Lux has been in business for more than five decades. In the early years of the Company’s existence, there was a conviction that innerwear hosiery was an item of fundamental clothing that would always be required.
Around that time, India had a population of 907.57 million. A number of people used innerwear as their workday piece of clothing. The product range was limited. Purchase was intended to last for months (if not years). However, the management of our Company could see what lay ahead. It felt that India would move to better innerwear quality, wider product range, superior manufacturing technologies and a greater role for the brand.
Over time, this perspective was validated. As India grew in terms of population, incomes and aspirations, the offtake of innerwear increased. We now have a scenario where innerwear is ubiquitous – for its sheer variety, sizes, quality, accessibility, extension into outwear and superior pricevalue proposition.
For decades, the Lux brand was synonymous with mass market innerwear products. In the last few years, the Company shifted the needle. The decisive shift was marked by two initiatives. One, the Company began to enhance its exposure to outerwear products (through organic and amalgamation initiatives). Two, the Company began to market a larger proportion of value-added products. These initiatives represent the emergence of a new Lux, its initiatives captured in one word.
In the last five decades, Lux has emerged as arguably the largest mid-sized hosiery brand in India. The Company possesses a diversified portfolio of home-grown brands, resulting in market outperformance. The Company is focused on widening its presence from a multi-regional brand to a pan-India company.
Lux was incorporated in 1957 by the late Mr. Girdhari Lal Todi as Biswanath Hosiery Mills. In 1995, the Company evolved into Lux Industries Limited. The Company has since emerged as a premier player in India’s branded innerwear and outerwear segments.
Today, the Company comprises seven manufacturing units across the country with a cumulative capacity of 34 crore garment pieces a year. The Company’s manufacturing units are located in Dankuni, Srijan Logistic Park and Sankrail Industrial Park (West Bengal), Tiruppur and Avinashi (Tamil Nadu), Ludhiana (Punjab) and Ghaziabad (UP).
The inspiring India story
Several people asked me after Lux’s record performance during the last financial year: ‘Where does the Company go from here?’ My answer is consistent. We go where India goes. We scale how India scales. We evolve how India evolves. My answers are based on where India has come from in the last 30 years and the rapidly transforming India story.
India is the world’s fastest growing major country, the third largest economy by purchasing power parity and the fifth largest at the current exchange rate. The country has grown 8 to 9% in 25 years in dollar terms. The gap between India and China is far narrower in PPP versus GDP measured using official exchange rates.
India is now the world’s seventh largest consumer economy, having risen from the 12th position 25 years ago. The quantum of consumer spending has grown six times during this period; US consumer spending merely doubled (albeit on a larger base) while that in Japan remained almost unchanged. This indicates that a powerful income current is presently under way within India, about to emerge as the world’s most populous country by 2023.
India recently accounted for the fastest forex accumulation in the world, the highest inward remittance from abroad and the highest share of IT in services exports. Besides, India’s export growth is the second highest in the world and the fifth highest foreign direct investment recipient. Despite the general perception of a relatively modest Indian industry performance (versus services), India’s industrial growth in the last 25 years has been second only to China. Today, India has the 5th largest industrial economy in the world, up from the 13th in 1996. The size of industry has jumped six times in dollar terms during this period.
India is one of the most attractive countries by consumer demand. This has been driven by a combination of strong income growth, relatively low penetration levels (when compared with countries with similar size and demographics) for most consumer products, a young population and rising aspirations. India rose from the eighth to the second position in 25 years when measured by growth in per head consumer demand.
Optimism
As India moves deeper into a dramatic growth decade, we expect that growth to translate to the textiles sector and then to companies like ours focused on making Indians look and feel better. At Lux, we see ourselves at the bottom end of a long growth curve. We don’t just see ourselves growing; we see ourselves growing at an attractive gallop, we see ourselves growing around superior realisations, we see ourselves extending from the usual inner wear to fashionable outerwear and we see a deepening of our recall –
‘If you need any respect-enhancing hosiery product, Lux will be able to provide.’
Our time starts now.
—
Drivers of India’s growth
At Lux, we are optimistic that the India growth story will not just sustain but will accelerate. I see the following catalysts of India’s growth through the Twenties, some inflation spike in our resource costs notwithstanding.
Population: India will emerge as the most populous country by 2023. The country adds around 1% to its population annually – around 14 million, widening the market for consumer-driven and retail-driven companies like Lux.
Desires: Population growth means nothing if the incremental population is not economically productive. The population that is now emerging possesses higher aspirations than their predecessors; they wish to wear, eat and live better. The result has been a decline in price-sensitivity and a willingness to spend higher for something better.
Formalising: There is an industry shakeout transpiring through India. Following the introduction of GST, we are seeing a formalisation of India’s innerwear hosiery sector. This means that consumption is shifting from unorganised to organised brands as the cost difference that unorganised players once enjoyed is declining and the overall value proposition is gravitating towards organised brands.
China + 1: As the world seeks to broad-base its supply chain with moderation in its excessive dependence on China, a new opportunity is emerging for Indian textile companies like Lux. An entry into large global supply chains could translate into a large, visible and sustainable revenue pipeline, an incentive to reinvest and grow faster.
