Description
This is a documentation is about company analysis of Raymond group.
An analysis of “Raymond Group”
Raymond Limited is India’s leading Textile and Branded clothing Company with interests in engineering (files, tools and auto components) having its corporate headquarters in Mumbai. The Textile industry is one of the largest and important sectors in the economy in terms of output, foreign exchange earnings and employment. It is one of the leading textile industries in the world. It contributes approximately 4% to the GDP, 14% to the nation’s industrial production and 17% to the country’s export. It is the second largest provider of employment with direct employment to over 35 million people. The industry is expected to grow steadily to US$ 110 billion by 2015. Textile sector has registered a growth of 4.3% during April-January 2011-12.
The textile and apparel industry went through a tough year struggling with the surging and fluctuating raw materials prices. Government is taking efforts for boosting the textile industry through various initiatives, and investments are increasing steadily. The Ministry of Textiles has sanctioned a total of US$ 133 million under Technology Upgradation Fund Schemes (TUFS) during September 2010. The industry is expected to continue to grow at a significant rate in the future, as it is fuelled by a strong domestic consumption.
PEST analysis of the Textile sector The Government runs the scheme of TUFS, under which the industry is assisted to modernize by aiding the technological upgradation. Government also gives a 10 % capital subsidy and a 5 % interest subsidy on installation of machinery. A national fibre policy has also been set up. The economic situation of the world can also affect the industry as increasing inflation rate make the cost of production high and thus reduce the profit margin of the industry. The demand of garments and apparels also depends upon the changing lifestyle of people. Also wants and needs across different demographics affects the demand in the garments. The textile sector has recently witnessed some major technological developments. These technological advancements have come about through in all the five stages of production.
SWOT analysis Strength – The textile sector is one of the most labour intensive sectors. This is where India has its first strength i.e. man power. Availability of abundant and cheap human resource in comparison with other countries is a prime consideration. The sector also enjoys supportive government policies for growth. Weakness – After the dissolution of the MFA in 2005, the competition in the global market has increased. The sector remains unorganized at many levels, and needs more attention towards the supply chain management. Also despite the funding policies of the government, many sections of the industry lag behind when it comes to modernization and technological upgradation. Opportunities – The outsourcing in the field of manufacturing of garments in countries like India present a lot of opportunities. As the labour costs in the traditional centres like China and some of the Asia-pacific countries increase, more opportunities are available in the Indian textile sector. Threats – The increasing cost of raw materials and high domestic inflation are cause of concern. Also the proposed increase in the tax in some areas on branded garments, adds to the obstacles in the growth of the sector.
Competitor analysis The domestic apparel industry constitutes of five segments – menswear, women’s wear, kids wear, unisex and uniforms. Menswear is the largest segment whereas uniforms and women’s wear are the fastest growing segments. Apparel manufacturing is the least capital intensive section of the textile value chain and is therefore characterized by low entry barriers. At the same time, it is highly labour intensive and requires skilled, unskilled and semi-skilled labourers. To remain competitive in the international market, Indian apparel industry needs to build up a strong weaving and processing link so as to provide support to the apparel manufacturers and also set up large units for reaping the benefits of economies of scale. Apparel industry’s profitability is mainly influenced by the raw material and input prices. Domestic players enjoy better margins as against the exporters. The raw material prices for apparel players have been on rise in the recent past due to the soaring cotton and crude oil prices. The players have been unable to pass on the rise in cost to the consumers due to the stiff competition and limited pricing power. Therefore, the margins of the apparel manufacturers are expected to remain subdued over the medium term.
Company Analysis Raymond Group Raymond Limited started operations in 1925 and is India’s leading Textile and Apparel Company and largest integrated manufacturer of worsted fabric in the world. With a capacity of 38 million meters in wool & wool-blended fabrics, Raymond commands over 60% market share in worsted suiting in India and ranks amongst the first three fully integrated manufacturers of worsted suiting in the world. The Raymond Group is headquartered in Mumbai, Maharashtra.
