Lakshmi Machine Works Ltd (LAXMIMACH) Q3 FY23 Earnings Concall Transcript

Lakshmi Machine Works Ltd (NSE:LAXMIMACH) Q3 FY23 Earnings Concall dated Feb. 03, 2023.

Corporate Participants:

V Senthil — Chief Financial Officer

Dhanalakshmi — Senior General Manager

Analysts:

Balachander Shinde — — Analyst

Dhaval Shah — Girik Capital — Analyst

Sarang Sanil — RW Investment Advisors — Analyst

Varun — — Analyst

Ritwik Sheth — — Analyst

Rushabh Shah — — Analyst

Manish Goyal — — Analyst

Abhishek — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Lakshmi Machine Works Limited, Q3 of Fiscal Year ’22/’23 Earnings Call hosted by NSDL.

As a reminder, participants line will be in listen-only mode and there will be an opportunity to ask questions after the brief by the company officials. Please note that this call is being recorded.

This is Sameer from NSDL. We have with us V Senthil sir, Chief Financial Officer and Mrs. [Indecipherable], Senior General Manager of the company. Over to you sir.

V Senthil — Chief Financial Officer

Thank you. Good afternoon, everyone, and thank you for joining Lakshmi Machine Works Ltd. earnings call for Q3 for FY ’22/’23. We will have a brief about the overall performance of the company for the quarter ended and for the period to date followed by an interactive session.

To begin with, let me explain about the overall performance of the company, then we’ll proceed to the segment performance and then consolidated performance. The financial results have been posted on the company’s website and hope you had opportunity to go through the same.

I’m happy to share that the company has achieved a turnover of INR3,200 crores, [Indecipherable] which is 57% higher than the corresponding nine months period of last year. This milestone was achieved amidst lot of challenges like supply-chain, availability of parts as well as higher procurement prices and other issues including overhead cost. The major challenges which we have faced in supply chain due to disruptions to our suppliers etc. In-spite of this challenges, we’ve been able to cross this milestone, which we are happy to report and note.

The total turnover of stands at INR3262 crores as against INR2076 crores. The PBT stands at INR350 crores for the current period as against INR168 crores for the previous period, which accounts for 109% increase in the profits of the company.

I would go into division specific now. TMD turnover for the period stands at INR2,667 crores as against INR1,586 crores for the previous year. For the quarter, it stands at INR966 crores as against INR932 crores in the previous quarter. Currently, we still hold an order book of close to INR5,600 crores. And these have been lined up for execution over the next four quarters. As you know TMD has over the last two years performed consistently. We have been able to supply — month-on-month we have been able to — quarter-on-quarter we have been able to supply hit higher turnovers. This is all because of the supply of project orders, return on the higher side compared to the machines and this continues as of the current quarter as well.

With respect to exports, exports have also grown. We are seeing — we have seen year-on-year increase of close to 90%. With respect to the ratio of domestic export and spares, the ratio stands at 60%, 20% and 20%. With respect to Q3, quite a few factors, which I’ve already mentioned, have had an impact. And currently, we are also running at full capacity, similar to that of Q2.

So our focus going forward will be to continue and ensure that we are able to deliver faster to the customers. We are also happy to share that in the previous — in the quarter ended in December, we had [Indecipherable] at Greater Noida. We have featured new machines. We have featured IoT-enabled real time monitoring systems and also a new customer engagement program called PACE, that is Professional Aftermarket Care for Excellence. And it has been well-received by the customers who have visited the exhibition.

Now I move to China. With respect to China, we have clocked the turnover of INR23 crores for the nine months and a profit of INR23 crores. Here again, the challenges of the last quarter included surge in COVID, lockdowns, restricted operations. And it as of course disturbed our supply chain, however they have been able to overcome this and things are becoming coming back to normal in the current quarter. There again we have close to six months of order book going into the China New Year. For China, it their — they always follow the calendar year and we start-off with almost six months of order book there. With respect to LMW in Middle-East, we have clocked a turnover of INR65 crores, with a profit of around INR4 crores for the period April to December ’22.

