CHAPTER III PROFILE OF THE COMPANY

INDUSTRY OVERVIEW Indian Textile Industry is a major contributor towards the countrys economic growth and foreign trade. Infact the importance of Textiles within the Indian Economy stands next only to Agriculture. Also, the Indian Textile Industry occupies a unique position of being a totally self-reliant industry across the value chain, right from raw-materials to the finished goods. It is notable that significant value addition happens at every stage. Indian Textile Industry is comprised of 1,834 big spinning mills, 1,249 small scale spinning mills 184 exclusive weaving mills, 5 lakh power loom units and about one lakh handloom units. Abolition of trade restrictions and the easing of MultiFibre Agreement (MFA) since January 2005 has enabled the Indian manufacturers to export without any quantitative restrictions across the globe. This has enabled sizeable growth in Indian Textile Industry across the value chain. India has about 24% of the worlds installed spindleage and is one of the biggest exporters of yarn.

According to the National Fibre Policy Report, India requires substantial capital expenditure during the period 2011-20 to keep up with the expected demand. In this scenario, any extension of the TUF Scheme during the XII Plan Period (2012-17) will immensely benefit the Indian Textile Industry PROSPECTS Expected extension of the TUF Scheme assistance during the XII Plan Period will serve as a catalyst for further growth in the Indian Textile Industry. Efforts of the Government to facilitate 100% foreign direct investment in textiles/retail sector. Establishment of apparel park/special textile parks/textile clusters. The proposed modernisation of NTC mills alongwith the fact that overall a major portion of the 40 million working spindles in the country need replacement/ modernisation. The products of your Company are continuously upgraded in technology and are also cost effective. This makes your Company a preferred partner of choice for the Textile Spinning Mills.

Experience gained over five decades; world class manufacturing facilities and a committed work force with specialized skill sets are the strength of your Company which enables your Company to grab any challenging opportunity.

CHALLENGES Reduced operating margins due to increasing commodity prices, power and labour cost. Delay in disbursement of TUF benefits and high cost of funds for textile mills. Unstable government policy on cotton and yarn exports and withdrawal of export incentives. Increased competition from multinational companies.

OUTLOOK Motivated by the depreciating rupee, exporters plan further expansion of capacity. Effective monetary measures taken by the RBI alongwith the prediction of a near normal monsoon is expected stimulate domestic consumption. On the other hand, the global economic slowdown seems to have little or no impact on the capex plans of well established integrated

textile mills, as they are aware that investment in contemporary technology is necessary to meet their customers cost and quality requirements. PROFILE LMW, 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. LMW 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. LMW'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. Credentials

ISO 14001: 2004 & OHSAS: 18001:2007 certified for the following companies : LMW TMD Unit 1,2 & 3 LMW Fdy Unit 1 & 2 LMW MTD

ISO 14001: 2004 & OHSAS: 18001:2007 policy

Quality Policy To establish global presence in spinning systems by providing Quality services and state of the art machinery that enhance value and customer satisfaction through company-wide efforts in continual improvement of People, Systems, Processes, Technology and Practices. Environmental Policy LMW is committed to incorporate, continuously review and protect overall Environmental, Occupational Helath & Safety(EOHS) considerations as a "Service to Future Generations." LMW shall achieve EOHS commitments by :

Complying with applicable legal and other requirements.

Working towards environmental sustainability and enrichment of biodiversity by controlling air, water and land pollution.

Reducing the volume of consumption of resources such as water, paper, hardware and other consumables.

Encouraging 'Green Procurement Practices' to the maximum extent possible and promoting the 'Reduce/Teuse/Recycle' principle for all types of wastes.

Valuing health, safety and environment issues of employees, clients, suppliers and local communities. Providing safe working conditions to all its employees and promote an environment friendly atmosphere.

Initiating, observing and reviewing objectives on a constant basis to improve EOHS practices/performance and its management system.

Imparting training to its employees to work safely and to practice sound environmental, health and safety practices. To accomplish these objectives, LMW will provide adequate resources.

