Lakshmi Machine Works Ltd. Q3 of the financial year 2023-24 earnings call

Textile Machinery Division:

• We hold an order book of Rs 4000 cr which has been lined up for execution. The ratio of domestic sales vs exports vs spares stands at around 65% to 21% to 14%

LMW Global Division:

• The order book on exports stands at close to Rs 60 cr under LMW Global

• There is tremendous potential within this business. There is no doubt about it. It is Airbus and Boeing, it is not just 5-6 years but they work even with a 10-year order book, depending on how they look at the manufacturing.

• Of course, when you talk about aerospace parts, spare parts, whatever components we make, if it is a non-defense sector, it goes to these machines in some way or form. While there is potential, we have to be aware that this is a global market and we are competing against a global supply chain and most of the supply chain is global.

• So, you are making a technical part for which everything comes from abroad. We do a conversion and again, ship it abroad. So, it is a very competitive business. While there is tremendous opportunity, it is a very competitive business and what we are doing is taking someone else’s market share. It is not that Boeing or Airbus are waiting for some of their parts to be made. You are getting integrated into their existing supply chain and trying to take some more business share from someone else. That is how you build the business

LMW China Division:

• The order book in LMW China is around Rs 41 cr

The machine tool division and the foundry division:

• Out of the entire turnover, around 12% is foundry turnover.

Advanced Technology Center business Division:

• We make components that go into, various aircraft manufacture. We make parts which are engine parts, and other parts which go into the body of the aircraft

• Our ATC business is split into two parts. We categorize them as
  i) metallics and
  ii) composites

Metallics

• The metallics business is catering to all the product sub-level components to the OEM players. Under this business, we have been able to establish a significant export business. Almost 90% of the total metallic business is towards exports, and only 10% is within the domestic industry. It does not cater to the local industry. We are only catering to 10% of the domestic market. The reason for that is that we can get long-term contracts. In these contracts, we are dealing with the export market, i.e., large private OEMs. Generally, they have an order book of about 5 years. This is what you can look for. So, with a 5-year order book, we can plan everything better within this particular business and we get better returns as well. So, the focus here is to increase our exports on the metallic side

Composites

• The composite side is something that we established around 4 years back. Predominantly, the composite business caters to the aerospace industry within India. We make parts for all the Government organizations within India. However, since we have a metallic business with an existing set of customers, we can use the same and increase our metallics, what we sell to them, on the composite side as well

• So, as of now, the challenge for us is to establish in terms of our ability to cater to the composite business to our existing customers on the metallic side. What we are saying is that we have been able to give a very clear focus which has helped us turn around during the 6-7 quarters. It has become profitable and of course, the reason, we should be very clear, the way this business works, you need to procure raw material which is specifically a very long lead-time material, and be ready for deliveries because they give us schedules for about 5 years

• So, in these 9 months, we have been able to cater to the demand including the increased demand. Especially in the last quarter, there has been an increased demand which we have been able to cater to. That is the reason we see the turnover has also gone up significantly compared to the previous year. So, we should say that this has stabilized to a significant extent.

• Today, our composite parts are going into rocket launches. We are proud to say that anything that is launched has a composite part from us.