Now I move to MTD. I would like to inform that we have clocked a turnover of INR620 crores with a profit of INR53 odd crores and we have an order book of around two months there. We have seen increased trend of sales of VMC machines in the — in MTD business. Thereby, we are — we’re able to service non-auto sector such as oil and gas pumps, dial mold and general engineering. Here again we have been able to introduce new models. And we just closed the Index exhibition in the month of January. And we have been able to show new models of CMC machines including BMC’s.

With respect to Foundry, I would like to now move on to Foundry. We have clocked turnover of INR72 crores and this represents around 20% of our capacity and the balance 80% going towards internal consumption. And the challenges in the foundry for the quarter, which has just gone by remains the input raw material cost and the raw material cost has gone up close to 25% compared to the same-period last year.

With respect to ATC, turnover for the period stands at INR77 crores for the nine months, as against INR30 crores for the same-period last year. We see that we also note that the export have picked-up in this particular business. And we are consistently delivering the turnover. And there by turning around this division.

With this short note, now we thank you and thanks for the participation. Now We can start the interactive session. Back to the moderator.

Questions and Answers:

Operator

Thank you so much sir. Thank you. We would like to go ahead with the interactive session. I would request the attendees to please raise hands, if you’d like to ask questions. After communication of your name and unmute status. And we would request people, please go-ahead with racing hands.

The first person in the attendees who has raised his hand is Balachander Shinde ji. Balachander ji, you have been unmuted. Can we have your question, with the audio and the video turned on please.

Balachander Shinde — — Analyst

Yeah, Good evening sir. Sir, regarding order book I would like to know like sequentially [Indecipherable] last quarter, I think it was around INR7,000 crores, now it is around INR5,600 crores.

V Senthil — Chief Financial Officer

Okay. Do you want to do the other questions as well. So that I can then reply at one shot.

Balachander Shinde — — Analyst

Yeah, yeah sure. The other, outlook wise, how we see textile machinery related outlook over next one year [Indecipherable] and how do you see this quarterly run rate, will we be able to sustain for the next one to two years? That’s it, thanks.

V Senthil — Chief Financial Officer

Okay. What I mentioned was domestic order book, of course we have export order book also, which is basically LCS backed. That is close to another INR9.5 crores, but to be very clear, yes, the order intake has come down. As you know, the industry is going through and has gone through a tough time for last four months to five months. And we have seen a reduction in the order inflow. And of course to replicate the kind of orders which have come in the last year, of course, it would be very unrealistic. So having said that, yes, there are still orders being picked-up. The net order book which is domestic, close to 5,600 or another 900 you can add. So you will see it was — have a close to INR400 crores of net introduction.

But with respect to the outlook, we are using this time to deliver the machines, which have already been ordered. As you can see over the last four to five weeks, the markets have picked-up, the export of yarn is kind of picking-up. And because of the geopolitical challenges, which are around as you can see, for example, our neighboring country Pakistan is going through a lot of Issues. So there is definitely shift demand. So we are using this time to kind of deliver as much as we could. And that is the reason you see the numbers what you see and we are at full capacities as we stand. So we will try to scientifically keep working to increase the throughput, but you should — and we expect to see similar numbers as what you have seen now close to INR966 crores, close to around INR1000 crores to be delivered for TMD business at least in the initial — the next three to four quarters. That is our — that is the way we plan.

I think I have answered all the questions. Back to the host, we can go to the — moderator, we can go to the next question.

Operator

Thank you so much sir. Thank you. We would request the people who questions have been answered to please lower the hand. And going ahead, next person with the question, we have Mr. Dhaval Shah. Mr. Dhaval Shah, you have been unmuted. Can we have your question with the video turned on please.

Dhaval Shah — Girik Capital — Analyst

Hello, hello, Dhaval from Girik Capital.

