Lakshmi Machine Works Ltd (LAXMIMACH) FY22 Earnings Concall Transcript

Lakshmi Machine Works Ltd  (NSE: LAXMIMACH) FY22 Earnings Concall dated Jul. 27, 2022

Corporate Participants:

Senthil —

Unidentified Speaker —

Analysts:

Unidentified Participant — — Analyst

Analyst — — Analyst

Presentation:

Operator

Ladies and gentlemen. Good day and welcome to Lakshmi Machine Works Limited Quarter one of fiscal year 2022-23 earnings call, hosted by as a reminder, please note that the participants lines will be in listen-only mode.

And there will be opportunity for questions after the belief by the company officials please note that this call is being recorded. This is Samir from NSDL. We have with us Mr. V Senthil, Chief Financial Officer and D Lakshmi, Senior General Manager of the Company. Over to you, sir.

Senthil —

Thank you. Good afternoon everyone and thank you for joining LMW’s Earnings Call for Q1. We will have a brief about the overall performance of the Company for the quarter, April to June 22. Followed by the interactive session. To begin with. Let me explain the overall performance of the Company.

Financial results have been posted on the Company’s website and hope had an opportunity to go through the same. I’m happy to share that the company actually the turnover of 955 crores. which is a 123% higher than the corresponding quarter June 21. Of course we should also realize that in June for the quarter ended June 21 there were COVID related lockdowns so perhaps it’s not directly comparable, this milestone was achieved amidst lot of challenges during this quarter. Which has been characterized around inflation in input material cost supply chain logistics issues and also a Forex being one of the key factors in the ForEx fluctuation is also impact on the geopolitical issues.

I think these were the main four characteristics of this particular quarter. Which has impacted us with the turnover of 955 crores expect towards the profit before exceptional items as 88 crores as against 11 crores in the corresponding quarter June 21 profit after after tax standard 67 crores as against 8 crores the corresponding quarter of last year.

We would like to move to segment wise results DMD segment revenue is 768 in for the quarter ended June 22 as against 307crores not certain groups these DMD segment results moved Aptose a profit of 66 crores in June, 22 as against a loss for the same period of last year. With respect to the order book we have an order book of both domestic and exports put together of close to 7,000 crores and we have seen that there has been an order flow even in the current quarter. So,that is good, and that’s a positive thing. With respect to the sales. What we clocked for the 768 crores around 60% is domestic 20% exports and 20% spares the split of that.

This quarter has been in terms of exports. This quarter it has been mainly two countries countries such as Turkey, Bangladesh and Vietnam. With respect to DMD. We are already running at full capacity during the quarter. And we have been able to, as you can see we have maintained the turnover in our effort is going into ensuring we are able to deliver as much as possible. And trying to keep our deliveries within reasonable time of between 12 to 18 months.

Those orders, which have been booked and it has been quite a challenge, like I said four reasons, which I mentioned before in terms of supply chain in terms of logistics in terms of the challenges geopolitical issues what we have. We see there has been a challenge, but we have been able to manage, quite well so far. Now, With respect to MTD and Forex have clocked a revenue of 231 crores as against 135 crores for the corresponding period of last year. The reserves, how the division is it has, it has registered a profit of 13 crores as against 8.8 crores of last year.

There has been a slight reduction in the turnover of MTD. As you can see from the numbers between quarter-on-quarter. And MT has also been quite significantly impacted in terms of the cost factors and mainly the Forex impacting it. That is the reason for the lower percentage and MTD. The turnover contribution remains constant and there has been the contribution has really supported well in support of what the internal demand of both entity MTD and T&D with respect to ATC the revenue standard 20 crores and there has been breakeven and profitability for the current quarter. We see that the demand has come back, there has been a lot of pull we always mentioned that is order execution. It’s only that the point where the customer has to ask for it and they have to deliver. So, it is good

Unidentified Speaker —

To see that we have been able to generate this much of sales because there has been good a pull in the system with respect to China we have blocked turnover of 58 crores and also it has been positive. It’s been a our margin of 10%, again, China. This quarter they had lot of challenges there was a lockdown completely in the month of April, almost a month and 4 to 5 weeks, there was a complete lockdown in China. So, there were challenges around that, but we have been able to overcome by planning a little bit better by selling the materials over there before the lockdown came in and also we were able to work just after the lockdown immediately and the numbers are there for you to see with respect to L&W Middle East absolutely.

