MIRA INFORM REPORT

Report Date :

02.02.2012

IDENTIFICATION DETAILS

Name :	LAKSHMI MACHINE WORKS LIMITED
Registered Office :	Perianaickenpalayam, SRK Vidyalaya Post, Coimbatore – 641020, Tamilnadu
Country :	India
Financials (as on) :	31.03.2009
Date of Incorporation :	14.09.1962
Com. Reg. No.:	18-463
CIN No.: [Company Identification No.]	L29269TZ1962PLC000463
TAN No.: [Tax Deduction & Collection Account No.]	CMBL03078F
Legal Form :	Public Limited Liability company. The company’s shares are listed on the Stock Exchanges.
Line of Business :	Manufacturing of wide range of spinning and pre-spinning machinery, weaving machineries, castings, pilot mill, metal cutting including grinding machines, payphone, granite and floriculture.

RATING & COMMENTS

MIRA’s Rating :

Aa (78)

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums		Large

Maximum Credit Limit :	USD 33000000
Status :	Very Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and a reputed company having fine track. Financial position of the company appears to be sound. Fundamentals are strong and healthy. Directors are reported to be experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payments are reported to be regular and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions. It can be regular as a promising business partner in medium to long run.

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

LOCATIONS

Registered Office :	Perianaickenpalayam, SRK Vidyalaya Post, Coimbatore – 641020, Tamilnadu, India
Tel. No.:	91-422-2692371-379 / 2892371-79 / 6612263 / 6612551/ 3022255/ 6612216/ 6612207
Fax No.:	91-422-2692541 / 542 / 543/ 2892541-42
E-Mail :	lmw.cbe@rmw.sprintrpg.ems.vsnl.net.in regd.off@lmw.co.in corp.off@lmw.co.in sales@lmw.co.in exports@lmw.co.in supportcentre@lmw.co.in secretarial@lmw.co.in rajendran.r@lmw.co.in soundhar_rajhan.k@lmw.co.in
Website :	http://www.lakshmimach.com
Corporate Office :	34-A, Kamaraj Road, Coimbatore - 641 018, Tamilnadu, India
Tel. No.:	91-422-2221680/ 82-87
Fax No.:	91-422-2220912
E-Mail :	corp.off@lmw.co.in secretarial@lmw.co.in
Factory 1:	Unit I Perianaickenpalayam, Coimbatore – 641 020, Tamilnadu, India
Tel No:	91-421-3983000
Fax No.:	91-421-2333270
E mail:	Unit2@lmw.co.in
Factory 2:	Unit II Kaniyur, Coimbatore – 641 659, Tamilnadu, India
Factory 3:	Spindles and Rings Unit SF 113, Annur Road, Arasur, Coimbatore – 641 407, Tamilnadu, India
Factory 4:	Bearings Unit SIPCOT Industrial Complex, Gummudipoondi - 601 201, Tamilnadu, India
Factory 5:	wind mill division Kethanur, Palladam (TK), Coimbatore, Tamilnadu, India
Factory 6:	commercial tool room Sangothipalayam, Coimbatore - 641 407, Tamilnadu, India
Factory 7:	agro division Naranahalli Village, Doddaballapur (TK), Karnataka, India
Factory 8:	MACHINE TOOL DIVISION Arasur, Coimbatore – 641 407, Tamilnadu, India
Tel No:	91-421-3983000/ 3022537
Fax No.:	91-421-2360029/ 3022577
E mail:	Mtdsales@lmw.co.in mtd@lmw.co.in
Factory 9	FOUNDRY DIVISION Arasur, Coimbatore – 641 407, Tamilnadu, India
Tel No:	91-421-3983000/ 3022553/ 3022511
Fax No.:	91-421-2360029/ 3022577
E mail:	foundary@lmw.co.in mtd@lmw.co.in
Factory 10:	G. K. D. INSTITUTE FOR TECHNOLOGICAL RESOURCES Arasur, Coimbatore – 641 407, Tamilnadu, India
Factory 11:	Ganapathy, Coimbatore-641006, Tamilnadu, India

DIRECTORS

Name :	Dr. D. Jayavarthanavelu
Designation :	Chairman and Managing Director
Qualification :	Engineering and DS Textiles
Date of Appointment :	03.04.1970
Name :	Mr. M. V. Subbiah
Designation :	Director
Name :	Mr. S. Pathy
Designation :	Director
Name :	Mr. R. Satagopan
Designation :	Director
Name :	Mr. Basavaraju
Designation :	Director (Nominee of LIC)
Name :	Mr. R. Venkatrangappan
Designation :	Wholetime Director
Qualification :	B.Sc., B.Com.
Previous Employment :	Lakshmi Textile Exporters Limited
Name :	Mr. Sanjay Jayavarthanavelu
Designation :	Wholetime Director
Qualification :	MBA
Date of Appointment :	3^rd June, 1994