V Senthil — Chief Financial Officer

Good afternoon.

Dhaval Shah — Girik Capital — Analyst

Good afternoon. My question is on the — on the Advanced Technology division. If you can share some thoughts regarding, we were planning to get some strategic partner in this business. So what is the development there and how should we look at four to five year future of this business? What sort of size can it achieve? And what developments are we seeing in terms of upgrading our self. In terms of technology capability. So that’s on the advanced technology side.

And second question on the machine tool division. All the factors indicating the factory — the production rate in the country seems to be strong. So how do you see the future for machine tool division from next one year perspective? These are my two questions.

V Senthil — Chief Financial Officer

Okay. So I would take the MTD question first. I think you’re absolutely right. I think the fact the overall production and overall requirement and where we see business moving into India is actually quite with strong and in fact even in the recent exhibition, we could see the evidence with the amount of interest, what we have seen. Definitely the long-term story is definitely that of manufacturing and that is the reason we have also like everyone — we have also invested in the current year anticipating this growth. So we have invested both in capex and increasing our footprint in terms of assembly. This is more of an assembly sector, because you have a high content of motor parts, and we have been able to, you know over the last six months increased our capacities for delivery. So yes, number one, we have invested. Number two, what is required is the new type of machines, rather new model machines and that is what we have been able to showcase as well. And this is to address the non-auto sector, because auto sector is the largest consumer. But what is kind of coming in is also the non-auto sector. So the content of the share of business of the machining centers is slowly rising in our machine tool business and that is something we are again seeing what used to be close to 15% of our business. Because, of course our training centers got more models and things like that, but with the centers there is what used to be 10% to 15% has now gone to 22%. So yes, 100%, this is a story which we should work towards and we have built capacities to ensure that we may — get — we are able to deliver as and when the demand kind of comes in.

Now to answer the advanced technology center, yes, we are in the process of demerging this unit. The idea long-term idea being that it should have a strategic partner, but that is a process which would take some time, however the turnover is what we are seeing right now, we have clocked around INR77 odd crores for the nine months. We have a potential order book there for execution over next four years for a value of around INR500 odd crores. No, these are all long-term contracts, which basically gets pulled off. We did experience during the extreme COVID year that they were pushed out, but since last one year they have been pulling and there’s been a lot of demand and that’s what you see. So, existing order books getting executed, is what you see. We definitely have a clarity there of delivery. So the numbers what you see, would it be sustainable. So a full-year number, when we come to that would be sustainable as far as our metallic solution is concerned. Now we also have within this the composite division where we have invested even in the current year. So with respect to the technology factor. The development should be — rather the growth would be the composite division and that’s what we see is that the technology which would come into ATC. And however, in the composite division, we are only investing at the moment. Consistently we have orders, which are basically orders for delivery to the aerospace, not aerospace, but space sector within India. But the focus would be to kind of grow that business to that of what we have done with metallics business, so you will see a consistent metallic turnover, but we should see whatever investments we are doing now for composites that should kick-in and we anticipate that would take at least another two quarters. And then we will be in a better position to come out and give similar kind of order books as far as composite is concerned while we are working on it now. While we do have orders from the space agencies within the country it, it is not getting pulled off. There’s no call off for various reasons. So the focus will be to kind of use that facility to increase our turnover.

I think that answers I think the question on ATC. Back to the moderator.

Operator

Thank you so much sir. Thank you. Thank you. Going ahead with the next person with a question we have Mr. Sarang Sanil. Mr. Sarang, you have been unmuted. Can we have your question with the video please.

Sarang Sanil — RW Investment Advisors — Analyst

Hello, good evening, sir.

V Senthil — Chief Financial Officer

Can you kindly speak up please. We are not able to hear you.

Sarang Sanil — RW Investment Advisors — Analyst

Am I audible now?

V Senthil — Chief Financial Officer

Yes.