In UAE. We are happy to note that we have been able to do our first billing. In the last week of June 21.05 crores and of course, there was a slight loss because of the opening initial expenses, which we have booked, but otherwise we have started operations in a very short time in level of the Middle East. Please note, I would like to start impact decision back to the moderator thank you.

Operator

Thank you so much Sir. Now I would request the attendees to please raise hands if you like to ask questions. After the communication of your name and unmute status the moderator. That would be me. You may go ahead with your question. The people who would like to ask questions. I would request them to please raise their hands that open to ask questions This is the participants that we have you can raise your hand. So that is visible people in the panelists including me and then we can have your question.

The first was, it was supposed to be. Mr. Dikshit but he is not in the attendee list yet. So going ahead. The rest of the people. If you have any question, we can have your hands raised once you do that, we can unmute you and you can go ahead with your question. With the legal As of now, we do not have any hands raised from the participants.

Unidentified Participant — — Analyst

Mortgages, can you help me was that please.

Operator

Now they can raise the hands sorry it was visible before it was this thank. Okay. It was now enable airport. Perfect Thank you, the host rates back to me or will you be able to shift them to the panelists. The first question we have here is Mr. Manish Goyal.

Analyst — — Analyst

Yeah. Can you hear me now.

Unidentified Participant — — Analyst

Mr. Manish. Yes, you have been muted, you can ask the question with the video turned on if you like you’re audible.

Unidentified Speaker —

Yes. Mr. Manish you are audible. how are you?

Analyst — — Analyst

Good, Thank you so much sir.

Unidentified Speaker —

Please go ahead.

Analyst — — Analyst

This just on the R&D Day DMD division. If you can repeat that and also if you can please provide us with the absolute number of spare parts for FY’22, because this time because we seeing in the Annual report and also if you can. thirrd question, if you can give us a perspective on the DMD margins. How are we looking at going forward in last call, we had mentioned that the large price hike. We have taken in December, 21. we were expecting margins to improve from quarter 2 and even am duty also we’re expecting the same. So, if you can give us a perspective on that aspect.

Unidentified Speaker —

Okay. I think the percentage I mean the full-year numbers the extent division for last year was 2,316 crores, 25% of that is a space that’s the number for FY’22 with respect to the TMT margins. Yes, I think take TMT margins question first then I will go to the MTD margins margins. We did revise the price in December 21 we said that if I am fully impact of that resolution would come Q2 and we still stand by that we expect that, when the full price one also because as you know, 50% of it is on the domestic the full price impact of it should we were incremental margin of around 2%, that’s what we should anticipate once the full margin impact comes in.

However, for MTD. We did a price revision in May 21 of course, sorry, May 1, 22 we did a price revision. The impact of that would also be in Q2. And we anticipate based on the existing numbers as it goes, we should have an impact of around 2.05%. The bottom line. That’s the number is what we anticipate from price. We, as we speak for the current in the month of July. We did also have have adjusted again, marginally registered space because we seen that there has been a consistent increase in cost by the steel prices have come down post May 24 because of all the reasons, which I mentioned before the cost pressure on material is still there. Availability is a challenge.

Logistics costs have not come down so, considering all these things there has an electrical Electronic costs are also quite high. So considering these factors we have made a correction of spares we maintain last and what I said, we are reviewing the cost on a constant basis on a monthly basis. We see what the impact is and then we will take corrective action as and when necessary. That’s, that is what it is. And as you can. As you can see the latest thing is electricity costs. Our plan being to go up. So, all those cost impact will need to come. So, we will keep a constant eye on this as we go forward.

Operator

Thank you so much, sir. Next person we have is Mr. Devansh. you have been unmuted and you can also now turn on your video and go ahead with your question.