KEY EXECUTIVES

Name :	Mr. R. Rajendran
Designation :	Chief Financial Officer
Name :	Mr. K. Duraisami
Designation :	Company Secretary

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

AS ON 31.12.2009

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Individuals / Hindu Undivided Family	302,330	2.44
Bodies Corporate	2,890,878	23.37
Sub Total	3,193,208	25.82
(2) Foreign
Total shareholding of Promoter and Promoter Group (A)	3,193,208	25.82
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	295,134	2.39
Financial Institutions / Banks	2,110	0.02
Insurance Companies	2,158,561	17.45
Foreign Institutional Investors	36,437	0.29
Sub Total	2,492,242	20.15
(2) Non-Institutions
Bodies Corporate	1,951,555	15.78
Individuals
Individual shareholders holding nominal share capital up to Rs.0.100 Million	1,806,031	14.60
Individual shareholders holding nominal share capital in excess of Rs. 0.100 Million	751,321	6.07
Any Others (Specify)	2,174,893	17.58
Trusts	10,515	0.09
Directors and their Relatives and Friends	13,719	0.11
Foreign Nationals	240	-
Non Resident Indians	114,375	0.92
Clearing Members	30,170	0.24
Hindu Undivided Families	374,354	3.03
Foreign Corporate Bodies	1,631,520	13.19
Sub Total	6,683,800	54.04
Total Public shareholding (B)	9,176,042	74.18
Total (A)+(B)	12,369,250	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	-
Total (A)+(B)+(C)	12,369,250	100.00

BUSINESS DETAILS

Line of Business :

Manufacturing of wide range of spinning and pre-spinning machinery, weaving machineries, castings, pilot mill, metal cutting including grinding machines, payphone, granite and floriculture.

Products :

Item Code No. (ITC Code)	844520
Product Description	Textile Spinning Systems
Item Code No. (ITC Code)	845811
Product Description	Metal Cutting Numerically Controlled Machines
Item Code No. (ITC Code)	844511
Product Description	Spinning Preparatory Machines

Exports :

Countries :

Bangladesh, Botswana, Ghana, Indonesia, Iran, Kenya, Malaysia, Nepal, Nigeria, Philippines, Sri Lanka, Switzerland, Thailand and Turkey

Imports :

Countries :

Denmark, Germany, Japan, Korea, Switzerland, Taiwan and U.S.A.

PRODUCTION STATUS

As on 31.03.2009

Particulars	Unit	Licensed Capacity	Installed Capacity	Actual Production
Spinning Machinery
Spinning Preparatory Machinery	Nos.	3287	5000	2486
Yarn Making Machinery	Nos.	5084	3300	1651
Accessories and Parts	Nos.	211 Lacs	211 Lacs	--
Weaving Machinery
Weaving Preparatory Machinery	Nos.	211	--	--
Textile packaging Machinery	Tonnes	196	--	--
Pilot Mill	Spindle	28000	8000	--
Metal Cutting Including Grinding Machines	Nos.	900	900	404
Diesel Engines	Nos.	2676	--	--
Casstings	Tonnes	15000	15000	22117.32

GENERAL INFORMATION

No. of Employees :	Around 3858
Bankers :	v Indian Bank, Coimbatore. v Bank of Baroda, Coimbatore. v Indian Overseas Bank, Coimbatore. v Citibank N.V., Coimbatore. v Bank of Nova Scotia, Coimbatore. v HDFC Bank Limited, Coimbatore. v ICICI Bank Limited, Coimbatore. v IDBI Bank Limited v Standard Chartered Bank v Deutsche Bank

Banking Relations :	Satisfactory
Auditors :
Name :	v M. S. Jagannathan and Visvanathan Chartered Accountants Coimbatore v Subbachar and Srinivasan Chartered Accountants Coimbatore
Memberships :	Confederation of Indian Industry
Collaborators :	H. Hergeth GmbH, Germany
Joint Venture :	Rieter LMW Machinery Limited
Wholly Owned Subsidiary Company:	LMW Textile Machinery (Sizhou) Company Limited
Associates:	Annur Satya Textile Limited Eshaan Enterprises Limited Integrated Electrical Controis Limited Lakshmi Cargo Company Limited LCC Cargo Holdings Limited Lakshmi Electrical Drives Limited Lakshmil Technology and Engineering Industries Limited Lakshmi Ring Travellers (Cbe) Limited Lakshmi Electrical Control Systems Limited Lakshmi Precision Tools Limited Mahalakshmi Engineering Holdings Limited Sri Kamakoti Kamakshi Textiles Private Limited Super Sales India Limited Titan Paints and Chemicals Limited Vekatavaradha Agencies Limited Walzer Hotels Limited Harshini Textiles Limited The Kuppuswamy Naidu Charity Trust for Education and Medical Relief

CAPITAL STRUCTURE

As on 31.03.2009

Authorised Capital :

