1:1 bonus issue by LMW despite slump in profit

COIMBATORE, May 29: The recession-hit Lakshmi Machine Works (LMW) Ltd has maintained 60 per cent dividend for 1996-97 despite a 10.17 per c...

COIMBATORE, May 29: The recession-hit Lakshmi Machine Works (LMW) Ltd has maintained 60 per cent dividend for 1996-97 despite a 10.17 per cent erosion in sales and a 44.65 per cent slump in net profit. The board has also recommended a bonus issue in the ration of 1:1 (see inset).

The textile machinery major based here reported a turnover of Rs 538.93 crore compared to last year’s Rs 599.96 crore. This year’s turnover is on enhanced capacity of nearly 30 per cent. The capacity was enhanced during the year to achieve a turnover target of at least Rs 900 crore.

A higher depreciation in view of the capital expenditure on expansion and a higher tax provision also resulted in a lower net profit of Rs 23.78 crore compared to Rs 42.96 crore earned last year.

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The depreciation for 1996-97 is Rs 61.75 crore (Rs 51.86 crore) and Rs 17 crore (Rs 9.50 crore) has been provided for tax. The provision for taxation last year was low due to the 100 per cent depreciation claim on the wind mill project, a senior official of the company told newspersons here on Wednesday.

Around 445 LMW shares were traded at NSE on Wednesday. The scrip touched a high of Rs 7,425 and a low of Rs 6,651.90 before being freezed at Rs 6,652.The gross profit margin of LMW is 19.02 per cent compared to 17.39 per cent last year, largely due to the 10 per cent price increase effected in the first half of 1996-97 than the lower expenditure of Rs 442.05 crore (Rs 510 crore). The capacity utilisation was lower at 75 per cent (on enhanced capacity) compared to 95 per cent during the previous year, claimed the company spokesman.

The company which was hit due to the recession in the domestic textile industry improved its export sales to Rs 57.21 crore from last year’s Rs 50.88 crore. In fact, this is marginally higher than the 1994-95 export earnings of Rs 56.49 crore. It hopes to maintain the rate of exports at 10 to 12 per cent of the turnover.