The LMW move to merge Textool comes in the wake of the recommendation of ICICI Bank, the operating agency (OA) appointed by the Board for Industrial and Financial Reconstruction (BIFR) to look into various options to revive the ailing company. ICICI Bank, after going into a detailed exercise, has submitted a report to BIFR with a recommendation to merge Textool with the parent company. BIFR had declared Textool sick under the Sick Industrial Companies (Special Provisions) Act, 1985 a couple of years back. Textool has an accumulated debt running into well over Rs 100 crore. The company owes this amount to banks, financial institutions, the government, employees, shareholders and debentureholders.
It is learnt that the LMW board will consider the ICICI proposal in its director board meeting scheduled to be held by July end. Incorporated in 1946, Textool manufactures textile machinery and accessories. The company ran into rough weather in the late 1960s and in 1970 it was taken over by the government of Tamil Nadu under the Tamilnadu Relief Undertaking Act.
The fortunes of the company did not change for better despite the takeover. Consequently, in June 1984, the present management took over the company. LMW, one of the leading textile machinery makers in the South, clocked a turnover of Rs 525.45 crore in 2002-03 and a net profit of Rs 26.32 crore.
There has been an upswing in the spinning sector auguring well for the textile machinery companies. LMW has also sophisticated machine tools and foundry divisions. LMW machinery, machine tools and foundry products are exported to the developed markets. The foundry division is mainly concentrating on exports to the US.