No. of Shares	Type	Value	Amount
25,000,000	Equity Shares	Rs.10/- each	Rs. 250.000 millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
12,369,250	Equity Shares	Rs.10/- each	Rs. 123.692 millions

Out of the above :

• 230,010 Shares are allotted as fully paid up, pursuant to a contract without payment being received in cash.
• 9,651,620 Shares are allotted as fully paid-up by way of bonus shares by capitalisation of General Reserve.
• 210 Shares are allotted as fully paid-up on account of Merger of India Precision Bearing Mfrs. Limited,
• with the Company.
• 177,520 Shares are allotted as fully paid-up on account of Merger of Textool Company Limited with the Company

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2009	31.03.2008	31.03.2007
SHAREHOLDERS FUNDS
1] Share Capital		123.693	123.693	123.693
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		8303.573	7451.296	5679.497
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		8427.266	7574.989	5803.190
LOAN FUNDS
1] Secured Loans		0.000	0.000	0.000
2] Unsecured Loans		0.000	0.000	0.000
TOTAL BORROWING		0.000	0.000	0.000
DEFERRED TAX LIABILITIES		471.184	474.783	305.200
TOTAL		8898.450	8049.772	6108.390
APPLICATION OF FUNDS
FIXED ASSETS [Net Block]		5185.882	5570.440	3853.947
Capital work-in-progress		87.846	8.550	10.331
INVESTMENT		1127.077	1031.836	1021.581
DEFERREX TAX ASSETS		0.000	0.000	0.000
CURRENT ASSETS, LOANS & ADVANCES
	Inventories	824.600	1359.900	1630.684
	Sundry Debtors	517.522	880.333	406.651
	Cash & Bank Balances	6197.020	5682.541	6126.264
	Other Current Assets	216.485	342.837	382.388
	Loans & Advances	2423.289	3346.986	2780.715
Total Current Assets		10178.916	11612.597	11326.702
Less : CURRENT LIABILITIES & PROVISIONS
	Current Liabilities	5782.460	7796.052	8893.550
	Provisions	1898.811	2377.599	1210.621
Total Current Liabilities		7681.271	10173.651	10104.171
Net Current Assets		2497.645	1438.946	1222.531
MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		8898.450	8049.772	6108.390

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2009	31.03.2008	31.03.2007
Sales Turnover		13380.139	22051.647	18535.815
Other Income		906.221	875.468	881.398
Total Income		14286.360	22927.115	19417.213
Profit/(Loss) Before Tax		1541.711	3711.568	3085.998
Provision for Taxation		472.362	1288.556	1024.022
Profit/(Loss) After Tax`		1069.349	2423.012	2061.976
Earnings in Foreign Currency :
Total Earnings		971.600	1294.946	822.817
Imports :
	Raw Materials	328.710	376.612	337.565
	Stores & Spares	902.767	2079.155	1606.783
	Capital Goods	420.546	1615.589	1111.360
Total Imports		1652.023	4071.356	3055.708
Expenditures :
	Operating Expenses	9280.294	15048.744	12860.706
	Employee Cost	1197.919	1461.395	1291.994
	Administrative and Selling Expenses	1090.263	1546.709	1490.997
	Depreciation	1176.173	1158.699	687.518
Total Expenditure		12744.649	9215.547	16331.215
Basic and Diluted Earnings Per Share (Rs.)		86.45	195.89	--

QUARTERLY RESULTS

PARTICULARS	30.06.2009 1^st Quarter	30.09.2009 2^nd Quarter	31.12.2009 3^rd Quarter
Gross Sales	1865.300	2685.700	3279.100
Other Operating Income	59.400	96.700	82.700
Other Income	141.800	144.600	100.800
Total Income	2066.500	2927.000	3462.600
Total Expenditure	1714.300	2222.000	2727.800
PBIDT	352.200	705.000	734.800
Interest	0.000	0.000	0.000
PBDT	352.200	705.000	734.800
Depreciation	183.900	218.300	279.800
Tax	60.000	210.000	190.000
Fringe Benefit Tax	0.000	0.000	0.000
Deferred Tax	[3.000]	[47.000]	[40.000]
Reported Profit After Tax	111.300	323.700	305.000

KEY RATIOS

PARTICULARS		31.03.2009	31.03.2008	31.03.2007
PAT / Total Income	(%)	7.49	10.57	10.62
Net Profit Margin (PBT/Sales)	(%)	11.52	16.83	16.65
Return on Total Assets (PBT/Total Assets}	(%)	10.03	21.60	20.33
Return on Investment (ROI) (PBT/Networth)		0.18	0.49	0.54
Debt Equity Ratio (Total Liability/Networth)		0.91	1.34	1.74
Current Ratio (Current Asset/Current Liability)		1.33	1.14	0.13

LOCAL AGENCY FURTHER INFORMATION

HISTORY

Subject belonging to the G V Naidu (Laxmi) group, was incorporated in 1962. LMW produces a complete range of state-of-the-art textile machinery in collaboration with Reiters, Switzerland, and high precision CNC machine tools in collaboration with Mori Seiki, Japan. The company's collaboration agreement with Rieter Machine works Limited, Switzerland expired in 1999 hence Rieter has withdrawn its nominees on the board of LMWL but it still holds a 13 percent share in the capital of LMW. 

