How Our Innate Instincts and Insights Has Enabled Us to Weave a Story of Success
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How our innate instincts and insights has enabled us to weave a story of success. Lux Industries Limited Corporate office: PS Srijan Tech-Park, 10th Floor, DN-52, Sector-V, Salt Lake, Kolkata-700 091 Lux Industries Limited P +91 33 4040 2121 F +91 33 4040 2001 21st Annual Report 2015-16 E [email protected] W luxinnerwear.com At Lux Industries Limited, we have built our business on common sense. Caution regarding forward-looking statements Contents Sense that is This document contains statements about expected Lux Industries. About us : Statement from uncommon, future events and financial and Our 10 Lux Industries the Chairman operating results of Lux 02 commandments 04 Limited 06 Industries Limited, which are unconventional and unrestrained. forward-looking. By their nature, 10 financial 10 minutes with 10 forward-looking statements metrics that the Managing Commandments Combining our deep homegrown require the Company to make make a statement Director assumptions and are subject to 08 12 16 inherent risks and uncertainties. instincts with generations of There is significant risk that the Our competitive Brand activations, Board of assumptions, predictions and drivers 2015-16 Directors other forward-looking 36 38 40 rich business insights, we have statements will not prove to be accurate. Readers are cautioned Management Report on Directors’ Report formulated some well-structured not to place undue reliance on Discussion and Corporate Analysis Governance forward-looking statements as 42 52 57 a number of factors could cause business principles that have assumptions, actual future Statement results and events to differ Auditors’ Report Balance Sheet of Profit and Loss enabled our enterprise to rise materially from those expressed 88 94 95 in the forward-looking statements. Accordingly, this Cash Flow Notes to Financial above the probable and go beyond document is subject to the Statement Statement disclaimer and qualified in its entirety by the assumptions, 96 98 the predictable. qualifications and risk factors referred to in the management’s discussion and analysis of the Our business principles are Lux Industries Limited annual report 2015-16. enduring and are enshrined in our 10 commandments. 1 2 3 4 l In a space that is l In a business typically l In an environment with l In a characteristically largely unorganised, we marked by small-scale little focus on integration, traditional industry, we differentiate our positioning manufacturing, we focus we are among the few disrupt the status-quo by through our brands. on large, technology-driven vertically-integrated getting better and better – in production. companies in our space. effect, continuing to identify small cost reduction ideas that yield big results. 5 6 7 8 l In an industry largely l In a space marked by an l In a typically ad-hoc l In an industry absorbed by marked by an insignificant erratic product range, we business environment, the short-term, we focus on focus on HR, we focus on emphasise on widening we focus on leveraging embracing prudent financial enhancing the skills of our our product bouquet and scientific practices practices that enhance teams and professionalise aligning relevance to to ensure a dynamic long-term organisational our business. consumer needs, budgets and supple supply and sustainability. and requirements. distribution chain. 9 10 l In a largely asymmetrical l In a business space that space, we focus on being is anchored on the present, Lux fair, transparent and we strive to create an meritocratic and adopt enduring institution that Industries the highest standards of represents an attractive Limited. governance. investment opportunity for both our existing as well as prospective shareholders. Lux and listing! In a milestone event, the shares of Lux Industries Limited were listed on the National Stock Exchange (NSE) on 1st December 2015 and the Bombay Stock Exchange (BSE) on 5th January 2016. The Company’s shares on the NSE were listed at ` 3,342.05 a piece. Its market capitalisation stood at ` 1,667.76 crore as on 31st March 2016 (NSE). Lakhs of customers. Thousands of designs. Hundreds of employees. One focus: To be the most preferred innerwear choice among our customers. The Lux legacy The Lux positioning The Lux potential conservative, yet aggressive focused, yet dynamic niche, yet abundant Incorporated in 1957 by the visionary, At Lux Industries, our business With a population of 1.3 billion, India late Mr. Girdharilal Todi from a small model weaves together the strength is the world’s fastest growing large tenement, Lux Industries has today to remain relevant in a dynamic economy, reporting a respectable transformed into one of India’s environment, the sagacity to capture GDP growth of 7.6% in 2015-16. With largest and fastest growing innerwear future opportunities and the diversity above-average monsoons, well- companies. With a wide range of more of brands and human