Will sustain 11-11.5% margin ahead: Lakshmi Machine Works

Lakshmi Machine Works is expecting a pick up in exports in FY16, says company CFO Rajendran R. He says the company will sustain margins of 11-11.5 percent going ahead.

According to him, the order book is flat as the company has executed pending orders.

Below is the verbatim transcript of Rajendran R's interview with Nigel D'Souza and Reema Tendulkar on CNBC-TV18.Nigel: Could you break up the top-line for us? In fact it has shown a growth of around three percent. Firstly, how have the exports done, what is the growth on the exports front and also on the domestic front what exactly is the growth. Also could you tell us what is the contribution coming out of exports currently?A: There is an increase of about seven percent growth in the overall net sales as compared to the previous financial year and the profitability shows a marginal increase of about 0.4 percent during this financial year. In case of export turnover,we could able to maintain the same level of what we have achieved during the last year. Not much of growth is concerned in respect of exports turnover and in respect of the order book,it is almost flat. In fact we have executed depending orders rather than order book position at the close of the year and it has slightly come down. The inflow of orders are also moderate and in case of exports, we were able to gain during the current financial year on account of the financial clearances which we were not able to make during the last financial year.So overall we hope that in a capital goods industry maintaining a topline growth of seven to eight percent seems to be quite encouraging. When the bottomline is concerned, we could improve slightly mainly on account of several internal measures that has taken place and also the commodity prices that has stabilised. This has also helped us at least to contain our material cost also.

Reema: Your exit margins for FY15 i.e. in the January to March quarter picked up to about 11-11.5 percent. Are these EBITDA margins sustainable for FY16?A: Yes we will be able to sustain the EBITDA margin that we achieved during the last quarter ,during this current financial year also.Reema: You will be able to sustain yourself?A: Yes, we will be able to sustain.Reema: So FY16 margins at 11-11.5 percent?A: Yes, we wil be able to sustain.Nigel: What about your capacity utilisation?A: Capacity utilisation currently is only about 55-70 percent overall as compared to the installed capacity.Nigel: And do you think that is going to go higher?A: No, it won’t go higher because it depends upon the order. Again the textile spinning mills have to go for investments and then they should get funding from the bankers and that is an issue that this industry is currently facing. However, the government has come out with a lot of policy initiatives. We hope those things will trigger during this current financial year.