In An Expansionary Mode

Updated: Feb 1 2004, 05:30am hrs
The share price of Raymond has increased by 112 per cent over the past eight months on BSE to Rs 191 as on January 29, 2004. On December 30, 2003 the stock had reached its 52-week high of Rs 245. The company has been banking on core competence by divesting unrelated businesses like steel, cement and synthetics, contributing 40 per cent to the turnover. It has been concentrating on the core areas of textiles and garments. In the process, equity base has been restructured and debts reduced substantially.

The company has posted good performance over the quarter to December 2003. It reported a 60 per cent y-o-y rise in net profit to Rs 30.55 crore, while net sales for the quarter increased marginally to Rs 277.44 crore (Rs 275.38 crore). Revenue from the textiles division was slightly lower at Rs 192.34 crore as compared to Rs 200.35 crore, whereas sales volumes were lower at 5.5 million metres (5.63 million metres). But despite a steep rise in the prices of wool and polyester, the textile division achieved a higher profit of Rs 28.3 crore (Rs 22.51 crore). This has been attributed to better cost management.

The denim division revenues were up by 33.13 per cent to Rs 51.31 crore and the files & tools division (an unrelated area) witnessed a fall in revenue to Rs 37.01 crore (Rs 38.12 crore). The company reported lower profits in this division due to rise in the steel prices after July 2003.

In spite of the core competence policy, chairman and managing director Gautam Hari Singhania finds acquisition of engineering files unit of HGI Industries by JK Files & Tools, to have immensely benefited Raymond. With that acquisition the company claims to be the worlds largest with a 90 per cent market share in India and 27 per cent, globally.

Another popular identity of Raymond is the Kamasutra brand of condoms, manufactured by JK Ansell, a 50:50 JV between Raymond and Ansell International, Australia. The company also manufacturers surgical gloves. Another group company, JK Helene Curtis, operates in the business of grooming. On its home turf, Raymond is among the top three manufacturers of worsted suitings in the world. It has recently introduced Super 200, a premium range of fabric, while Park Avenue is claimed to be the largest selling office and occasion wear brand in India. Raymond has made its mark with various brands like Parx (leisurewear segment) and Manzoni (a niche brand). To fill the vacuum in the high end, casual wear segment, Raymond decided to acquire ColorPlus, as a major growth driver for ready-to-wear business.

Raymond is present globally through a network of 13,000 retailers in 400 cities, while its manufacturing divisions include textiles (plants at Thane, Jalgao and Chhindwada), denims (plant at Yavatmal), files & tools (plants at Thane, Ratnagiri, Chiplun and Pithampur) and aviation (Mumbai). The company has a promoter share holding of 36 per cent, while institutional investors hold 34 per cent, with the Indian public accounting for another 25 per cent.

Raymond has embarked on a Rs 200 crore expansion plan involving a new garments manufacturing unit at Bangalore. The greenfield plant will come up in two phases, costing Rs 40 crore. Another denimwear manufacturing facility is also coming up in Bangalore, costing Rs 44 crore. The garment unit, with an export focus is reported to have a capacity to stitch 1,000 suits and 1,500 formal trousers per day, with possibility of capacity expansion. Meanwhile, the company is also preparing itself for the post-2005 market when quantitative restrictions on garment imports will end and it will be faced with competition and opportunities from around the world. To take on the challenges, Raymond has identified better manufacturing facilities and participation in more international fashion events, as its important tasks.