Analyst — — Analyst

Yeah. Moving to slide just depression. So just a couple of questions. So what is our disappointment — until the order book seems to have growth. So look, if you can just comment on the customer behavior in all things are shaping up our customers some sulfur into.

Unidentified Speaker —

Okay. You said two questions. Mr.Devansh.And, Second one.

Analyst — — Analyst

Okay, And also if you could just elaborate market and movment — when,that has been shaping up over the last few years. The company does have been performing. If you Can elaborate on our new launches a bit more on pricing both the projects.

Unidentified Speaker —

Okay. Yes, I think, like I mentioned in the initial when we say which I spoke, we have been able to throughout the quarter, being able to have an order inflow, which is same a little bit higher than what our execution wise and all the, and that’s a good sign. Now The market scenario. Yes, there been challenges as we can as we see that the cotton prices is a challenge. The capacity utilization. The export of yarn, there are challenges our stand basically.

Yes. CapEx business so whilst we can expect new cotton yarn took our cotton crop to come to the market in the next couple of months. When the customer is ready with the building and the loan and there is also lead time for us to deliver we are able to and the customer demand is still there. And yes, there is shuffling which happened. So, when I see it’s a shuffling some customers who are in line with say, okay, I want to differ. But then there are enough customers in the line who actually want the product getting in so we do not see CapEx business a challenge. However we do understand that there are certain in cases, especially in certain smaller mills there are some capacities, which are being shut for a shorter time period because of the demand being low, it has some slight impact on spares.

But from a CapEx point of view when they planned and everything. Just everything said they still require still require us to deliver the machines and get the machines and started so that’s where we are. So, I think it’s a Barstool thing that the order books out of order flow is still happening and this quarter also with respect to the market share of computers. I mean not getting into too many specifics. Definitely, yes. Everyone has, is in the same boat I mean the deliveries of ours. Like I said it stretches between 12 to 18 months depending on the type of product, depending on the projects depending on all those things

I think we should acknowledge that a universally the demand rather larger demand is still there and they all have extended deliveries as well. I think that’s fair Our push is still to ensure that the machines are getting supply as much as quickly as possible to the customers, I mean that is what we’re pushing for at the moment. And ensuring all our supply chains are robust and able to cater to date. That’s what we’re pushing for even today as well as Forrest extinguish dilution — is concerned.

Operator

Thank you so much sir. This was the question from Mr. Devansh the next person we have with this raised hand waiting with his question is Mr. Varun you have been unmuted so why don’t you can go ahead with your question.

Analyst — — Analyst

Good afternoon, sir. I am audible.

Unidentified Participant — — Analyst

Yes, you are audible. please go on.

Analyst — — Analyst

Good afternoon. First for congratulations on good performance in a digit market. My first question has to do with the which include division so as you see the order book is about 7,000 crores and the deliveries period is over 18 months. I’m just trying to understand how this would pan out because at about 800 close to 800 crores a quarter is where at full capacity and to dispatch 7,000 crores, 18 months would be something like 1100 crores, plus our understanding, right, is this a CapEx which is coming which means sort of fill the gap.

Unidentified Speaker —

Yeah, do you want to start next question.

Analyst — — Analyst

Yes, Sir. So, the second machine for division I understand last year we did close to 700 crores of revenue ex foundry, how much capacity is there or what kind of revenues can we do in this business. And is there any CapEx, which has been planned for this for this division.

Unidentified Speaker —

Okay. I think just to give you a breakdown of that 7,000 odd crores generally what, what happens is around 12% to 15% of this are really the world around us. Right. So, as you know with LMW when you place an order how old, it is the order stays line but it may not come up for execution. So we don’t call these labor orders so you perhaps had left with all 2,200 crores of non-live orders but there, which still there in the system, the balance are all for execution and they all new orders. We have come off last three quarters, four quarters with an excellent order book as what we have seen last year, But, sir. And what seen now more of the regular order books what we generally get to see that is where our execution and our order book kind of niche. Now, you absolutely right. When you talk about pulp 18 months. Deliveries. What we, what generally happens now as you can see in the current situation because of the cotton price the yarn exports and things like that. We believe generally who are in the lines these are on sequential orders right, they all sequenced out some of them may say that I want to take it up a little bit later. So that’s the way we are able to maintain that 12 to 18 month order book under absolutely right.

