clientele, besides wooing prospective ones, have all triggered the capital expansion plans.

The company is aiming to reach 40 per cent growth in volume and value. "We are planning to enhance our capacities to achieve these growth levels, but only during the next year," Mr Rajendran added.

No price revision now

The company, he confirmed, had not initiated any price revision after June 2005.

"We are not planning to revise the rates for now either," he said.

To a query on the rise in consumption cost, he said the cost of inputs depended on the product mix.

"When the ring frame numbers are up, the material consumption cost also tends to rise," he explained.

The company's bottomline has almost doubled to Rs 44.66 crore in the just-ended third quarter against Rs 23.36 crore during the corresponding period of the previous fiscal. Mr Rajendran attributed the steep increase in net profit to the higher deferred tax provisioning made in the earlier fiscal, following the acquisition of Jeetstex. Against a deferred tax provision of Rs 23 crore in the September-December quarter of 2005, the company has only provided for Rs 7.26 crore in Q3, 2006.

Its income from operations increased by Rs 130.32 crore to Rs 465.43 crore (Rs 335.11 crore) and other incomes by a little over Rs 5 crore to Rs 25.78 crore (Rs 20.03 crore).

Expenses also rose correspondingly with the consumption of raw materials touching Rs 279.71 crore (Rs 181.43 crore), staff cost at Rs 33.98 crore (Rs 25.87 crore) and other expenses accounting for Rs 74.15 crore (Rs 67.53 crore).

On staff cost, Mr Rajendran said the company had recently signed a wage revision with its workforce. "Both the activity and volumes are up, but our staff cost to total cost is only around 8 per cent, well within the industry level."

More Stories on : Modernisation | Textile Machinery

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