Lakshmi Machine sees Chinese subsidiary turnaround this fiscal

Lakshmi Machine Works, the Coimbatore-based textile machinery maker, expects its Chinese subsidiary to turn profitable this financial year.

Its joint venture company Rieter-LMW Machinery (RLM), which it plans to turn into a wholly owned subsidiary soon, has already turned around, R Rajendran, chief financial officer, LMW, said.

On the margins side, the company expects operating profit margins to sustain at 17-18% in the current financial year on account of a recent hike of 3% to 7.5% in prices.

China-based LMW Textile Machinery (Suzhou) Co Ltd, the wholly owned subsidiary of LMW, started operations in September last. LMW till date has invested around $5 million in this subsidiary.

Going ahead, LMW will limit its capacity in China to 1 million spindles per annum, Rajendran said.

Its 50:50 joint venture with Rieter Machine Works of Switzerland is believed to have achieved breakeven in the last quarter.

Rajendran refused to share financial for the company as the results for this subsidiary are yet to be announced. The company had earlier announced a plan to acquire 100% stake in the company by June-July this year. LMW has a total investment of around Rs12.5 crore in RLM and an additional Rs12.5 crore debt has been infused in the joint venture. Once acquired, RLM’s 1 million ring frames capacity would be utilised by LMW. The company also plans to change the joint venture’s name post acquisition.