VISION To enhance customer satisfaction and our image globally and achieve exponential growth to leadership through world class products and service. MISSION

To deliver greater value to our customers by providing complete competitive solutions through technological leadership and manufacturing excellence that are responsive to dynamic market needs. VALUES Excellence Integrity Learning and sharing Contribution to industry and society

TEXTILE MACHINERY DIVISION Lakshmi Machine Works Limited, a leading Textile Machinery Manufacturer in India and one among the three in the world to produce the entire range of Spinning Machinery. In 1962, LMW was founded to provide the Indian Textile Mills with the latest Spinning Technology. It caters to the domestic market as well as Exports the products to Asian and Oceanic regions.

Products Lakshmi Machine Works Ltd., has been consistently at the forefront of technological advancements in textile machinery. Over a period of time, the company has gained a worldwide reputation for its state-of-the-art technology and high quality standards. LMW has a major role as a totally integrated spinning system manufacturer. One can be assured of the unique LMW brand excellence on every product.

Components Spinning machines from LMW contributes to a large extent in keeping production costs down and quality standards up. When it comes to replacement of parts it makes all the more sense to source original spare parts from LMW to optimize machine reliability, ensure quality and performance more importantly to ensure accurate interaction with other machinery parts. In short what you get is real value for money.

Key components exclusive to spinning systems are manufactured in separate business units at LMW. These independent business units with modern manufacturing facilities and high production, follow stringent quality control. EXPORTS Exports of the textile machinery amounted to FOB value of Rs.30.88 crores during the period under review. This is a new high for the company. The company has been recognized by the Govt. of India as an Export House and during 1988, the company received the following export awards : 1. Top Export Award under the category Machinery Section for 1987-88 (All India level) from the Textile Machinery Manufacturers Association, Bombay. This award has been

received by the company for the second time in succession. 2. Export Excellence for 1987-88 (All India level by Engineering Export promotion council. RESEARCH AND DEVELOPMENT

Fully aware that the Research & Development (R & D) is a source of great strength, the company is making all efforts for technical upgradation in respect of the machine development. During the period under review, the company has spend a sum of Rs.123.13 lakhs towards Research and Development activities. A number of projects of industrial improvements were taken up, including sponsored projects by different polyester manufacturers to determine the optimum spinning performance and quality of yarns spun from their fibres and blends on the companys open and spinning system. On the machinery development of import substitution, good progress has been made. MACHINE TOOL DIVISION Lakshmi Machine Works Limited, founded in 1962, is today one of the three in the world, who manufacture the complete range of textile spinning machinery. During 1988, LMW added to their formidable manufacturing resources, a new plant to produce CNC Machine Tools in technical collaboration with M/s. Mori Seiki Co.Ltd., of Japan. A plant that is one of its kind in India. A state-of-art foundry was added to the facility during 1993.

Necessary infrastructure facilities for this Division with latest machine tools and testing facilities have been created. The manufacturing activities have commenced, and the contribution by the division will accrue during the current year onwards. Today LMW is the only company in the country and one amongst a select few companies in the world, manufacturing the entire range of spinning machinery. Products Horizontal Lathes & Chuckers Turnmill Centres Vertical Lathes Vertical Machining Centers Moving Column Vertical Machining Centres Horizontal Machining Center PRODUCT DEVELOPMENT The company has a well organized Design Department with competent and dynamic engineers, some of whom were sent abroad to acquire special knowledge in the design of spinning machines. The

department is constantly striving to improve on the various components for better productivity at the mills and reduced costs. It successfully introduced in the market in 1976, a new model Do/25 High Speed Draw Frame which gives 20% more production than the earlier model Do/2B. Thanks to the encouraging response, the Department launched a number of projects to improve the current range of products, a few of which have already passed the design stage. LMW has today more customers at home and abroad, who have repeatedly sought its products. On its part, the Company considers customer satisfaction as a prime objective. JOINT VENTURE MAURITIUS The company has received the requisites approvals from the Govt. Of India and Reserve Bank of India for its proposal to have a joint venture in Mauritius with two other Indian promoters for establishing a textile mill in the name of Jayalakshmi Textile (Mauritius) Limited to manufacture and marketing of cotton and blended yarn. Effective steps for implementing the project. WORKS

