Driving Growth Consistently: Pradip Kumar Todi, MD, Lux Industries
P.K. Todi has rich technical knowhow of the hosiery sector and his expertise is in developing new patterns, yarn combinations and knitting technologies, areas that have helped the company to introduce new and innovative products. His efforts at decreasing production costs and introduction of new products have helped Lux to enhance its profit margins.
In business for over five decades, Lux today is an Indian company with a multi-continental presence. As of FY22, it was present across 47 countries. It reported revenues of Rs 2,312.92 crore in FY22 along with EBITDA of Rs 490.27 crore. It clocked a 25 per cent jump in its net profit in FY22 at Rs 338 crore. Since FY18, Lux has been on a growth spree. For example, in FY18 Lux reported revenues of Rs 1,079.36 crore which more than doubled in FY22 to Rs Rs 2,312.92 crore. Again, in FY18, Lux reported EBITDA of Rs 156.07 crore which jumped nearly four times at the end of FY22 to Rs 490 crore.
Swift Growth
"During FY 2019-20, Lux Industries reported revenues of Rs 1,674.18 crore and in FY22, it reported revenues of Rs 2,312.92 crore. The 38 per cent growth in revenues over two years, during one of the most challenging socio-economic phases in the country’s existence, underlines our commitment to value-creation, governance and sustainability," said Todi in his shareholder’s address. But the period was full of challenges from all fronts, he added.
Todi said FY22 proved to be a roller coaster year, marked by sharp movements in resource costs. "A significant increase in raw material costs could not be easily or immediately passed on to consumers. This increase in raw material costs stretched our working capital management. The slowdown in winter wear offtake added to our inventory and carrying costs," he said.
Inventory accounted for 73 per cent of the working capital of Lux in FY21 and in FY22 the company could not make any substantial improvement in this regard for the reasons indicated.
Todi said the company was pleasantly surprised when most of its customers upgraded their purchases, moving higher in the value chain, seeking better products and willing to pay more for them. The result, he added, resulted in the proportion of value-added products (innerwear) increase from 11.74 per cent in FY21 to 13.56 per cent in FY22.
"There has been a significant increase in the contribution of outerwear to our overall revenue across the last two years," said Todi. The premium segment revenues within the company grew 36 per cent while the economy segment grew 19 per cent, validating the company's decision to invest in the former, he added.
The Outlook
Todi said in FY23 Lux will complete a Rs 110-crore capital expansion that would comprise a state-of-art manufacturing facility in West Bengal. The increased proportion of revenues from premium products, he added, was expected to enhance margins, while the stable outsourcing ecosystem will be scaled to respond to the growing appetite of the retail marketplace.
"Growing exports will address a widening China+1 opportunity, enhancing the company’s global footprint. At Lux, we are optimistic that the company’s take-off based on these initiatives shall translate into enhanced value for those associated with our company," Todi said.