No customer would want to wait for 24 months for orders so the order book is there. And these are all backed by 100% money and these are the only things, which we’ve taken a taken as orders were 10% money is paid towards and these are all orders were 10% money is available. okay. Depending on the planning of the customer, whereas builders whereas credit availability is get sequenced and issue so we are positive. With respect to the order deliveries. Now the question basically is that going to increase capacities and the CapEx. Yes, there is CapEx there is CapEx plans and we always cap expense, the amount of capacities. I mean now amount of depreciation. What we have. That’s the CapEx we investing. We are planning that we have added LMW Middle East where which takes care of certain amount of production assembly assembly out of there, so that we are able to the current LMW because we don’t want everything coming into play. Then going out of Queensland –, so there are plans, and that’s what is this, where we are able to how in LMW Middle East this production with respect to the mission, CapEx itself. Yes. We mentioned last quarter and also the quarter before that we will be ordering the balancing CapEx and perhaps I’m repeating. But yes, generally we have enough capacities. But since this last one year.

The project orders have been quite a lot on the machines are getting shipped out. Right. So we might be indeed balancing capacity. So in certain types of machine we need some capacity so that those capacities are getting added as far as PMD is concerned no. With respect to Mission pool business. Absolutely. We have we already have capacities, where we can still go up by around 30% odd percent, compared to the turnover. What we have last year we increased our assembly footprint this year as we speak, we are increasing Again, we have invested around 30-odd crores in

Unidentified Speaker —

CapEx and further investing on the newbuilding. So the idea there is to actually expand our assembly capacity because assembly and of course the machining capacity MTD division because most of it has been bought out. It is important that we create assembly capacities and we create world-class world-class facilities, and that we are in the process of creating that we are positive that even if it is going to be the is even if we are able to do on a 30% to 50% we should be able to easily achieve that turnover basically the capacity is what we’re building.

Operator

Thank you so much. Thank you. Sir, going ahead with the next question, we have on the list with the raise hand we have Mr. Ritwik shape. So, you have been unmuted. You can also turn on your video. If you would like And we can have.

Analyst — — Analyst

Hi, can you hear me.

Unidentified Speaker —

Yes. Mr.Ritwik we can hear you. how are you.

Analyst — — Analyst

Yeah, hi, sir. Good afternoon, Sir two questions from my end. You mentioned earlier that we are expecting, price realization to picking from Q2 and so does that margin guidance also include some benefit from the commodity cost, which have already declined and my second question is on capital allocation and dividend payout. So, we have declared dividend of 40 rupees for fiber. This translates to our 25% of. So what does the Tarkwa, especially given the fact that we have about 1000 odd crores in the bank and we are generating very healthy cash flow. So you know, my 25% payout and previous before COVID we are paying out almost 100% of what has changed in the last two years COVID would be an exception. But not what is the thought process here. Just wanted to be covering on that.

Unidentified Speaker —

Yeah, I think your numbers this actually is a 400% dividend we on the profit, it is 25%. But in terms of percentage, it’s 400% last time meters 100% because you know how the year was last year and the year before. So it was a 100% payout, which is because it’s a tender share standard present payout, it was 10 rupees. But it is 40% because it’s part of the, but we do maintain a credit 25% payout ratio that, this is Bob. Point number one. I think with respect to margins, you know, we don’t give margin guidance guidance.

We don’t yeah. What are the strength on said basically was that yes, we did do a price represent and which is known. Andy, as you know, since we have expense policy, the impact of it and we have by price. For every mission, rolls out from a particular cut-off date. We need to be revised the prices even though is older audits. So that’s what I was think to M&A, I said that the full impact will come out in Q2. Apart from that with respect to the cost is this cost is going to get my margin going to go, because of the steel price increase as we price decrease. I think it is very difficult to tell. And that’s what I was just I was saying, foreign exchange business. There are three factors, one is the fact that we do import, a lot of electrical, and those electrical electronic items are becoming expensive as we speak and these things come from Europe.