The works consist of three main divisions viz., the foundry, the Machine shop and the Assembly well supported by the plant engineering division and other service departments. FOUNDARY DIVISION LMW Foundry Division manufactures Ductile Iron and Grey Iron Castings to demanding specifications in their state-of-the-art Nobake Foundry. Internationally renowned companies have chosen us for procurement of critical castings. Our foundry has facilities for supplying machined and value added castings for various applications. LMWs Foundry, which manufactures various grades of grey iron castings, is one of the most modern and highly machanised in the country. It was designed and erected in collaboration with Fried Krupp Industribu of West Germany and Rieter in 1968. It is equipped with induction furnaces, cold blast cupolas, heavy moulding machines, mould transfer systems, fully mechanized sand control plants, core shooters and shot-blasting machines. A modern pattern shop and a well equipped Metallurgical Laboratory support the production. The foundry can manufacture machine moulds upto a box size of 2250 x 1600 x 350mm. Castings upto a unit weight 600 Kg. can be manufactured on a mass scale. The facilities available also permit

manufacture o bigger and heavier castings, but on a limited scale. The capacity of the foundry is 6000 tonnes of good castings per year. The quality of the castings is to international standards. In the words of a world bank team, which visited the company in 1975. Quality of the castings is very nearly equal to European best. Apart from meeting the companys requirements, the Foundry has also been supplying intricate castings to select industries in India and abroad. PRODUCTS Ductile Iron Castings Windmill Castings Locomotive Castings Marine Transmission Castings Traction Motor Castings Railway Undercarriage Parts Traction Gearbox Housings

Grey Iron Castings Engine Castings Turbo Charger Castings

Pressure Tight Parts Hydraulic Transmission Parts Heavy Pump Castings

ADVANCED TECHNOLOGY CENTRE (ATC) "Advanced Technology Centre "- is a one stop Solution to the customer. In terms of infrastructure and capability, ATC has world class facilities and machines in place like CNC Lathes, VTLs, CNC Turn Mill Centre, CNC Machining Centres (Multi axes & Multi face), Sheet Metal fabrication and special processes with surface treatment, heat treatment & NDT facilities with NAS410 Level III certified In-house Inspector. In terms of Quality Assurance, we are aligned to AS9100 Rev C certified Organization & working towards the NADCAP for special process like chemical process, NDT and Heat treatment. ATC has tied up the projects with major OEM`s in US & Europe and various division of Hindustan Aeronautics Limited. Embracing of world class manufacturing technology & customer dedicated cell concept for potential business, focussed approach on the

OEM`s which gives an edge over to quickly enhance the capacity & technology, in terms of future growth potential.

Products & Services Engine, Structural and Landing gear Sub system and assembly. Structural Parts Aero structure components - Brackets, Stiffeners, Frames, Fairings, wings, ribs, fuselage, etc., Precision Machining Aero engine components Casings, Blisks, shafts, housings, stators, NGV, Pump housing Bushing, Sleeves and sub-assy. LRU`s Gear Boxes, Actuators, Landing gears

Sheet Metal Fabrications Aero engine sheet metal components Assemblies & Fabrications, Seal Segments, Rings Heat Shields, Vane Inserts, Cover Plates, Springs, etc.

MACHINE SHOP

The machine shop has a wide variety of imported and indigenous machine tools. Out of a total of about 500 machine tools, 30% were

imported from West Germany, Switzerland, England and France. Most of the machine tools are general purpose machines to suit the requirements of small-batch production. With the increase in the volume of certain products, special purpose machines are now being introduced in some areas. As the components for textile machinery require close dimensional tolerances and high quality surface finish sophisticated machine tools like production jig borers, centreless, cylindrical and surface grinding machines, heavy surface grinding machine, automatic lathes, gear cutting machines, plano-milling machines, programme controlled milling machines, Thread milling Machines etc. are employed. High frequency induction hardening with Radyne horizontal and Delapena vertical machines are also widely used. A modern tool room, equipped with high precision machine tools like SIP Hydroptic jig borer, Deckel tool room milling machine, Blohm surface grindr, studer profile grinder etc. lends support to the machine shop by manufacturing and reconditioning complex tools, jigs & fixtures and other accessories.