Sarang Sanil — RW Investment Advisors — Analyst

Yes, good evening, sir, this is Sarang Sanil from RW Investment Advisors. So I have a couple of questions. So on the MTD division, I understand that 60% to 80% of the components are imported and that has a forex impact on the top line plus the logistics cost were the issues for the margin impact, but we are still off by you know 7% to 8% from the peak margin what still hampering the margin in the MTD and will it stay volatile? That’s my first question.

The second question. This month, utilization of spinners has been picking up, have there been discussions with the spinners on their capex plans for better clarity? And my final question is, ATC demerger, any tentative date you can think of. I know it’s still in the process, but it’s been going on — going on for some time, right.

V Senthil — Chief Financial Officer

Okay. For the MTD margins, see MTD that particular segment is made-up of foundry and MTD. Now what is kind of pulling the margins down is the fact that three impacts. As you know the foundry has been here — foundry is one of the highest consumers of power. And the power cost in Tamil Nadu has increased last quarter, it is close to INR1 a unit has increased. And that is one reason, of course forex is the other reason because Machine tools imports quite a bit in terms of forex. Our effort in terms of foundry is to see that we are able to observe — we are able to pass-on the cost rather than absorb the cost, but considering that it also does lot of exports there has been a lot of challenges in passing on this cost in the previous quarter, because there is a — the way we work it is gradually done in — it is always done in the next quarter. So we are working towards ensuring that these costs are getting passed on as far as foundries is concerned.

With respect of machine tool business, apart from forex like I said, the margins, the mix of business is between turning centers and machining centers. And machining centers tend to have, in our scenario bit of a lower margin than turning centers. So that is another mix impact which is kind of impacting machine tool business. However, we are very much aware that we should be aiming to like what you said the peak, the past peak levels of margins. So there is lot of work being done. Whilst I say this in the past, over the last two years, we did two price revisions. We went for both the textile and the machine tool division, but unfortunately for machine tool division, the consistent cost has — it has not been able to recover everything what — with respect to the cost what we are incurring. And the — third point which I would also like to mention is, in terms of foundry again the raw-material cost, like — I told you in the opening remarks raw material costs are still be it pig iron, be it all the other commodities, which going to foundry they are close to 20% to 25% higher than what it was last year. This is — this is the one — these are the ones which are impacting MTD margins and yes, our effort is to ensure and you — I will have — be able to happy to give you — I will be happy to give you some clarity, perhaps over the next earning call as to how we are able to do that because there is lot of work being done around this.

With respect to the spinners and their capex plans. Yes, even during the last quarter, we have been still been booking certain orders. In terms of a certain. Unitary machines we have been able to get unit machines are more in numbers. Projects are a little bit less in numbers, so close to 30% to 40% is the kind of projects and 60% to 65% are the unitary machines, which were with respect to the order inflow. So yes people are speaking about it, it is a slower process and we should see better conversions going-forward. We have to just wait-and-see, because it’s too early because there is entire, the betterment in spinning capacity utilization has happened in last three to four weeks.

With respect to ATC demerger, if I’m right. I think. I will ask Dhanalakshmi to answer the question.

Dhanalakshmi — Senior General Manager

[Indecipherable] final hearing last week. And we are supposed to [Indecipherable] within the next one week, with that we will have a better clarity on having this company, but along the way RSPs Industries as a separate entity. And the related process will continue to drive. So that is the update on the current process of merger demerger.

V Senthil — Chief Financial Officer

Back to the moderator please.

Operator

Thank you so much sir and ma’am for answering the question. Our next person with the hands up, we have with us Mr. Varun [Phonetic]. Mr. Varun you have been unmuted. Mr. Varun?

Varun — — Analyst

Hello?, Am I audible?

V Senthil — Chief Financial Officer

Yes, Mr. Varun, you are.

