Bid to overcome market demand slump
Despite being one of the worst year for the textile industry, India’s leading machinery manufacturer Lakshmi Machine Works Ltd. (LMW) achieved a turnover of Rs. 2,07,249.19 lakhs in 2011-12 (Rs. 1,77,331.17 lakhs in 2010-11), resulting in a net profit of Rs. 22,339.40 lakhs before tax (Rs. 23,784.22 lakhs). During the year the turnover increased 16.87 per cent over the previous year. However, profit decreased by 6.07 per cent. In spite of rise in turnover, the increase in commodity prices, power and fuel expenses and depreciation of the Indian rupee against the US dollar impacted profitability.
The Textile Machinery Division of the company during the year recorded a turnover of Rs. 1,75,329.51 lakhs as against Rs. 1,51,813.21 lakhs the previous year, recording an increase of 15.49 per cent.
The buoyancy in demand for textile machinery experienced during 2010-11 slowed down in 2011-12. During the year the Indian textile industry was affected by external factors like the Euro Zone crisis and concerns relating to low growth in demand from the US market. Demand generation in the domestic market too was affected by the uncertain economic environment. The high rate of inflation eroded the disposable income and hampered demand growth in the domestic market.
The textile industry was also affected by volatile cotton prices, high cost of inventory carried forward, rising interest rates, withdrawal of export incentives and levy of additional excise duty on readymade garments. The financial gains realised during 2010-11 were negated by the first quarter of 2011-12. Imposition of restriction on cotton yarn export and the high cost of working capital forced many mills to dump yarn made out of expensive cotton in the domestic market at very low prices, resulting in huge losses.
Many textile units also closed/suspended operations or experienced lower capacity utilisation due to power shortage and issues relating to environmental concerns.
The uncertain and unpredictable Government policy on cotton and yarn export is posing a threat to the new entrants. It also made theexisting players defer their investment proposals for capacity expansion or modernisation. Only large integrated textile companies with sufficient internal accruals or arrangements with banks / financial institutions were able to proceed with their investment programmes.
The Budget for 2012-13 too has failed to cheer the Indian textile industry, which has been bogged down by many issues. However,extension of relief for R&D activities and testing laboratories, exemption of expenditure on skill development in the manufacturing sector, allocation of Rs. 1,000 crores for National Skill Development Programmes and allocation of Rs. 2,914 crores for the TUF Scheme were hailed as steps in the right direction.
In the current market scenario, LMW aims to strengthen the existing product lines by presenting new value-added products with high level of automation. Despite stiff competition from multinational companies, the company has retained its market position through its ability to provide comprehensive spinning solutions, prompt after-sale services and commitment to enhance the bottomline of its customers.
The move to allow 100 per cent foreign direct investment (FDI) in the textile sector and retail sector and the commitment to establish more textile parks by the Government is expected to bring moderate growth in business to this division in the coming years.
The turnover of LMW Textile Machinery (Suzhou) Co. Ltd. (LMWTMSCL) during the year under review was Rs. 15,860.53 lakhs by sale of 304 machines as against Rs. 11,221.18 lakhs in the previous year. As on March 31, 2012, the company has received orders for 294 machines worth Rs. 15,405 lakhs, and the same are under execution.
During the year the company earned a net profit of Rs. 93.51 lakhs (previous year net loss Rs. 1,271.40 lakhs).
LMW’s latest technologies displayed at ITMA ASIA
Lakshmi Machine Works showcased innovations at ITMA Asia. With the unceasing product innovations and continuously setting new standards for the global textile industry, the company exhibited new technologies like ring frame LRJ 9/AXL linked with Murata Q-Pro Link Winder, draw frame LDA/1 Drafting module, card LC361 and components.
Ring frame LR J9 Series is designed with a blend of cutting-edge technologies and proven LR9 Ring frame features to produce perfectly compacted yarn. The live demonstration of compact Ring frame LRJ 9/AXL at high speed, linked with the winder, was well received and appreciated by the visitors for its innovative technology and salient features.
High speed auto leveller Draw frame LDA/1 sets new standards for sliver and yarn quality. The drafting module of the Draw frame LDA/1 was indeed a special attraction. The Card LC 361/LC 363 configured for higher production upto 120 kg/hr with distinctive features received overwhelming response from customers.
The visit of key officials and esteemed customers to the stall and the numerous enquiries generated during the exhibition proved it a sensational show by LMW to strengthen its position in the market place.