Innerwear maker Lux in talks to bring foreign brand, eyes better margins

Lux Industries, one of the largest knitted-garments maker in the country, is likely to sign a licensing pact with a global innerwear brand within the next few weeks.

"There is a clear intent to have an inorganic growth like getting a brand licence and manufacturing and distributing them and we are in advanced talks on certain fronts. And perhaps, in a very short period, in a quarter or two, we should be in a position to announce. We are not doing it just because others have done similar brand licensing agreements and we have been in talks for over a year," said Saket Todi, senior vice president, Lux Industries Ltd.

Apart from manufacturing and selling within and outside the country hosiery brands like Cozi, ONN, Lyra leggings, Venus or GenX, Lux also makes hosiery garments for several overseas brands like Byford of UK, Polo of South Africa or retail chain Lulu's private labels.

Once the pact fructifies, Lux would be joining the league of other two large hosiery brands – Rupa and Dollar – that have such licensing agreements to bring premium and ultra-premium innerwear to India.

Dollar Industries had recently announced a joint venture with Pepe Jeans Europe BV to manufacture innerwear while Rupa has a pact to bring in brands like FCUK and Fruit of The Loom.

Hosiery makers are fast expanding their product portfolio in India, adding more high-margin outerwear brands.

"With changes in fashions, people are increasingly adopting to knitted garments, be it T-shirts for men and leggings for women. As hosiery garments makers like us move from innerwear to outerwear, our product portfolio, as well as pricing and margins, are expanding," said senior VP Udit Todi while giving media persons a tour of Lux's new state-of-the-art integrated plant at Dankuni near Kolkata.

"We have consolidated all the six scattered units in and around Kolkata and brought them under this plant. The savings from integration coupled with installation of imported machinery have helped reduce our rejects, leading to improvement in margins. Since the commencement of production here, our overall margins have improved by 100 basis points and may go up further by 50-70 bps in coming days," Udit said.

Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin improved to 12.43% in the first quarter from 10.99% a year ago.

With this plant, Lux has four facilities in West Bengal and one each in Ludhiana, Tirupur and Delhi.

The Dankuni plant, spread over 6 lakh square feet, has a potential to raise production capacity from 14 lakh pieces to 20 lakh in the next three years, company officials said.