Varun — — Analyst

Yeah, hi, good evening, sir. Thanks for taking my question. And congratulations on a good result to set this quarter. Sir, my question is an extension of the previous participant’s question on the machine tool division. I would assume given the turnover being similar, the revenue in MTD being similar to the previous quarter, it would be at about 60% to 65% capacity utilization. Looking at the inquiry pipeline that you have, how much capex more is being done in this business? And what kind of peak revenue do you hope to achieve. That’s the first part. Second part is, you have talked two price revisions taken. I remember, one was May ’22. Has there been a subsequent price revision? And third is. I missed the order book numbers in the machine tool divisions. Thanks,

V Senthil — Chief Financial Officer

I think your ball park number is pretty much right. In terms of capacity utilization. Because we have increased our assembly capacities and machining capacities for machine tools, it’s in the order of 60% to 65%, which basically gives us that capacity. So the numbers what you see, we can there’s still 40% headroom available for us to deliver. So you can do the calculations yourself with respect to what the peak revenues will become.

With respect to price revisions, when I said two price erosion, I didn’t mean for the year ’22. ’23. You are absolutely right in May we did a price revision and the revision was in the year before that. What I meant is that subsequent to May ’22, Today the situation is the electrical electronic component. And also the currency impact of it, it is absolutely very expensive. I should say the cost of production has gone up quite significantly in this. So whilst we did a price revision. In May ’22 and that was very early post the geopolitical issues in terms of the war which has happened and the supply-chain issues were not that clear at that point in time. Subsequently, we of course have gone through more than a year and almost last year, February 24 was the day which started. So in this last one year, what we have seen over the last quarter is the electrical and electronic items becoming very expensive still supply-chain issues are continuing. So that cost is, what is the one which is hitting that’s what I mean,

With respect to order book number I mean it is, it is always two month order book, one and half month order book as well as this business is concerned, whereas it does not, it’s not a long lead time product. We have products, which I mean I have told this before, but I’ll again repeat. We’ve got — we’ve got products, which actually gets delivered to the customer door step within a matter of 48 hours from the time he place order in the online system. So I mean this I’m talking about anywhere within the country. So there is no there’s no specific order book here which we can discuss on or we can give numbers for.

I think that answers the question. Back to the moderator please.

Operator

Thank you so much sir, thank you. Going ahead with the next person with the question, we have with us Mr. Ritwik Sheth.

Ritwik Sheth — — Analyst

Yeah, hi, am I audible, sir?

V Senthil — Chief Financial Officer

Yes, Mr. Ritwik, you are. I think he dropped off.

Operator

Mr. Ritwik, he has been shifted to the panelist, so that he can start his video. Mr. Ritwik we can we have your video, okay.

V Senthil — Chief Financial Officer

Mr. Ritwik, you are not audible. Mr. Ritwik, you are not audible. Mr. Ritwik,

Ritwik Sheth — — Analyst

Yeah, Sir. I have two questions. Firstly. So on the TMD, have we seen any orders being canceled because if I look [Indecipherable] and what you mentioned this quarter there seems to be our INR400 crores INR500 crores of reduction in order book.

V Senthil — Chief Financial Officer

And your second question.

Ritwik Sheth — — Analyst

[Indecipherable] Machine Tool Segment. Any update on the five axis machine that we are [Indecipherable] That’s it from my side. Thank you.

V Senthil — Chief Financial Officer

Okay. With respect to the order cancellations. As you know we only shuffled the orders. So yes, there has been. churn in order book. So like I said, we have been very. I think in last two quarters back, I think we did discuss about it where we said that we have been able to get more project orders and this project orders. are time bound, they are backed up with all finance, backed up with construction. So there are enough orders which needs to get pushed out. So there is no cancellation, it’s only the churn, which happens and we postponed it to a different date depending on what the requirements of the customers is.

With respect to the — I think the second question was on-the-fly access to machines of MTD. I think what we have shown, of course, we have shown other models in the INTEX exhibition this year. But this Y-axis machines are have not been commercially launched as of now. I think this answer — this were only two questions.

