Dankuni unit to add 200,000 capacity per day: Lux Industries

The Dankuni unit of Lux Industries has commenced operations and the company's Vice President Saket Todi said that the new unit has a total capacity of 500,000 pieces. The company now produces 1.2 million pieces per day and expects to add 200,000 pieces per day.The company expects its FY17 revenue growth of more than 10 percent -- the industry average -- and Todi said it is aiming at additional revenues of Rs 350 crore thanks to new capacity.For the full year, the company targets a revenue of Rs 1,200 crore in FY17.Below is the verbatim transcript of Saket Todi’s interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18. Nigel: 5,00,000 pieces is the capacity is but what does take your total capacity to and in terms of revenues this 5,00,000 units what can it add? May be in FY18 we will see it for the full 12 months, for full 12 months what can it contribute in terms of revenues? A: As per the total capacity right now we have around 1.2 million pieces and our capacity would increase to 1.4 million pieces per day. Reema: From 1.2 if you are adding 5,00,000 shouldn’t it go to 1.7 million? A: No, actually what we are doing we are transferring some old units to our new units as well. Reema: The incremental capacity addition is only 2,00,000 pieces per day? A: Yes that is right. We have many places which are on rent so that will close to decrease our cost. So, the increment capacity will be 2,00,000 pieces which will take our total production capacity up to 1.4 million pieces per day. Reema: If you could tell us what this 2,00,000 pieces per day means in terms of rupee crore, in terms of revenues? A: Our average selling price (ASP) would be Rs 60, so Rs 60 per piece. Reema: Rs 1.2 crore per day? A: Yes. Reema: At full capacity it can potentially add about Rs 440 crore thereabout? A: Yes. Rs 440 would be, we generally consider 300 working days. Nigel: So it will increase your topline? A: Around Rs 350 crore. Nigel: Rs 350 so that is a big increase then to your topline. Last year you did around Rs Rs 950 crore or thereabouts so come FY17 we could see your topline go to at least may be around Rs 1,350 crore? A: I don’t think so like in this year we will be able to achieve the full capacity. It will at least take us one and a half years to two years to achieve the full capacities. We have also installed many new cutting machines as well as knitting machines which would decrease our cost and increase our EBITDA margins. Nigel: What will it do to your margins than last year you did around 10 percent? This new unit coming on stream you will have operating leverage as well that will be playing out. Can you see your margins move higher from around this 10 percent levels? A: Last year we had increase of growth of 16.51 percent EBITDA and this year it would increase even more than that more than 16.51 percent. By the end of next year it should be at a peak.