Lux Industries Limited has announced that its Board of Directors has approved a Greenfield expansion plan attuned to Rs 110 cr. The company has already identified a land parcel measuring the construction area of around 4,60,000 sq ft of which 20% to 30% will be used for manufacturing unit and balance for warehousing, storage and finishing facilities.
Lux Industries, which is one of India’s largest hosiery producer and exporter, has three major facilities in Kolkata, Tirupur and Ludhiana, which are capable of producing more garments than the installed capacity due to the improved efficiency and flexible manufacturing capabilities. It is also working towards way more flexibility in terms of capacity with enhanced mechanical tools and scientific way of working according to the market demand.
Ashok Todi, the Chairman, said that despite the advent of COVID-19, the company’s performance continues to remain strong and continues to see a robust demand. “To support this northward trajectory of growth, we have decided to invest Rs 110 cr in a Greenfield expansion to be completed in the next 12 to 18 months,” he said. “Our flexible manufacturing approach has made us more agile in responding to strong demand estimation. The new investment will further augment our ability to act swiftly and improve our market share in existing segments as well as new segments like kids and women innerwear.”
Pradip Todi, Managing Director, said the new capex of Rs 110 cr will have an asset turnover of around four times thereby generating additional revenue of around Rs 400 cr. “The flexible manufacturing approach has helped us improve our operating as well as return matrix and the new capex will strengthen it further,” he said. “As on December 31, 2020, we had a cash balance of Rs 140 cr which will be sufficient to fund the capex fully. We expect to maintain our Net Cash status positive even after completing the capex backed by our strong operating cashflow on reducing working capital further.”
Currently, Lux Industries is running at full production capacity, but it also has third party long-term contract to enhance the production capacity. Hence, the company is planning to infuse the capital for supply chain but well supported with the increase in own production capacity. It generates sufficient internal accruals to finance its capital expenditure and do not need any external funding. The company’s profits take care of their capital expenditures.