Lakshmi Machine

The power woes hit the company’s performance in Q2, leading to lower order executions. And it seems to have become worse in Q3, with the company showing a 27% (YoY) drop in net sales at Rs.473 crore and net profit was down 49% at Rs.20.36 crore. The company scaled down its operating costs by 24% and had a 49% lower tax outgo; but for these, the net profit would have been harder hit.  Due to poor offtake of machinery, the plant capacity utilisation levels also dropped to 60%.

The company has laid the blame of poor performance once again on frequent outages in power and lack of firm schedules for delivery of textile machinery. Order postponements were common during the quarter as new projects did not come up and those lined up, did not have the required finances thus deferring orders.  Another segment which pulled down profits was the Advanced Technology Centre, which has been in the red.  More than lack of orders it was power shortage which pulled down performance. The state of Tamil Nadu is working fast on executing some major power projects, conventional as well as non-conventional and if it keeps up the schedule, it will become power surplus by 2014.  Thus looking ahead, the power woe continues in Tamil Nadu for now and this could impact order inflow and execution in coming months. Thus at the moment, earnings look subdued for Fy13. The company, as at 30th Sept 2012, was sitting on reserves of Rs.949 crore and had a cash balance of Rs.678 crore. Debt is around Rs.150 crore. Fundamentally very sound but is a victim of circumstances.