MUMBAI (Reuters) - Shares of Lakshmi Machine Works Ltd. fell 8.9 percent on Wednesday after the textile machinery maker said October-December sales were stagnant on the quarter, though net profit nearly doubled on year.
However a senior official on Wednesday expected the company to maintain a 40 percent sales growth in the January-March quarter and in 2007/08 helped by sustained demand for Indian textiles.
"We have reached peak production capacity," Chief Financial Officer R. Rajendran said. "Though our order book is swelling there is only that much we can produce and sell."
Lakshmi Machine Works has just expanded capacity by 50 percent to 2.7 million yarn making spindles and is looking at a further increase, he told Reuters.
The company is also aggressively looking at the spare parts and accessories segments to boost growth, Rajendran said.
The company's order book, which stood at 30 billion rupees in June 2006, has since crossed 55 billion rupees, Rajendran said.
Indian textile mills are expanding following the World Trade Organization abolished quantitative limits on textiles and clothing from January 1, 2005, paving the way for a production shift to low-cost countries.
Loans sanctioned under the textile technology upgradation fund (TUF) grew 27 percent in the April-November 2006 period to 109.7 billion rupees, data with Textile Commissioner's office showed.
TUF, a federal scheme, offers 5 percent interest subsidy to expanding textile firms.
Lakshmi Machine works has a more than 60 percent market share in the Indian spinning machinery market.
Sales grew 39 percent on the year to 4.65 billion rupees, but was just a shade above the 4.6 billion rupees reported in July-September.
Lakshmi Machine Works shares closed at 3,538.50 rupees in a weak Mumbai market.
Wed Jan 31, 2007 7:58 PM IST
Source:Reuters India
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