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Lakshmi Machine Works (LMW)
hosted a conference call on May 25, 2023. In the conference call the company
was represented by V Senthil, CFO and Dhanalakshmi, Sr GM.
Key takeaways of the call
Textile Machinery Division (TMD)
Order book (Domestic Order + LC) as end of March 2023 was Rs 5930 crore, which
is lined up for execution over current year.
Of the order book about 42% is projects.
Export share in total order book is Rs 600-700 crore and balance are
domestic. Of the domestic order book
about Rs 950-1000 crore are inactive.
ATC Order book as end of March
2023 is about Rs 400 crore and will be executed over next 3 years.
Surge in order inflow for TMD in
FY22 is largely due to pent up demand as there is not much of investment in pre
covid years as well as covid year. So FY22 order inflow is not
sustainable. Over the last year the TMD
order inflow tapered. Now what the
company sees is more of sustainable order inflow. The outlook for TMD order
inflow is stable.
CNC machine – With increase in
manufacturing and booming of engineering industry the demand for CNC machine is
expected to be good. Still have close to 30-40% gap what is
shipping and what capacity it have.
Outlook for the business is positive. Turning centers and machining centers.
Last few quarters the focus is on machining centers. Moving the mix between 51:49 between auto and
non auto is the target.
Inked a development agreement
with Sobha Developers to develop 5 acres which is adjacent to the land already
developed along with Sobha Developers. The timeline for completion of this real
estate development project is 60 months.
Exports revenue of TMD grew by
47%yoy.
TMD revenue mix is 65% is Domestic,
24% is Exports and 11% is Spares for
FY23. The mix for Q4FY23 is pretty
similar to that of FY23.
In the month of May 2023, the
company has effected price hike. It has not effected price hike earlier and
thus the rise in RM cost has hit the Gross Margin.
MTD - revenue is flat with revenue mix is changing
in favour of Machining Centres (MC) from Turning Centres (TC). Able
to pump more MC which addresses non auto segment. This is reducing the margin
of MTD. Like to increase the STO of MTD. Built the 2nd facility last
year for MTD and look to improve the dispatches from the new facility.
TMD – domestic 64%, exp 24%,
spares 11% for FY23. The mix is almost
similar in Q4FY23. Last Q2 and Q3 are
not great for textile industry that is reason the spares as % of overall
revenue has reduced.
Chinese Subsidiary - Sales were up 24% to Rs 272 crore in FY23
against Rs 221 crore. The PAT was Rs 23
crore against break even last year.
Order book of Chinese Subsidiary is for a quarter of sales. Now able to send people freely to china
unlike earlier years due to covid restrictions.
So able to send sales team.
Sales of LMW Middle East is Rs
121 crore and the PAT is about Rs 9 crore for FY23. Current year focus is to stabilize operations
of the LMW Middle East.
Capacity utilization of TMD is at
its peak. The future growth will come
from debottlenecking of existing capacity. The TM business is cyclical due to
the inherent nature of Textile industry capex.
Disposed of older aircraft which
is held for 17 years the values is 24 crore. This is part of other income.
In Q4FY23 the company has
purchased a 2nd hand aircraft for about Rs 86 crore.
Revenue of Foundry Division in
Q4FY23 is about Rs 96 crore against Rs 78 crore in corresponding previous
period.
TMD price hike is close 5-7%
depending on type of machines. The
purpose of hike to get back to the margin. The company has absorbed the
incremental cost last year and with now market stabililizing the company took
price hike.
Auto corner machine is not
commercially launched yet.
Plan to invest similar amount of
about Rs 100 odd crore in debottlenecking at both TMD and MTD division.
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