The Hindu : Business : Raymond to invest Rs. 280 crores in joint venture, capacity expansion

Online edition of India's National Newspaper
Friday, Feb 18, 2005

Business

Business

Raymond to invest Rs. 280 crores in joint venture, capacity expansion

By Our Staff Correspondent

Gautam Hari Singhania

MUMBAI, FEB. 17. Raymond . today announced two major initiatives aimed at further strengthening its position in the textile sector. The company has announced a total investment is of Rs. 280 crores, which entails an investment in a joint venture with an Italian company and the expansion of the company's worsted fabric capacity.

The Raymond Group has announced a 50:50 joint venture with Cotonificio Honegger of Italy which is a part of Gruppo Zambaiti for the manufacture and marketing of high value-added cotton shirting fabrics. The plant will have a capacity of 10.5 million metres annually and the project is estimated to cost Rs. 180 crores. Gruppo Zambaiti is among the top three Italian high fashion cotton textile groups with strengths in design and development and is a supplier to leading premium shirt brands worldwide.

The joint venture is part of Raymond's strategy to expand its product portfolio by entering into cotton fabrics — India's key strength in the textiles and clothing world.

This facility will cater to international markets at the higher end and the company's own requirements of fine shirting fabrics for its premium brands Manzoni, Park Avenue and ColorPlus. Honegger will buy back a significant portion of the production from the joint venture.

Raymond also announced a further expansion of its worsted capacity by setting up a facility at a new location in India with a capacity of three million metres annually to augment its capacity to 27 million metres. This expansion would enable the company to cater to the increasing demand for its high quality wool based suiting both in the international and domestic markets. The total capital outlay for this project would be Rs. 100 crores.

Gautam Hari Singhania, Chairman and Managing Director, Raymond, said, "The location for both the plants are still to be finalised and we are negotiating 2-3 locations for each of the plants. We are considering locations in Maharashtra, Gujarat and Karnataka and both plants are expected to come on stream before the end of the current financial year."

While the worsted plant will be financed by Raymond completely through internal accruals amounting to Rs. 100 crores, for the shirting fabrics plant amounting to Rs. 180 crores, Rs. 70 crores would come in the form of equity from both partners and the remaining Rs. 110 crores would be in the form of debt.

Mr. Singhania said, "The textile scenario internationally is looking extremely positive for Indian companies. There are significant opportunities for Indian companies to partner international companies to exploit the opportunities in the international market. Our 50:50 joint venture with the Italian company is the first step towards creating partnerships, which can establish Raymond strongly in the international arena. We have been through three phases — restructuring, consolidation and growth of our business and we are now in the growth phase."

Reacting to the threat of Chinese competition, Mr. Singhania said, "We tend to overplay the Chinese threat. China will be a large volume player in textiles while India will always be a higher quality lower volume player. We are well positioned to take advantage of that as we are today a fully vertically integrated player in our business."

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