LMW Textile Machinery (Suzhou) Co Ltd plans capacity expansion at its Wujiang unit. It is a wholly-owned subsidiary of the Coimbatore-based textile machinery major Lakshmi Machine Works Ltd.

The company, situated in the Wujiang Economic Development Zone, in China's Jiangsu province, currently manufactures 35 machines a month. This will be expanded to 40 machines a month.

Besides, it also plans to construct its own premises in the same zone. “The government authority has already allotted land for the proposed facility,” said Mr K. Soundhar Rajhan, Chairman, LMW Textile Machinery (Suzhou) Co Ltd.

Growth opportunity

According to him, the expansion project and the new (own) facility will cost a little over $6 million. “Of the budgeted $12.5 million, we have already invested close to 50 per cent. The remaining funds will be invested in these projects in two years,” he said.

China offers great growth opportunity as the Chinese textile market is “simply huge” and most of the manufacturers are getting modernised periodically.

“However,” he said, “competition from many European giants and the state-owned enterprises there is the biggest challenge for us. But we managed penetrate the market quite successfully”. The company posted a turnover of RMB 220 million last year.

Mr R. Rajendran, Director (Finance), LMW Ltd, earlier said the order inflow has been good and the China venture was concentrating on localisation following price pressures.

“We expect to break even, and even make a profit next fiscal,” he added.

While the Chinese venture is only engaged in the making of ring frames at present, Mr Rajendran hinted that there were plans to add more products in the days to come.

Lakshmi Machine Works Ltd reported a drop in net profit to Rs 39.65 crore for the quarter ended December 31, 2011 from Rs 46 crore in previous corresponding quarter.

>rravikumar@thehindu.co.in

Related Topics