Both the supply chain issues are there the logistics costs there and also the ForEx impact so I think all these three things are going to that’s happening on a daily basis. So, today we are somewhere around 70, 75 US dollars and secondly, with respect to Mexico business as well. We almost 60% of the COPD is based on important component side both electronics and also mechanical impacts so it could be challenging for us to give any guidance as to what would be the margin impact, because of steel price reduction in India. Hello. Know that may not be actually possible around this. So, I would say should — we are working towards it. We are taking, lot of calculated decisions. For example, in case of emission to when you know that there is a possibility for price increase of the electrical electronic. We are going ahead and covering six months multiple deliveries, so we are taking decisions to ensure this rapid change works well. And B, we are able to sell and not get control the cost, we are doing, we are doing that extensively and as you know, since we got a negative working capital where we have the ability to go cover long materials and that’s basically what we are doing as we speak, but very difficult to what has to give you guidance on margins.

Operator

Thank you so much, sir. Thank you. The next question that we have, with the hand raised is Alicia Sonali you have been unmuted. You can also turn on your video, if you like, and we can have your question.

Analyst — — Analyst

Hi, thank you for the opportunity. Am I audible. so a few extra companies have been talking about pushing our planned CapEx at least until the cotton yarn spread kind of balances out while continuing with the current capacity expansion plans are already underway. So my question is basically coming from the fact that you mentioned that normal Island order book around 10% to 15% is pertaining to older orders is this by any chance do we expect this trend 10% to 15% which is are we expecting any performance. Have you seen in your performance so far from any of our customers. And second question is, what kind of order inflows. We expect this, especially the kind of situation on the ground. This imbalance in crisis.

Unidentified Speaker —

Yeah. So, let me again explain older orders is something which we always carry, they now be active orders. Most of this order book almost 85% of your order book is an active order book, which means, these are all new orders and people who are actually wanting to expand and things like that. Do people deferred orders of course customers do different depending on what circumstances. They are in where do we see ordered depending we see order, if where customers have ordered, let us modernization facilities modernization CapEx where they’re ordering 10 15 machines, which the machines. Just to modernize an existing plant because of the current situation.

What they see they are able to defer the orders, but we project which constitute almost 65% of the order book, so basically these project orders where the customers are putting a complete new facilities where the investment in land and building done we loans loans have been there and also like I said, because there is a lead time for ordering lithium for installation whilst there are, there are cases where some customers will come back and said please hold on, but there are enough orders in the pipeline for us to execute.

That’s the reason you see between Q4 and even you can say Q3, Q4 and Q1. The consistency with the turnover. What is coming out there and I again mentioned also before that we are still planning to we are in the process, got better and higher turnover here and better deliveries because this is the right time, if there is someone who was who comes in the line and says, okay, don’t undertake division in these types of banker. The next person in the line. That’s how it works. Now with respect to the order book we come, be compared to

Senthil —

Last year it was definitely one of the best years in terms of order booking this year. We definitely say see that, would be a little bit do not be a repeat exactly of last year, but we bought by end of the year, we still continue to maintain similar order books and similar delivery times that will be, that will be the best possible scenario, I should say and for the first quarter, it has come up like that, we believe we have delivered around some 68 and order flow has been to a similar extent of 700 odd crores has been flow.

So if we maintain this then we will be able to maintain the similar type of an order book going into the following year as well. And one thing, one other thing is like we mentioned so most of the orders of project that has already been placed. Right. So for and customer wouldn’t be comfortable to wait for orders and then wait for two years and more in terms of diluted time. So our sense is that this order book would continue we will have a 12 to 18 months kind of a delivery period that was going to go into the future. That would be the Central Bet.

Operator

Thank you. I think submitted market This is something, Mr. Bhavin you have been unmuted can we have your question please. Mr Bhavin.