Operator

Thank you so much sir. Thank you. Moving ahead. We have with us Mr. Rushabh Shah. Mr. Rushabh, you can have your question, if possible with the video turned on please. Mr. Rushabh?

Rushabh Shah — — Analyst

Can you hear me now?

Operator

Yes, sir.

Rushabh Shah — — Analyst

Hello?

Operator

We can hear you, can we have the question please.

Rushabh Shah — — Analyst

Yeah, sorry. I just had one question, sir. In the TMD division what we understand we made major cater from say blowroom to ring frame auto, autoconer division, which mainly goes for production of [Indecipherable]. So I just wanted to understand your thought process in terms of entering the product categories wherein we can cater the entire textile value chain. Well, what are we thinking on those lines or is that a possibility, just if you want to add significantly enter new categories using LMW’s random. [Indecipherable]

V Senthil — Chief Financial Officer

. Okay, if I rephrase it, what you are saying is apart from blowroom to autoconer can we look at further machines down the — downstream? Okay, I think. definitely the fact that we have a complete set of products and in [Indecipherable] exhibition in December, we also showcased the autoconer product, which would see commercialization next year. The point is that. We have enough space within this particular spinning segment where we need to go up on market share not only in India, even in the export market. So I think the work what we do is to ensure that we are. Having the best quality of machines especially because we have to have retain the current market-share in India and also to increase our market share abroad. So our work is on towards this, of course, as and when an opportunity presents itself for growth in terms of inorganic growth or whatever it is, it will be a decision which will be taken by management. But yeah, I think it’s a good question and thanks for asking that because we are able to tell you what we introduced in the exhibition last month.

Operator

Thank you so much. Thank for answering that. We would like to go-ahead with the next person with the question. We have with us Mr. Manish Goyal. Mr. Manish you have been unmuted. And you can go ahead with the question please.

Manish Goyal — — Analyst

Yeah. Thank you so much. Can you hear me? Yeah, very good afternoon sir.

V Senthil — Chief Financial Officer

Please go on.

Manish Goyal — — Analyst

Yes, sir. So just continuing. I have three-four questions I’ll list out all of them. First is continuing on new product introduction on autoconer. So is this one, like the fully automatic one which is currently being supplied by many multinationals. And related question is, the market size INR1,000 crores or it has increased further and how competitive we would be in terms of pricing as compared to the existing players? On capacity increase in TMD, you mentioned that we will continue with INR1000 crores revenue run-rate per quarter for the next few quarters, but we have been incurring capex also to increase capacity and doing debottleneck and productivity improvement, automation and so how do we see our capacity increase and probably we can increase the revenue going forward? My third question is on export order book, which has seen a significant improvement probably highest in history in terms of INR900 crores. So what has led to this and which countries we are seeing strong demand and how do we see outlook and how is the pipeline over in exports market? And if you can give us the revenue breakup, you did give a revenue breakup. 60, 20, 20, so was it for Q3 or nine months or if you can give US Q3 numbers, nine-month numbers comparable for last year as well. That will be very helpful. Thank you so much sir.

V Senthil — Chief Financial Officer

So I will take the autoconer. I mean, yes, this is autoconer which is the advanced autoconer, we were able to showcase along with the link system through the. ring frame in our — in the exhibition. With respect to market size, we would still hold the view that perhaps it is INR1,000 crores to INR1,500 crores kind of a market size in this particular — in this particular machine, in this particular segment. We go with the same principles of LMW. We need to be the most competitive players here giving the best product to the customer with the highest quality. And like I always miss him, Mr. Manish, at the end-of-the day yarn is a commodity and it has to come out at the best quality, the most cost-effective price for the producer, for the investors and mills And that is the framework within which we have to operate and we have to deliver.