The Company has its presence in Textile Machinery Division, Machine Tool Division and Foundry Division. Subject has also diversified into the iron and steel, telecom, granite and agro sectors.  

Company’s associate companies include Pugoda Textiles Lanka and Southern Iron and Steel. Subject’s subsidiaries are LMW Investments, Dee Jay Leasing and LMW Management Services. During April, 2002 Jay Leasing Company Limited and LMW Investments Limited, the wholly subsidiary of the LMW were acquired by the company. 

Indian Precision Bearing Mfrs. Limited, a BIFR company manufacturing textile machinery components, was merged with the company during 1997-98. During 2003-November,Textool Company Limited(TCL) has been amalgamated with LMW and as per the scheme of Amalgamation approved by BIFR,One Equity Share of Rs.100 each of LMW will be issued for every 200 Equity Shares of Rs.10 each held in TCL or Rs.10 payable in cash for every equity share held of Rs.10 each held in TCL. 

Southern Iron and Steel Company Limited (SISCOL) was promoted in 1994 by the company with Tamil Nadu Industrial Development Corporation Limited (TIDCO) in Associate Sector for the Manufacture of Foundry Grade Pig Iron, Alloy Steel and Mild Steel. During the year the company has disposed off the Equity Investments in SISCOL to the promoters of Jindal Iron and Steel Company Limited  

In 1997-98, it introduced a number of new products like, the high-speed CNC machines in the Pilatus range, high-power CNC lathe in the Rigi range, vertical machining centres in the Kodi range, Ooty 40, which is the all-new horizontal machining centre and a mould- making machine, Kodi Mould 50. 

To consolidate its manufacturing activities the company has shifted its Cots and Aprons unit from Eloor to Unit II at Kaniyur. The Flyer Unit was also shifted from Muthugoundepudur to Unit I. The company has leased its Powder Paint unit as it is not the core business activity. The company forayed into foreign markets by exporting Steel Billets to Thailand and Sri Lanka. 

During 2005-2006, Jeetstex Engineering Limited (JEL), Coimbatore a sick company engaged in the manufacture of textile machinery and castings was acquired by the company during November, 2005 and has become a wholly owned subsidiary of the company. The companies shareholders at EGM approved the merger of JEL with the company. 

The company enhanced its capacity of Spinning preparatory machinery and Yarn making machinery from 3112 Nos to 4002 Nos. and 3000 Nos to 3300 Nos.

DIVIDEND:

The Directors have recommended payment of dividend at Rs. 15/- per equity share of Rs. 10/- each (150%) on the equity share capital of Rs.123.693 Millions for the year ended 31st March, 2009 aggregating to Rs. 185.539 Millions and to pay a Dividend Tax of Rs. 31.532 Millions. The dividend if approved by the shareholders will be paid to those members or their mandatees whose name appear on the Register of Members on 27th July, 2009 for those holding shares on physical form and as per the details furnished by the depositories as at the end of business hours on 15th July, 2009 for those holding shares on Dematerialized form.

OPERATIONS:

During the year , the Company has recorded a turnover of Rs.13380.139 Millions (2007-08 Rs. 22051.647 Millions) resulting in a net profit of Rs. 1541.711 Millions (2007-08 Rs. 3711.567 Millions) before tax. During the year the turnover had declined by 39.32% and profit by 58.46% respectively over the previous year due to the financial meltdown and the resultant economic recession in Western markets impacting adversely the global and domestic Textile Industry.

Textile Machinery Division 

The Textile Machinery Division of the Company, during the year , has recorded a turnover of Rs. 11799.754 Millions as against Rs.20074.232 Millions achieved during last year recording a decline of 41.22% over the previous year.

The growth trajectory of the Indian Textile sector has peaked out from the middle of the financial year 2008- 09 and has started moving southwards as a consequence of global economic recession. The global economic slow down has contracted the export potential for textile products out of India. Ambitious expansion, modernization and capacity build up carried out by the textile mills, after the phasing out of quota regime in 2005, is not being fully utilized. Mills have either postponed or abandoned their investment proposals due to the uncertain situation prevailing in this sector.

Besides the external factors, internal factors such as power shortage, sharp exchange rate fluctuation, forex hedging losses, increasing commodity prices and interest rates have depressed the investment sentiment of the

Textile sector.