Analyst — — Analyst

Yeah. Thanks, Suzanne, if you could give us a little bit of a historical perspective, our order book currently is about 7,000 crores, if you go back, slightly in the history. So if you could just help us how, what was the order book number in March 2019 March 20 have bottomed out and how it has moved in ’21-’20 to get a perspective of the kind of –.

Senthil —

Okay. Any other questions. Mr.Bhavin.

Analyst — — Analyst

It is the similar part of the question that was asked by the previous participant are we increasing the capacities in any of our vertical if yes, what quantum will be increasing the capacity. The third is, you spoke about supply chain bottlenecks and in both our products, we are seeing increasing use of electronics and semiconductor. So how are you seeing this the supply chain related to semiconductor and I understand it impacts the machine tool division, water heat exchangers reserves are we seeing the supply chain. And the last question is on the EPC division. If you can just give us a perspective over the next 2, 3 years, what’s the kind of demand scenario that we are seeing and the efforts from assay will actually make it turnaround and positive.

Senthil —

Okay. With respect to Textile Machinery division, and again I think the question is on order book see somewhere we if you go to one of the most difficult times. Which is March 20 we perhaps around 1,600 to 2,800 crores of an order book is what we were having and I say because it is a difficult time. because I mean our memories are generally short, but we know what, what challenges we have faced. At that point in time, but yes so subsequently 21 we were somewhere close to around 3,000, little bit less than I think it was more closer to 2,500 to 2007,50 kind of scenario is wh,at we had then last year March 22 what we had tremendous flow what orders. I mean that’s the way and we have, if you go to an average I mean perhaps it we won’t even EBIT before 2000-2019 nicely in March 18 you always see that it will be hovering around 2000 crores kind of an order book is what we had I’m not going back to 2008. I mean that’s a different time again. Altogether, where we had touched before the books.

So, I would say that this is the March technically the peak multiple book or I should say June 22, because we have incrementally, it has been higher because the order inflow has been more than what we have executed again in June that is giving you a historical perspective. As far as order book is concerned. Now with respect to capacity addition capacity increase again MTD. Yes we are, increasing capacities. We are increasing assembly space, we are investing in in both machining and assembly space for MTD we are in the process of Steve personally this the assembly area for the machines because entity is more to do with assembly and many of it is bottled packs. So we, are in the doing it and we have been doing this capacity addition in MTD for almost last two years we did it in a smaller way last year, and again, good Dror condition assembly facilities is what we, as far as machine tool is concerned we are adding CapEx.

It’s not very CapEx heavy, as you can understand with respect to extending division the war on numbers are not getting at it. But definitely, we’re adding balancing CapEx to ensure all machines are able to answer today. We are already at full capacity. Right. So the idea basically is that we do have bottlenecks and for that we need to add CapEx and that is the CapEx, which is getting added so nothing to say that our enhanced capacities from the machine shop respected but definitely In terms of assembly as you, as you know LMW Middle East has come up. So that will be able to assemble a little bit more in Middle East and explore and we will be able to kind of cater to the export market out of LMW Middle East that’s the idea is it going to increase capacity that it will not increase capacity but definitely let us our manufacturing process, and that is the purpose behind having this L&W Middle East the supply chain coming to the supply chain bottleneck supply chain it not only emission to lot acceleration it is impacting all divisions that it is impacting that I should say it is impacting both divisions, whereas even you cannot ship permission of Textile Machinery division. Even the chip, if there is a problem in Egypt and mission delivery stops therein didn’t perform so yes We know that as a patient issues and we have been taking this our supply chain has done an excellent work we have been in constant interaction with ourselves as a player base multiple visits seeing what we can change to ensure that there is no stoppage of production.

