Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lakshmi Machine Works Ltd (BOM:500252, Financial) has a substantial order book of INR3,380 crore, indicating strong future demand.
- The company is focusing on export business, particularly through its UAE subsidiary, to drive growth.
- The Machine Tool Division (MTD) has a capacity utilization of 64-70%, indicating potential for scaling up without significant new investments.
- The aerospace division has a high export contribution, with 90% of its turnover coming from international markets.
- The company is investing in new product development, including the Autoconer and Airjet machines, which are expected to launch in FY25-26.
Negative Points
- The company's turnover for Q1 FY24-25 decreased by 45% compared to the same quarter last year, from INR1,155 crore to INR636 crore.
- The Textile Machinery Division (TMD) saw a significant revenue decline of 53%, resulting in a loss of INR12.72 crore for the quarter.
- Lakshmi Machine Works Ltd (BOM:500252) is operating on a five-day workweek due to lower capacity utilization, indicating underutilization of resources.
- The wholly-owned subsidiary in China reported a turnover decline and a loss of INR3.6 crore, reflecting ongoing challenges in rebuilding the organization.
- The Machine Tool Division (MTD) also experienced a revenue decline, with profits dropping from INR17 crore to INR6.5 crore year-over-year.
Q & A Highlights
Q: What is the purpose of the INR200 crore investment in the UAE subsidiary?
A: The investment is aimed at enhancing our export business by establishing an assembly facility in Dubai. This move is part of our strategy to consolidate our subsidiaries and be closer to our customers, which is crucial in the current market scenario. (V. Senthil, CFO)
Q: What are the plans for the INR1,500 crore cash reflected in the March 2024 balance sheet?
A: The cash includes investments, cash in hand, and fixed deposits. The utilization of this cash is under the purview of the Board, and specific plans will be disclosed as they are finalized. (V. Senthil, CFO)
Q: Can you provide an update on the rebuilding and reestablishment of the Chinese subsidiary?
A: We are rebuilding the team and reintroducing new models and machines to the Chinese market. The team now includes experienced personnel, and we are working to regain customer confidence and market presence. (V. Senthil, CFO)
Q: What is the current capacity utilization and number of working days in the plant?
A: The current capacity utilization for textile machinery is around 45-50%, with a five-day working week. Other divisions, like the Machine Tool Division, are operating six days a week. (V. Senthil, CFO)
Q: Any updates on the Autoconer and Airjet machines planned for launch in FY26?
A: We have placed three Autoconer machines with customers and expect a soft launch by Q4. The Airjet machine is in advanced stages of development and is expected to launch in FY25-26. (V. Senthil, CFO)
Q: How do you foresee the impact of improved cotton spreads on future orders?
A: Improved margins on yarn are expected to trigger demand in the next two quarters, leading to better order flow and offtake. (V. Senthil, CFO)
Q: What is the visibility for the Machine Tool Division over the next three years?
A: We have sufficient capacity to scale up by 30% with current investments. The focus is on innovation and reaching out to customers to drive growth. (V. Senthil, CFO)
Q: Can you provide details on the order backlog for the Textile Machinery Division?
A: The active order backlog is around INR2,100 crore. We focus on automation solutions and are investing in R&D to enhance our offerings. (V. Senthil, CFO)
Q: How is the company positioned in the EMS and semiconductor sectors?
A: We have machining centers for the EMS segment and are continuously innovating to meet market demands. However, we do not currently have a play in the semiconductor manufacturing space. (V. Senthil, CFO)
Q: What are the reasons for the significant drop in ATC division profits?
A: The drop is due to investments in the composite division, which is currently incurring costs. The metallic segment remains stable and profitable. (V. Senthil, CFO)
Q: What are the future growth drivers for the company?
A: Key growth drivers include exports in the Textile Machinery Division, the Machine Tool Division, and investments in the ATC composite division. (V. Senthil, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