Next to China, India is the second largest textile market in the world. Realizing the importance of this sector, the Government of India has initiated schemes like Technology Mission on Cotton (TMC), Technology Upgradation Fund Scheme (TUFS), Scheme for Integrated Textile Parks (SITP), rationalized duty structure etc. It is heartening to note that the Government is committed to implement these measures thoroughly, in order to

give a fillip to this industry.

Stimulus package introduced by the Government,declining inflation and interest rates, one year moratorium granted to textile mills for the repayment of term loans, favorable foreign exchange rate situation gives hope for recovery in this sector, in the near future.

Machine Tool Division 

Turnover of the Machine Tool Division during the year under review was Rs.733.148 Millions as against Rs. 1247.893 Millions recorded during the last year.

Machine Tool Industry is yet another industry which is worst affected by the global economic slow down. Failure of auto majors in the US and Europe has played havoc on the auto component and auto ancillary industry in India. Consequently the Machine Tool industry which is dependent on the engineering, auto and auto ancillary industries were as well affected by demand recession. Besides, this sector is facing a severe competition from the high technology Machine Tool manufacturers based in Japan and Germany.

To face the competition from international players the Company has taken steps to strengthen the product range with high value products, took measures to improve product support including application engineering and tool design. New VMCs developed during 2008-09 are going to be commercialized during the year 2009-10. The new HMC machine developed and exhibited in the IMTEX 2009 has received a good response. R AND D work is tuned up towards the development of new variants of VMCs' and HMCs' with the help of domestic and imported technology.

Foundry Division 

Foundry Division has achieved a turnover of Rs. 847.237 Millions as against Rs. 729.522 Millions recorded during the previous year showing a marginal increase over the previous year. About 47% of the turnover amounting to Rs. 394.034 Millions is from exports made to countries like USA, Germany, Spain, Finland and Canada.

Despite all round economic slow down, the high precision heavy castings manufactured by the Company attracts good demand from Indian and international customers. In order to cater to the increased demand, the Company has augmented the capacity of this division considerably. Implementation of world class manufacturing technology, creation of facilities for value addition by machining of heavy castings would take

this division to new heights.

This division manufactures turbine parts for advanced low emission engines, critical traction motor housings, marine transmission housings, power transmission, wind mills, transport infrastructure etc., which are all having a recurring demand.

Augmentation of Renewable Energy Resources occupies the centre space in the Company's long term investment planning. The Company's contribution to develop inexhaustible sources of clean energy will definitely contribute towards global battle against climate change.

During the year, the Company has installed 6 numbers of 250 KW wind energy generators. So far the Company has installed 23 numbers of wind energy generators with a total installed capacity of 27.95 MW. During the year, this division has generated 623 lakh units of wind energy as against 567 lakh units generated during 2007-08.

The wind power generated by the Company meets a major portion of its power requirements and thereby brings about appreciable savings in the energy bill of the Company.

Exports 

During the year, the Company has achieved an export turnover as indicated below:

a. Textile Machinery - Rs. 577.566 Millions (previous year Rs. 901.913 Millions).

b. Castings - Rs. 394.034 Millions (previous year Rs.393.032 Millions).

c. Total - Rs. 971.599 Millions (previous year Rs. 1294.945 Millions).

The countries of export include Bangladesh, USA, Germany, Kenya, Vietnam, Indonesia, Thailand etc. Subsequent weakening of the Indian Rupee against major currencies of the world and the stimulus packages introduced by various countries to kick start their domestic economies is expected to bring in more export orders.

RESEARCH AND DEVELOPMENT:

The Company has a vibrant R AND D infrastructure set up separately for the Textile Machinery Division and the Machine Tool Division. Customer focused research is being carried out to provide value for money. R AND D is also tuned to track emerging trends in technology and adapt them suitably to enhance the competitive strength of the customers. It is the continuous endeavor of the R AND D to develop user friendly, cost effective, state of the art

machinery. World class infrastructure facilities have been provided to this department. For testing the new Textile Machinery in a mill working environment a new Pilot Mill with 8,000 spindles capacity has been established.

AWARDS:

During the year the Company has received the 'Star Performer-Large Enterprise' Regional Award for the year 2006-07 from the Engineering Export Promotion Council.

The Company has been inducted into the prestigious Hall of Fame in the Asia Pacific region and awarded with a Steuben Crystal Rising Star in appreciation of the efforts in implementing and successfully running the Balanced Score Card Tool. The award was presented to the Company by Dr Robert S Kaplan. The Balanced Score Card is a Performance Management Tool.

The Company has also received the 'ICWAI National Award for Excellence in Cost Management-2008' under the category of private manufacturing organization (Large) from the Institute of Cost and Works Accountants of India.

INDUSTRIAL RELATIONS:

The relationship with the employees was cordial throughout the year.

JOINT VENTURE: RIETER-LMW MACHINERY LIMITED:

During the year, the Company recorded a turnover of Rs. 926.300 Millions (Rs. 1445.800 Millions during 2007-08). The reduction in turnover is mainly on account of poor off-take of machinery globally.