Now coming to the capacity increase. And yes, you’re absolutely right, we have invested and continue to invest in debottlenecking — debottlenecking the manufacturing process and in that sphere we have also been doing automation. As well. But what you have seen and what I’ve also been explaining over last, perhaps two or three meetings as well is the fact that manufacturing is a very scientific process where it is incremental in nature. And with the existing capacities, we have been able to bring additional 25% to the turnover. Without replicating complete manufacturing setup, which practically is not possible. And if you actually go back nine months, if we are to order machine in machine tool business itself especially an imported machine, our waiting time itself was close to a year. So we have been very prudent in bringing in lot of automation, a lot of efficiencies inside the system to see the turnover of where it is. We continue to do that. So but again, as you know, we have done that 25% increase for us to replicate over the last three quarters or four quarters. But for us to replicate the same thing is would be an unsustainable thing to inform. So that’s where we said, that is something is definitely will sustain, but in the background we are of course increasing — plan of working as much as possible we increase the throughput. That is the way we look at it.

I think with respect to the export, I think your observation is absolutely right. We are getting orders of course, from most the same countries would be Bangladesh is doing quite well. We got some orders even from order books rather I should say from Uzbekistan is a market where we have been able to get orders. I think that is the reason for us to kind of build this. This size of order book, which would get delivered over the next three to four quarters.

With respect to revenue breakup, the 60, 20, 20 is for the YTD that is for the nine month period is still 60, 20, 20, but however. if you are to look at the current quarter, which has just gone by, we may be looking at little bit higher on the domestic side, maybe around 63%, 64%. The exports still at 20%, but spares perhaps little bit lesser by around 4%, so it will be 64. 20 and 16 odd percentage. That would be the ratio of revenue breakup for TMD.

I think that answers all the questions. Back to the moderator, please.

Operator

Thank you so much sir. Our final person with the raised hand for the question, we have with us Mr. Manish Goyal. Mr. Abhishek was supposed to be here, but Abhishek sir lowered his hand. I believe his question was answered with somebody’s else’s question. So, Abhishek as his hand up again, Mr. Abhishek.

Abhishek — — Analyst

Thank you. Sir, good afternoon and congratulations on a good execution for this quarter. Just two questions, sir. One is regarding the order book, if you can give some numbers on the slow-moving orders. And are you seeing any movement there. And secondly, sir, regarding the domestic you orders outlook, our a PL is going to benefit us or how should we see that given a new PLA could also be coming into textile sector.

V Senthil — Chief Financial Officer

Yes, I think with respect to orders like I said, we are close to INR2,600 odd crores of which the inactive orders would be close to around 12.5% to 15%. That would be the net orders, balance are all active orders which needs, which have been planned for deliveries. With respect to PLA scheme, I think there is a PLA 2.0, which is being planned. So I mean we are — we also look forward to that. Even in the current budget I think there have been able to take cognizance of the requirements and they released. I think proportional allocation of iNR900 crores for the tough schemes or disbursement. For the current year for those which are registered claims in March 22 I think government is doing all what it can trying to clear up the older pending matters and then perhaps they will come with schemes, which are better designed. Because they are actively working on this and we are very much aware that the Ministry is also working on this. And I’m sure that will come with a good proposal as far as PLA 2 is concerned. But like I said, it’s too early to comment you have to just wait-and-see. But we always maintain only one thing, so long as the customer or the customer’s customer is able to benefit that automatically passes on as a better opportunity for us and better for everyone in the sense that we need to. for a long-time increase the [Indecipherable] increase our exports. There’s a lot of targets, which are send by government in terms of export targets. So long as PLA address the customer, our customer’s customer either which way it is good for us.

I think that answers the question. Back to the moderator, please.

Operator

Thank you so much sir. Thank you so much. I believe we are done with all the questions. Do we have anybody with any questions. I got a few people who have gotten back to us who we previously took before. So with your permission, would you like me to invite them again for another question.

V Senthil — Chief Financial Officer

We have 10 more minutes. I think we’ll definitely take the questions in whatever order you have.