I think effect and like I said, in case of one of the components, we have been able to try to buy. We have been trying to buy six months advance settlements that seven months advance. So I think there are multiple levers, which we can use the design or the procurement and we have been using everything possible we ensure that supply chain and continues to grow. And do we see this rather than one question is, do we see this this going becoming easing out rather. I think we see is easing out, I think we have to wait in Europe, you know the type of

Unidentified Speaker —

Inflation, which is going on other type of geopolitical issues, which are going on. So I don’t see an immediate relief as far as the supply chain is concerned, it is going to be under pressure. The logistics costs are going to be quite high there continue to be high. So that’s what I was mentioning to the previous question as well. It’s very, very dynamic and we are handling asked what we can do coming. We’re coming to 80 decent division yes, I think we quite happy to note that the demand is back, there’s a lot of orders, order book perspective, again what close to the 300 plus crores of orders which are to be executed over a period of five years to six years, right. So the order book is there, it’s only that execution, which is, which was, which has been a challenge for the last few years from the time of COVID and our reliance on the domestic has also been challenged because of lot of programs have been pushed out because of the spend not being diverted to having been diverted to COVID requirements, which we all understand very well. So, that, think that is the order book order books are there. We are still taking orders but the execution has started coming in and we hope that this will continue. I mean it’s, we are happy to note that it’s not the Barstool we definitely expect to see to going follow.

Analyst — — Analyst

Follow-up question on ATC. I mean so what are the gross margins in this division and because I believe the losses historically were largely due to under-utilization of the capacities early.

Unidentified Speaker —

Absolutely. You know, that is the case. In fact, if I were to give you a little bit perspective, we invested in what we have metallics for a long payment last two years we have invested in composites completely beautiful facility 40 crores We have invested but unfortunately the entire orders, which are, there are also for domestic and there no pull. So there is a challenge in terms of I mean we are not making breaking even in the composite side so gross margins, so it’s more than gross margins we have lot of people we have been sharing everything is there. So it really proves that it pulls down the performance of the division we prepared to continuously do 20 odd crores a month, then it would be reasonable to then structure of the company at the moment. What happens is, let me give you a sense of it. We for it, we take the product, we should be ready for delivery. Now, it does we have people, but the delivery is not ask one then in last that’s. So that’s all that’s the current scenario. What we have been facing. But like what I said. No, there is lot of pool, which is happening hopefully should become better.

Operator

Thank you so much sie, the next question we have is Mr Balachandra Shinde you have been unmuted. You can also turn your video, if you like, you can, we can have Question really.

Analyst — — Analyst

So, good afternoon, sir. So regarding order book as you said keep it flattish. Are we conservative based on historical precedents, do we don’t see as such capacity addition that much happening in this year, or at least look plants coming because the China Plus-One strategy actually is seeing. They are taking gathering pace this year especially after the incentives and all the other things. India is going to be relatively better on the production cost. So, don’t we think that growth will further add to the capacity addition plans or are factoring.

Unidentified Speaker —

Okay. Any other questions. Mr. Balachandra.

Analyst — — Analyst

No, sir.

Unidentified Speaker —

Yeah, I think some market perspective, definitely, it’s not only China plus one factor as what everyone is calling it is also a lot of benefits in terms of out TCL I mean BLS schemes definitely if sitting here data indicates to having a fairly robust government support to ensure that we are able to India stands to gain in the shifting of spindles which I mean. Everyone is talking about right, and it is not only India there is it’s been addition happening in Bangladesh happening in Turkey. It’s happening in many places one thing to understand is also that. Okay. We stand in a better question because of the stability. what we currently are able to enjoy so very Boston that has been additions would happen. Capacity would definitely increase overall spend in India will definitely increase. There’s no doubt, And that’s what saying and that’s where the order book itself is an indication, say that there will be adjustments ventures, which are going into the market. It is only a temporary phenomenon. In terms of cotton prices and that is perhaps a minor issue, which our customers are facing right now. But, definitely There will be spent later this spring, when it comes into the market. It will be included in total at four to five million spindles over the next yes, two years to three years at get it we should also I understand that still, the advanced because just closed out in March the new scheme has not had been announced, I think that’s also something which customers will be looking forward to and let us see how that comes out. So definitely whatever the schemes, which are out there. So, indications indication of complete support to our garmenting and extensive.

Operator

Thank you so much, sir. Thank you. So all the people who have raised their hands have been taken and the questions have been answered. We go ahead with concluding this meeting.

