Raymond to ramp up cotton fabric production capacity in next 3 yrs

Diversified group Raymond, one of India’s leading manufacturer and retailer of fabrics and garments is planning to ramp up its cotton fabric production capacity, despite subdued domestic demand and slowdown in the export market. In the next three years, Raymond will increase its current manufacturing capacity from 21 million to 46 million metres annually, through a new plant at Amravati and its existing plant at Kolhapur.

The company will also be investing Rs 450 crore in a new textile unit at Nandgaon Peth in Amravati district in Vidarbha. The plant will have an annual capacity of 20 million metres of cotton fabric.

S K Gupta, president (shirting business) and group CEO (UCO Denim), at Raymond said that with the new plant at Amravati, the company will ramp up their production capacity up to 46 million metres in the next three years. Their 55 acre Kolhapur facility is looking to scale up its overall production to 26 million metres by 2018. They are upgrading their technology and machines at the Kolhapur plant,

For the Amravati plant, the company has been allocated 500 acres by the Maharashtra government.

Raymond exports 15% of its total production to markets like Australia, North America, Brazil, Europe and the Middle East. It has a market share of 60% in cotton fabric manufacturing.

Gupta said that given the industry benchmark of producing 93-94 percent fresh fabric in the country, this is the only plant to produce 97 percent fresh fabric without any rejection that sets it apart from the competition and also results in huge cost saving for the company.

The Kolhapur facility currently employs more than 800 people and secures 20% of its overall orders from exports.

Last month, Raymond reported a 28.46% decline in consolidated net profit at Rs 40.11 crore for the third quarter ending December 2015, down from Rs 56.07 crore during the same period in the previous financial year.

However, Raymond’s total consolidated income from operations during the quarter increased 7.36% to Rs 1,484.40 crore as against Rs 1,382.58
crore in October-December 2015.

Raymond is raising up to Rs 100 crore through issuance of non-convertible debentures (NCDs) on private placement basis. However, the company did not indicate end use of fund it plans to raise.

The Maharashtra state government has also decided to set up textile parks in the cotton belt of Vidarbha, as well as in Marathwada and north Maharashtra through state Industrial Development Corporation (MIDC). Similarly, the state government has allocated 102 hectares of land collectively to Shyam Indofab Ltd, VHM Industries, Suryalaxmi Cotton Mills and Siyaram Silk Mill where a total investment to the tune of Rs 1500 crore is expected. These units will employ about 5,200 people.