resources to structured Government policies and than 5,000 SKUs for men, women pursue excellence at all times. With revival in the consumption cycle, the and children, manufactured across a production capacity of over 3 crore country’s GDP growth is expected 11 facilities strategically spread in the pieces per month, the Company to accelerate, going into the future. country, the Company’s brands are possesses a 20% market share of Besides, the impact of the Seventh Pay available across around 5 lac outlets, India’s organized hosiery industry. Lux Commission, aggressive shift towards pan-India. Besides, Lux Industries’ Industries is also the largest exporter the branded organised segment of the turnover and net profit has surged of innerwear from India. Our teams market and rising aspirations driving at a 12.57% and 43.73% CAGR continue to deliver on our brand product premiumisation is expected (compounded annual growth rate) over promise, producing sustainable results to give a boost to the ` 20,000 crore the past five years, with total income even in challenging times. Indian innerwear industry. and net profit standing at` 941.16 crore (up 3.52% over the previous year) and ` 51.34 crore (up 13.51% over the previous year), respectively, in 2015-16. 4 LUX INDUSTRIES LIMITED ANNUAL REPORT 2015-16 5 Dear fellow The consumers of today continue to projections indicate that India could growth opportunity on account of our the target audience through two of the seek distinctive brands that enhance touch an 8% GDP growth in the current aspirational positioning, wide and deep most engaging platforms in India – shareholders, their lives and make a statement about financial year. product portfolio, quality excellence cricket and Bollywood. who they are and who they aspire and well-integrated operations. STATEMENT FROM THE CHAIRMAN The Indian innerwear industry is a Continued focus on premiumization, to be. This is what the Lux brand is I am proud to present ` 20,000 crore opportunity, growing at At our Company, we are one of the portfolio expansion in existing all about. In an India where growing the annual report of a fast clip of 11% CAGR (over FY2010- leading players in the premium product segments (men and women aspirations are meeting rising incomes, 15). Interestingly, though the innerwear branded innerwear space, given our innerwear), venture into new segments Lux Industries Limited our enduring brand appeal makes us segment constitutes 8.1% of the strong advantages in brand-building, (children wear and socks) and the innerwear of choice among a large for the year 2015-16. Indian apparel industry, it is the fastest control on production on account of distribution expansion into existing cross-section of our consumers. growing segment of the market. As a fully captive manufacturing chain, markets as also penetration into At Lux Industries, our brands are at per industry estimates, the segment portfolio width and lack of credible and upcoming growth centres (Tier III the right place, at the right time, at the is expected to leap to a ` 59,500 crore relevant competitors in the premium and IV towns) will enable us to open right intersection of enterprise and market by 2023, recording a potential space. With this, our brands are at up the potential for consistent and opportunity. Relevantly so then, the CAGR of 13%. Besides, the premium the forefront of capitalising on the sustainable revenue growth. thematic positioning of this annual and above sub-segment constitutes underlying premiumization opportunity On the overall, in 2016-17, we expect report is an emphasis on how, as a roughly 20% of the market (about in the innerwear category. revenue growth of about 8-10% that Company that is deeply rooted in ` 4,000 crore), offering the robust To a typically unorganized segment, will enable us to cross the historic India’s soil, we are rightly positioned platform for a sizable premiumization- we have brought forth an institutional ` 1,000-crore mark. as a multi-year premium play on the led growth opportunity. culture that is most visibly reflected country’s consumption story that is just Importantly, the most significant in our technology orientation. During In conclusion about beginning and is at the cusp of prospect for frontline players like us the year under report, we imported The Lux story continues to grow more accelerated growth. is embedded in the rapid transfer of 108 stitching/ sewing machines from positive each year. I am proud of the The India story – an exciting share from the unorganized segment Singapore; 11 high-speed knitting accomplishments of our teams whose of the industry to the organized sector, machines from Germany; 60 sock opportunity landscape dedication has made us what we are fuelled by favourable macro factors like knitting machines from China and a today. I am also indebted to our Board India is widely acknowledged as a rising incomes, urbanization and higher cutting machine from Singapore, for of Directors for their wise guidance and beacon of hope amidst a sea of despair.