SUBSIDIARY: LMW TEXTILE MACHINERY (SUZHOU) COMPANY LIMITED:

The Company has incorporated LMW Textile Machinery (Suzhou) Co Limited, a wholly owned subsidiary, with a registered capital of USD 12.50 million to establish a green field project in China for the manufacture of Textile Spinning Machinery at an estimated cost of USD 29 million. The project is situated in the Wujiang Economic Zone, Jiangsu Province in the Peoples' Republic of China. This Company has taken a ready built factory premises with water and electricity connections on a long term lease. Erection of machinery, provision of other infrastructure facilities is under progress. The company is expected to commence commercial production during last quarter of 2009.

MANAGEMENT DISCUSSION AND ANALYSIS:

Economy Overview:

The world economy is in a recession mode. Economic meltdown has happened mainly on the weight of the Toxic Assets of the Western Financial Institutions. Toxic Assets are but credit extended through exotic financial products that became non-recoverable later. The impact of big financial institutions becoming bankrupt or seeking financial restructure has been so huge that it has completely drained off credit driven liquidity hitherto

freely available. On a parallel, nose-diving stock markets have wiped off investor portfolio values by the millions if not by the billions.

Lack of credit and loss of wealth has meant slackening demand for products and services in the Western Markets thereby plunging a number of export driven economies around the world directly into recession. The repercussions of consumer demand driven boom collapsing around the world has also reached India. However, prudent policies and actions by the Reserve Bank of India and the Government have ensured a minimum fallout impact.

Nevertheless, for the past three to four years, Indian Industry has been adding up to installed capacity in anticipation of increased demand. Now all of that capacity may have to remain dormant in the near future. On the positive side, Indian Industries mainly rely on domestic demand rather than export driven demand. This means that once the negative credit sentiment and infrastructure shortage scenario improves, the Indian economy will start throwing up positive numbers. The rules of the game until then would be to sustain and capitalize on the next best opportunity arising.

Segment Review:

The Company has three major divisions namely, the Textile Machinery Division (TMD), the Machine Tool Division (MTD) and the Foundry Division (Foundry). All the divisions are located in and around Coimbatore City, Tamil Nadu, India.

Textile Machinery Division:

Industry Overview:

The Indian Textile industry accounts for 20% of the total Industrial Production in India, enables 8% of the total excise collections, provides for 18% of the total Industrial employment, makes up 4% of Indian GDP and contributes nearly 20% to country's total exports. The Textile Machinery Industry is also the largest segment of the Indian Capital Goods Industry.

With the Indian Spinning industry investing on an average more than Rs. 35000.000 Millions India has the second largest installed spindle capacity in the world.

Globalization of markets and the dispensation of quota system since 2005 had brought about a great fortune upswing to the Indian Textile sector. However, recent developments in the global economic conditions coupled with domestic issues like rising commodity and other input costs, power shortages, high interest rates and a weak demand for apparel/clothing are pushing the textile sector to the corner.

The stimulus package announced by the US and European Governments to kick start their economies and the steps taken by the Indian Government is expected to reverse sentiments and bring about cheer to industry in the days to come.

Outlook:

The outlook for the Textile Machinery Industry depends upon the recovery of the Global Economy; improved export outlook; and mainly the increased capital investment activity in the Indian Textile Industry. Already positive signs are seen towards anticipated demand increase. The automatic capacity correction that took place in the Spinning sector and the favorable exchange value of the Indian Rupee vis-a-vis US Dollar in recent times has started to bring about a good price realization for yarn. This situation is expected to improve further.

Machine Tool Division:

Industry overview:

Machine Tool Industry serves as the back bone for the entire Industrial Engineering activity. Over the progress of the last four decades the Indian Machine Tool Industry has established a sound manufacturing base. There are

about 125 Machine Tool manufacturers in the organized sector and about 300 manufacturers in the unorganized small and medium sector. Still yet, about 70% of the High end Machine Tool needs in India is met through imports from Japan and Germany.

India has a very dynamic presence in the global Auto Industry. Today, for many auto manufacturers India is an important hub in the Asia Pacific region, as the country offers the twin benefits of quality at a low cost. Development of auto industry has also meant development of Auto Ancillary industries. Growth of Auto industry has been a natural boon for the growth of the Indian Machine Tool Industry. Recent global economic slow down has been very harsh on the Auto Industry and as a consequence the Indian Machine Tool industry is also facing a downturn.

MTD Segment performance:

This division had sold 402 numbers of machines for a total value of Rs. 733,148,249 during the year.

Outlook:

Signs of revival in the Auto and Engineering industries are seen. The new and improved variants of the CNC machines, HMC and VMC introduced by this division are expected to bring in more orders for this division. The performance of this division will improve based on economic upswing.