Operator

Sure. Mr. Manish is back with another question I believe. We would request technical support team to please help us. Mr. Manish, yes we are good.

Manish Goyal — — Analyst

Yes. Can you hear me sir?

V Senthil — Chief Financial Officer

Yes, Mr. Manish, please go on.

Manish Goyal — — Analyst

Yeah, so. I have two more questions, one on the — on the spare parts, we did mention last time due to lower capacity utilization of textile mills the demand for spare parts side come down. So how are we seeing trend now and also spare parts related, how is it doing for the exports market as well. That was number-one question. And number two, on the ATC, so we did mention that we have. INR500 crores order book to be executed over four years. So how do we see the quarterly revenue momentum building not going-forward and maybe when do you see that division probably reporting double digit segment margins probably on what size of the revenue sir, thank you so much.

V Senthil — Chief Financial Officer

Okay. I think we were absolutely right as you can see this spares turnover has — has come down as a proportion of sale and that’s what we had informed. But like I said, this is right now way too early, because the capacity utilizations have gone down, it has started going up and also of course. What generally happens is when the machines are stopped just to the cost-effective they would definitely use the existing machines which are stopped spares would be interchanged and things like that. So I think it’s too early. We do expect that the as the utilization goes up the spares requirement also would go up. So as of now. If you were to ask do you see any change in the trend over the last four weeks, it’s too early for us.

With respect to ATC, these are all orders which needs delivery and that’s what we have planned for. Like what I mentioned perhaps I would repeat that again. Whilst ATC [Indecipherable] side has been — achieved turnover we’re at least comfortable to say that it is on a 1:1 to the investment. With respect to composites, we continue to invest and we continue to have people, we continue to invest, we continue to have fixed costs. Associated with that and that division is what we are — we focus for it to achieve decent turnover and I think when this both are achieved, you would see what EBITDA margins, double-digit EBITDA margins there. Today EBITDA margins which are getting generated by metallics [Phonetic] under ATC of course, it’s a fixed cost of composites are consuming that. And that’s — that is the reason we see ATC at breakeven level, at the current turnover.

I think that answers the question back to the moderator, please.

Operator

Thank you so much sir. We have with us Mr. Sarang Sanil, once again with another question.

Sarang Sanil — RW Investment Advisors — Analyst

So thank you for the opportunity, Sir, so really appreciate how we have done with the margins of TMD business Pre-COVID now can TMD margin sustain? That’s my first question. And the second question is 12% to 15% of inactive order book you are mentioning. So that 12% to 15%, the first two, which as a whole is INR56,000 crores?

V Senthil — Chief Financial Officer

Any other questions apart from that?

Sarang Sanil — RW Investment Advisors — Analyst

No sir, thank you.

V Senthil — Chief Financial Officer

Okay, with respect to the inactive, generally we only reference with respect to domestic because the exports are backed by LCs or deposits again. So when we say inactive, we only refer to for the [Indecipherable] domestic order book on that. We you mean 10%. TMD margins, yes, I think we do have to say that post COVID, I think I have to be clear, we have done two price revisions for the machines. Post COVID, not in the current year, current year actually for OEM machines, we have not done any price revisions at all. And we have been working quite a lot to ensure that we are able to have control on the costs, like I already mentioned, the costs have all gone up both in terms of the electronic mechatronic kind of components. We are working towards that. So to answer are they sustainable margins? Yes, we are — they are sustainable, because they come both operational efficiencies is factored inside this at the current turnover and the impact of new pricing has also taken full effect. So these margins would be sustainable at this this level and we continue to see how best we can kind of get control of the costs. And that’s the work our team continues to do.

Operator

Thank you so much sir. This brings us to the end of all the questions we had from all the attendees. Now, I believe, we do not have any further questions. All the hand that was raised, the people have taken. Thank you so much sir. Thank you.

V Senthil — Chief Financial Officer

Thank you. If no further questions, then we can close the call. Moderator?

Operator

[Operator Closing Remarks]