This led to Raymond shares surging almost 10% to close at Rs 204.85 on the BSE on Thursday.
Addressing the press in Mumbai, Gautam Hari Singhania, chairman and managing director, Raymond Group, said, This is mainly to unlock shareholder value. We currently have 15 to 20 acres of land at Thane in central Mumbai where we would be building a residential township targeting the mid-housing segment with 2-3-4 BHK apartments.
The company had made a net loss of Rs 231.32 crore in FY 2009 on net sales of Rs 2,585.6 crore.
According to Singhania, The first phase of the project will get over in the next two years. We have received approval from the board to go ahead with our plans.
However, Singhania refused to divulge any financial details. As part of the new corporate strategy, he added that Raymond group is currently evaluating plans to spin off its realty business into a separate subsidiary.
On Raymond Groups foray into real estate, Sanjay Dutt, chief executive officer business, Jones Lang LaSalle Meghraj (JLLM), said, Raymond has forayed into the real estate sector because it has a large realty portfolio and land bank which it may like to develop and exploit in the interest of its shareholders. Many organisations have forayed into the sector. They include Bombay Dyeing, Godrej, Tatas and Videocon, apart from some infrastructure companies.
Dutt added, These corporations, including Raymond, have strategically located land parcels which are creating a launching pad for their realty plans. Hence, should the project be successful and should promoters feel inclined to continue to fuel growth in the realty sector, one would expect them to grow beyond its own land portfolio. As a corporate, it enjoys tremendous credibility in the eyes of financial institutions. This also brings in an element of professionalism.
Raymond was founded in 1925 when its woolen mill was set up in the area around Thane creek.