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L.N. Revathy

Coimbatore, May 20 A combination of negative developments such as fall in demand and tight monetary conditions has had an adverse impact on the performance of textile machinery manufacturing major Lakshmi Machine Works Ltd (LMW).

The company has scaled down its operations to a single shift, and the capacity utilisation, according to a company official, is 35-40 per cent. LMW is not expecting the scenario to change much at least during the first half of the current fiscal.

The order book position is said to be comfortable at over Rs 3,500 crore. The company source, however, said the revival would depend on the textile industry.

“With a majority of units either postponing or deferring expansion, it could take a while. Bankers are not enthusiastic to lend to the textile industry because a good number of mills have sought to reschedule their loan and were deferring repayment,” a senior official of the company told Business Line.

While admitting to a slowdown, the LMW source said: “This is not the first instance. We have experienced it in the past. But this time it is coupled with a financial crisis. The consumer demand should improve and we are on the last link of the chain.”

The audited results reveal a sharp drop in the net sales to Rs 180.78 crore for the quarter ended March 2009 against Rs 603.99 crore during the corresponding quarter of the earlier fiscal. Other operating incomes also slipped by over 50 per cent to Rs 6.56 crore (Rs 14.06 crore).

There has been a corresponding drop in expenses too. Raw material consumption fell from Rs 344.20 crore for the quarter ending March 2008 to Rs 103.99 crore during January-March 2009.

Employee cost dropped to Rs 26.04 crore (Rs 37.50 crore).

Asked if LMW had laid off workers, the official said: “We have reduced apprentices and casuals. The number of permanent workers on our roll is 3,500.”

The company’s net profit dipped to Rs 8.04 crore (Rs 60 crore).

Its net profit during the 2008-09 fiscal fell by over 50 per cent to Rs 106.93 crore compared to Rs 242.30 crore during the earlier year. Income from operations also took a hit dropping to Rs 1,338.01 crore (Rs 2205.16 crore).

Despite the bleak scenario, the company has gone ahead with its project in China. “We have taken possession of the building and sending shipments. We have received enquiries for ring frames with auto Doppler. We plan to send demo machines, and after one or two installations, look at establishing a market,” the source said.

More Stories on : Financial Performance | Textile Machinery

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