Unidentified Speaker —

I think one Amit has raised he hand you can take it.question. And I think you can take Christian sure, sure. Mr Amit, you have been unmuted we can also have your video turned on if you like

Operator

And I think you can take Christian sure, sure. Mr Amit, you have been unmuted we can also have your video turned on if you like

Analyst — — Analyst

Yeah, Hi, sir. So, my question was more on the Analyst Day. So you mentioned that you have this capacity in the Middle East. And secondly, the balancing CapEx has been done in the domestic facility. So post this both capacity addition. What is the peak revenue that we can do on a quarterly business.

Unidentified Speaker —

The segment. I mean we have been L&W Middle East, we had de cluttering right. We have already seen the facility the capacity of balancing CapEx when you’ll find you will find as we go. Quarter-on-quarter, you will find whatever incremental additions, we are able to be able to see it in our performance. I think that is the way to look forward to, because we don’t want, and we can give you a that to say this is what is going to be our deliveries. But you will see and you’ve already seen that. So between two and three. Sorry. Q2 of last year to Q 1 of this year you seen a 10% growth in terms of top line and this is a very scientific way of approaching manufacturing. So we have to get the best out of the existing systems and existing machines, which is what we will do

Unidentified Speaker —

Do so you as we bring in CapEx as we bring in one or two machines and debottlenecking as we go along. You will find that reflecting in our quarterly numbers. So we look forward to seeing quarterly numbers as we move forward.

Analyst — — Analyst

Sure sir. And in the order backlog, what would be the export orders that we have, what proportion proportion of our order backlog with exports.

Unidentified Speaker —

10% Chile Just one second. It is actually 1000 crores out of 7000 in exports.

Analyst — — Analyst

And sir, one more question, that the MTD division, we already have capacity to do 30%., and we are still going ahead with almost 50% kind of look increase in the SMB area whereas in the division also the capacity is running at full pace, but we are not incrementally planning to add any greenfield CapEx. So are we more confident on the sustainability of the MTD order inflows going ahead and we are slightly skeptical about.

Unidentified Speaker —

Yeah, I think the point here is empty Okay. There is a requirement, because it’s not simply that type of an operation we require that kind of grow growth. So for us to look at let’s say 50% turnover, we need to have that 50% additional space. That’s the way to grow and MTD again if you see as a market share what we have, we are price leader an MTD as the most expensive machines MMT within India. And we, there is enough space to grow because as we start expanding the coverage of machines. Right. So there are various tests in general engineering. So you’re talking about pumps as general engineering auto. We did not at least 20 other divisions, which we can look at.

So you need to increase our coverage increase the top line this requirement pattern But in the case of DMD yes. Like I said it’s a large facility. Right. I mean we have two facilities very large facilities and therein. This is a totally different business as it’s not just an assembly facility assembly plant in in DMD where you can simply go increase space and start rolling out more and machine. So it’s totally different manufacturing process. That’s why the CMD is concerned, but like I said yes, we we take the decision of investment for whatever is required the capital allocation, which we, do and we ensure that to meet the demand of the customer to ensure that we are well within the delivery time which is my acceptable in the market. We will be investing and we continue to do that.

Analyst — — Analyst

Sure sir. Last question from my side on the DMD side what is the spindle capacity, the capacity addition that we are witnessing at the industry level and what is the kind of Spenders that LMW deliver at full capacity. So that’s the last question.

Unidentified Speaker —

I think if you to take. Last year I think it was close to 1.3 million 1.3 million that is Jan to December. I think it is around 1.3 million spindles around 70% or 72% where it was LMW installations out of that And going forward as start delivering. We have already spoken about it as we start delivering. I mean that’s what would get installed in the current year.

Analyst — — Analyst

Thank you so much, sir. For answering all your questions.

Unidentified Speaker —

Yeah. Thank you. I think we don’t Unions and that I think so. Thank you. Thank you, everyone. Back to Mr Sumit.

Operator

Thank you so much, sir. And here, all the questions that were raised this meeting but answer. Thank you so much, everybody, for joining this meeting and here we declare this meeting concluded. Thank you so much. All the attendees. Thank you