Foundry Division:

Industry overview:

Indian Foundry Industry is the second largest in the world next to China. It consists of about 6500 foundries most of them in the small and medium sector. Global economic slow down has not affected the manufacturers of high precision heavy castings, however small players in this field contributing to the auto component sector are severely affected by the slow down.

Foundry Segment performance:

This division has sold 7,257 MT of ductile iron and grey iron castings valued at Rs. 847,237,286 during the year Organization Risk Assessment Matrix: . Out of the total castings sold about 47% accounting

for Rs. 394,033,990 was exported.

Outlook:

The products of this division are well received in the domestic and international markets. Capacity addition, commissioning of Medium Frequency Induction Furnace, establishment of Machine Shop for machining of Heavy Castings, operation of Thermal Reclamation plant and adaptation of world class manufacturing technology will enable this division to perform well during the current financial year 2009-10.

CONTINGENT LIABILITIES:

Particulars	31.03.2009 Rs. In Millions
Letters of credit	143.139
Bank Guarantee	125.329
Central Excise Demand	25.054

Disputed Tax due are appealed before concerned appellate authorities. The company is advised that the cases are likely to be disposed off in favour of the company.

The company is in trade terms with:

Ø Associated Autotex Ancillaries Private Limited

Ø Beekay Industries

Ø Bhavani Enterprises

Ø Craftsman Automation Private Limited

Ø Hi Tech Plastics

Ø Kentex Control Systems

Ø Mikrosen Control Devices Private Limited

Ø Micro Instruments Limited

Ø Plastimerzs

Ø Plasto Plast

Ø Precimetcut Toolings Private Limited

Ø Sangeeth Machine Works

Ø Standard Hard Chrome Works

Ø Emtycee Tubes and Steels Private Limited

Ø EPMP Fibre Industries

Ø Moldwell Products

Ø Sri Narayana Electro Plating Works

Ø Sri Lanka Lakshmi Narayana Plastics

Ø Sri Balaji Industries

Ø Precision Engineering Products

FIXED ASSETS

• Land
• Buildings
• Machinery
• Furniture and Equipments
• Vehicles

AS PER WEBSITE

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 31ST DECEMBER 2009

(Rs. In Millions)

Particulars	3 months ended 31/12/2009 (Unaudited)	Corresponding 3 months ended in the previous 31/12/2008 (Unaudited)	Year to date figures for current period ended 31/12/2009 (Unaudited)	Year to date figures for Previous period ended 31/12/2008 (Unaudited)	Previous Accounting Year ended 31/03/2009 (Audited)
a. Net Sales / Income from operation	3279.090	2563.342	7830.118	11572.301	13380.139
b. Other Operating Income	82.649	115.043	238.796	298.353	361.305
Total Income	3361.739	2678.385	8068.914	11870.654	13741.444
Expenditure
a. (Increase) / decrease in Stock in trade and Work in progress	[13.671]	181.543	31.339	122.925	191.374
b. Consumption of raw materials	1762.769	1286.291	4370.904	6584.243	7624.180
c. Employee Cost	343.289	253.647	890.654	937.492	1197.919
d. Depreciation	279.776	343.400	682.027	992.764	1176.173
d. Depreciation	635.350	597.797	1371.246	2091.566	2555.004
f. Total Expenditure	3021.183	2662.678	7346.170	10728.990	12744.650
Profit from operations before other income,interest and exceptional items	340.555	15.707	722.744	1141.664	996.794
Other Income	100.810	189.379	387.290	376.8930	544.916
Profit before Interest and exceptional items(3+4)	441.365	205.086	1110.034	1518.557	1541.710
Interest	0.000	0.000	0.000	0.000	0.000
Profit after Interest but before exceptional items(5-6)	441.365	205.086	1110.034	1518.557	1541.710
Exceptional Items	0.000	0.000	0.000	0.000	0.000
Profit/Loss from Ordinary activities before tax	441.365	205.086	1110.034	1518.557	1541.710
Provision for taxation - Current Tax	190.000	168.200	460.000	560.000	520.166
- Deferred Tax	[40.000]	[100.600]	[90.000]	[40.000]	[3.600]
- Fringe Benefit Tax	0.000	4.500	0.000	9.500	11.784
- Prior year taxes	0.000	0.000	0.000	0.000	[55.989]
Net Profit/Loss from Ordinary activities after tax	291.365	132.986	740.034	989.057	1069.349
Extraordinary items(net of tax expense)	0.000	0.000	0.000	0.000	0.000
Net Profit/Loss for the period	291.365	132.986	740.034	989.057	1069.349
Paid up equity share capital (Face value of Rs.10)	136.693	123.693	126.393	126.393	126.393
Reserves excluding Revaluation Reserves as per balance sheet of previous accounting year	--	--	--	--	8303.574
Earnings Per share (EPS)
a. Basic and diluted EPS before extraordinary items for the period, for the year to date and for the previous year (Rs.) (Not annualised)	23.56	10.75	59.83	79.96	86.45
b. Basic and diluted EPS after extraordinary items for theperiod, for the year to date and for the previous year (Rs.) (Not annualised)	23.56	10.75	59.83	79.96	86.45
Public shareholding
- Number of shares	9176042	9176042	9176042	9176042	9176042
- Percentage of shareholding	74.18	74.18	74.18	74.18	74.18
Promoters and promoter group shareholding
a) Pledged / Encumbered
- Number of shares	--	--	--	--	--
- Percentage of shares (as a % of the total shareholding of promotor and promotor group)	--	--	--	--	--
- Percentage of shares (as a % of the total share capitalof the company)	--	--	--	--	--
b)Non-encumbered
- Number of shares	3193208	3193208	3193208	3193208	3193208
- Percentage of shares (as a % of the total shareholding of promotor and promotor group)	100	100	100	100	100
- Percentage of shares (as a % of the total share capital of the company)	25.82	25.82	25.82	25.82	25.82

