Dankuni plant to play a strategic role
Lux Industries has established its presence across the manufacturing value chain (yarn outsourcing to in-house knitting, processing and stitching operations), strengthening its cost leadership – the highest innerwear volumes at the lowest cost. The company’s Dankuni factory is equipped to manufacture five lakh pieces of knitted products a day, the largest in India’s innerwear textile sector. The extensive distribution relationships have helped replenish sales with speed. The large pan-India distributor family (950 across India), has enhanced product accessibility.
Lux currently has nearly 350 circular knitting machines and fully automated in-house stitching units. It clocked revenues of Rs. 1,139 crores for 2017-18. It manufactures 20 crore pieces of garments per annum, which is one of the largest in the Indian innerwear sector. The innerwear market in India which was Rs. 24,000 crores in 2015 is projected to grow to Rs. 47,000 crores by 2020. Lux Industries is targeting a turnover of Rs. 1,500 crores by 2020.
The Dankuni plant in West Bengal is a state-of-the-art 12 lakh sq. ft. manufacturing facility. The plant is extensively integrated from knitting to cutting, making it possible to deliver products with speed, coupled with enhanced value addition. Lux has invested in the best knitting and cutting machines: the cutting machine from Morgan Technica SPA, Italy, and the knitting machine from Mayer & Cie, Germany, and United Texmac Pte. Ltd., Singapore.
The plant has 108 stitching / sewing machines, 11 high-speed knitting machines and 60 sock knitting machines, as well as a cutting machine. Certified for OHSAS/ISO 9001:2008, the plant represents a milestone in the multi-decade existence of the company. Lux is planning phase-II expansion to double the production capacity over the next 3-4 years.
The GST implementation narrowed the cost differential between the organised and unorganised players. By enhancing the relative competitiveness of the organised sector, the Government has inspired a re-balancing of the business. The market share of the country’s unorganised sector is expected to decline, and the share of the organised sector is likely to increase. When one considers that India’s apparel and hosiery markets would continue to grow organically, in reality India’s organized players will need to catch up with two marketplace shifts – from the unorganised to the organised on the one hand and the organic growth of the market on the other.
In 2017-18 Lux announced its proposal to merge its two group constituents, J.M. Hosiery and Ebell Fashions, with itself. The appointed date of the merger was April 1, 2018, which means that the full impact of the merger will reflect from 2018-19 onwards.
The value that these constituents bring to the business is distinctive. J.M. Hosiery owns the men’s brand GenX and Ebell Fashions owns the women’s brand Lyra. Their merger with Lux will be complementary and profitable.
The consolidated impact on the business would result in each of the merged arms growing faster than usual and their resulting synergies-cum-economies translating into accelerated growth of the parent company as well