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Articles: Stock Market | Raymond
- Prof. 00782 Maverick
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Leading brand in Textile industry; Foocus on apparel for domestic market is a story for the future!
Raymond ltd is India's total textile provider and leading producer of worsted suiting fabric with 60% market share in domestic market, with a capacity of 28 mn meters ( 31 mn including 3 mn WIP) of wool & wool-blended fabrics. Business comprises value chain from textiling to garment retailing in which textile segment remains the most profitable business for the company contributing 66% of the total revenue. This division has a leaders position in the domestic market. In addition to this, company also operates denim ( to be hived into a JV) 22% of revenues and Engineering files and tools division which is 12% of revenues.
The company exports its textile and garments to more than 50 countries including USA, Canada, Europe, Japan and the Middle East etc. Out of the total revenue 20% comes from export earnings. However it faces big competition from the countries like China, Pakistan and Bangladesh etc.
Raymonds has well respected apparel brands in the market. Namely Raymond, Manzoni premium wear, Park Avenue formal wear, ColorPlus premium casual wear, Parx casual wear, Be and Zapp kids wear. It is also attempting women wear where not many organised players exist. This segment is where Raymond will be by January 2007. The strategy behind is to target all segments in the market.
Raymond has a well established distribution network with around 350 - 400 company outlets all over India in which company owns 25 outlets and some are in other countries also. The company has tied up with malls as a distribution expansion strategy. The company has 140 acres of land in Thane though it will be a while before it will capitalise on this.
Textile segment outperforming, Denim smartly handled.. Valuations a triffle expensive.. but good things dont come cheap!
The Textile division is the primary growth segment in Raymond. Manufacturing textiles is highly technological and labour intensive process. This includes spinning, knitting and garmenting. Using worsted wool as the main raw material, which is known by its wool count from, 80 - 230 and blend it with natural cashmere, pure wool or chemical fabric to get higher quality cloth. With capacity utilisation running at 90% the company has been expanding. The expansion of capacity of worsted fabric of 3 mn m pa at Vapi is in progress. This plant is expected to start commercial production from Q1 FY08. This segment got the benefit from lower cotton prices of late. Wool prices were stable. The division grew by 13% and revenues stood at Rs 868 Cr up 18% qoq on the back of improved product mix and large volumes. Margin improved to 23% from 17% last year yoy on higher realisation and lower cotton costs. Textiles exports account for 8% of total revenues. Raw material prices were helpful which helped margins.
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