1 The above results were reviewed by the Audit Committee and approved by the Board of Directors at their meeting held on 25th January, 2010. Statutory Auditors have carried out limited review of the above results.

2 No Investors' complaints were pending as on 01.10.2009. Seven complaints were received during the period from 01.10.2009to 31.12.2009 and were adequately addressed and no complaint is pending unresolved as on 31.12.2009.

3 The Company proposed to start Advanced Technology Centre for manufacture of Components/Parts required in the field of Aerospace and Defence.

4 Figures of the previous year /quarter have been regrouped /rearranged wherever necessary.

SEGMENT WISE REVENUE, RESULT AND CAPITAL EMPLOYED FOR THE QUARTER ENDED 31^ST DECEMBER 2009

(Rs. In Millions)

Particulars	3 months ended 31/12/2009 (Unaudited)	Corresponding 3 months ended in the previous 31/12/2008 (Unaudited)	Year to date figures for current period ended 31/12/2009 (Unaudited)	Year to date figures for Previous period ended 31/12/2008 (Unaudited)	Previous Accounting Year ended 31/03/2009 (Audited)
Segment Revenue
a )Textile Machinery Division	2909.650	2330.633	6901.180	10645.473	12167.446
b ) Machine Tool and Foundry Divisions	465.233	374.801	1199.315	1287.489	1648.834
Total	3374.833	2705.434	8100.495	11932.962	13816.280
Less : Inter-segment revenue	13.144	27.049	31.581	62.308	74.836
Net Sales/Income from Operations	3361.739	2678.385	8068.914	11870.654	13741.444
Segment Results
(Profit/Loss before Interest and tax)
a )Textile Machinery Division	324.044	64.949	707.667	1203.998	1055.429
b ) Machine Tool and Foundry Divisions	56.494	15.538	85.161	69.020	35.447
Total	380.538	80.487	792.828	1273.018	1090.876
Add : Other un-allocable income net of Un allocable expenditure	74.498	124.599	317.206	245.539	450.834
Total Profit Before Tax	455.036	205.086	1110.034	1518.557	1541.710

Profile

Subject founded in the year 1962, is today a global player and one among the three manufacturers of the entire range of Textile Machinery.

History stands as a documented proof of LMW's Corporate and Financial success reflecting phenomenal growth since first year of operations. LMW has 60% market share in the domestic Textile Spinning Machinery Industry.

Subject diversified into CNC Machine Tools and is a brand leader in manufacturing customized products. LMW Foundry makes Precision Castings for industries the world over. The only company in Asia outside Europe to manufacture OE products for Mikron of Switzerland.

Subject’s Global presence has grown over the years, with a market presence not only in developing countries, but also in Europe. LMW has won the Top Export Award in textile machine exports for the past seven years.

Environmental Policy

Subject is committed to the protection of environment and conservation on of natural resources, as a “Service to the Future Generations”.

Subject shall strive to achieve Environmental Excellence through:

1. Compliance with applicable legislative and other requirements and go beyond compliance to good practices on environmental management
2. Periodic reviews of its environmental performance and minimizing the environmental impacts, while achieving its business objectives
3. Protection of air, water, land and biodiversity and engaging with the community and business associates on environmental issues of mutual interest
4. Waste minimization, energy conservation and recycle and reuse of resources like water and sand

Provision of management tools, awareness and training to employees for continual improvement in its overall environmental performance

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.49.53
UK Pound	1	Rs.77.94
Euro	1	Rs.64.65

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	7
PAID-UP CAPITAL	1~10	9
OPERATING SCALE	1~10	9
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	9
--LIQUIDITY	1~10	9
--LEVERAGE	1~10	8
--RESERVES	1~10	9
--CREDIT LINES	1~10	9
--MARGINS	-5~5	--
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		78

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.