All the machine tools are well cared for in LMW through maintenance routines. The mechanical and Electrical Maintenance wings of the Plant Engineering Division employs over 160 skilled workmen and engineers to care for the machine tools. The company has also started reconditioning. Replacing the machine tools wherever necessary is done to keep up the quality of outputs and productivity. TRAINING CENTRE Any industry producing machines of specialisd nature requires skilled work-force. In order to meet this requirement, LMW has placed special emphasis on training. The Training Centre, set up in 1964 with the guidance of two swiss experts, provides training facilities in several fields. It has a wide range of machine tools from bench drilling to jig boring. Specialised training is also given in areas like tool making, machine reconditioning etc. There are many trainees undergoing training in various fields. There are different apprentice training schemes like short-term scheme (of one and two years duration for ex-ITI boys), full-term apprentice courses of 3 and 4 years duration etc. The company has trained, skilled workman duration etc. The company has

trained, skilled workman who are now employed in various departments of the company. The training centre also provides training to develop supervisory and managerial cadres. Towards this end there are programmes for engineering Diploma holders, Graduate Engineers and even post-graduate Engineers and MBAs. These trainees selected from various institution in India through mainly Campus Interviews and are given intensive training in different activities of the company for 2 years. These training are tailored to the individual needs and encourage their ability and institutive. The company also sponsors its engineers and workmen for special training in other industries and training centres in India. LMW deputes its employees abroad for advanced training in various areas like product design, tool design, production planning, production technology machine building and general management. Such visits by the employees have played a vital role in transfer of technology from the collaborators to the company. Engineers and workmen have been trained in Switzerland. On request by a number of organizations, the Training centre trained 8 trainees from abroad and 335 trainees from various organizations in India.

QUALITY CONTROL The well equipped metallurgical laboratory lands support to the quality control Department. The quality control Department is equipped with some of the best testing machines and inspection tools available in the world. In addition to the facilities for inspection of components, which includes special fixtures and pneumeti gauges, there is a guage room for periodical inspection of tools and gauges. There is a liaison officer from Rieter to assist in quality control, new projects and other activities. There are also monitoring control systems for the quality control Department itself through tool and guage inspection records and audit inspection.

DATA PROCESSING Many of the activities like inventory control, cost accounting, incentive calculations, payrool accounting, invoicing order processing etc. have already been mechanized. The LMW has a ICL 1004/D data processing systems to handle the vast amount of data. This Department provides vital management

information to assits decision making at various levels.

REMUNERATION OF EMPLOYEES AND OTHER FACILITIES When the company started manufacturing operations, it had only 323 employees. Today, the company employs around 5183 workmen and staff. In LMW, employees are paid well. An employee would earn a

minimum of Rs.500 per month which include besides basic wage, variable D.A. linked to cost of living index and average production incentive of Rs.40 for indirect workmen. Earnings of direct workmen through the The company also introduced an

incentive is about Rs.60 per month.

additional incentive scheme for the direct workmen in 1976, by which the workmen benefit, on an average to the tune of Rs.20 per month. The introduction of the incentive schemes has helped the highly efficient workmen to increase their earnings upto every by Rs.400 per month. The introduction of the incentive schemes has helped the highly efficient workman to increase their earnings upto even by Rs.400 per month. LMW also encourages its employees to give useful suggestions. These are

scrutinized by a committee and worth while suggestions are well rewarded. LMW is fully aware that good working conditions are spacious equally important. The spacious workshops are well lit and ventilated. Dust and fume extractors are provided in the foundry. Beautiful laid out gardens

in their ever green and colourful appearance all round the factory present a pleasant environment to work. All the employees are covered by a Group team insurance of the LIC. Under this scheme, on the death of any permanent employees while in service, the dependent will be paid 20 times his last monthly salary. The entire premium for the insurance scheme is being borne by the company.