The Share holding pattern of Raymond Ltd is as follows Promoters Financial Institutions Foreign Institutions N Banks Mutual Funds Other Companies General Public 39.52% 11.70% 9.03% 15.20% 3.06% 20.11%
The top management of Raymond Ltd Gautam Hari Singhania Gautam Hari Singhania H Sunder Aniruddha Deshmukh Rakesh Pandey Shreyas Joshi Harshal Jayavant Chairman and Managing director CEO President - Finance & CFO President - Textiles & FMCG President - Retail & Business Development President - Group Apparel President - Engineering Business
Financial status Raymond Ltd. Has a market capitalization of Rs 2310.65 Cr. FY12 consolidated a net profit of 190 % to Rs 156 Cr. Board of Directors recommended a dividend of 25 %. Consolidated Net Sales for the year grew by 20 % to Rs 3642 Cr. while EBITDA was up to 535 Cr.
Segments as percentage of total Revenue in FY 12 Worsted Brand Apparel Denim JV Cotton Shirting Garmenting Tool & Hardware Auto Component 49 20 11 3 5 9 3
SWOT Analysis of Raymond Ltd. Strength – The Company has a superior technology-based manufacturing capacity. Raymond Ltd has deep pan-India retail network accompanied by strong and successful brands. It has Strong research and development for products and innovations. Weakness – The Company derives much of its revenues from tits operations in the textile sector. The other sectors like Engineering and Aviation, where the company has interests, have been neglected for technological modernization. The imports of wool from Australia are always susceptible to the fluctuation in the exchange rates. Thus the supply chain management can be better than the present state. Opportunities – The strong domain expertise, powerful brand positioning and strength and resilience of the brands combined with the deep retail market penetration, growth potential of the tier 2, 3 and 4 towns; provide opportunities in the newer markets, new segments of customers, new channels of distribution, etc. Threats – Sharp increase in raw material prices, Fluctuating exchange rates. Higher domestic inflation and proposed mandatory levy on branded apparels
Raymond Ltd - Operations The company has leveraged its Raymond brand for fabrics and has expanded to apparels. Currently, it focuses on four key brands, with the flagship brand Raymond and Park Avenue in the formal wear category, and Parx and Colorplus in casual wear. Makers is a recent brand targeted at the mass market. Recently it discontinued five loss making brands and started to focus more on the variants under Raymond Apparels. These brands are predominantly marketed through the company’s own retailing network. The company has maintained its advertising and promotion spending at 4% of revenues. In the last 4 years the company has expanded aggressively in smaller cities. With over 850 stores, it owns about 25 % of them. Thr Company has a land of 125 Acres in city of Thane near Mumbai at a prime location. The plant that exists here has been closed down. The market value of this land is estimated to be around 132 million Rs. This land can be sold or developed (fully/partially) by the company. Raymond Ltd has witnessed significant restructuring in the last 5 years and has even more optimized operations in the new manufacturing facilities in the country. There may be benefits from the men’s wear segment due to the increase in income levels. Raymond’s fast expansion in new markets like smaller cities may provide a first mover’s advantage. Merger of Solitaire apparels Ltd with Raymond Apparels Ltd has helped to increase operational efficiencies and rationalizing of costs.
doc_575072329.docx
This is a documentation is about company analysis of Raymond group.
An analysis of “Raymond Group”
Raymond Limited is India’s leading Textile and Branded clothing Company with interests in engineering (files, tools and auto components) having its corporate headquarters in Mumbai. The Textile industry is one of the largest and important sectors in the economy in terms of output, foreign exchange earnings and employment. It is one of the leading textile industries in the world. It contributes approximately 4% to the GDP, 14% to the nation’s industrial production and 17% to the country’s export. It is the second largest provider of employment with direct employment to over 35 million people. The industry is expected to grow steadily to US$ 110 billion by 2015. Textile sector has registered a growth of 4.3% during April-January 2011-12.
The textile and apparel industry went through a tough year struggling with the surging and fluctuating raw materials prices. Government is taking efforts for boosting the textile industry through various initiatives, and investments are increasing steadily. The Ministry of Textiles has sanctioned a total of US$ 133 million under Technology Upgradation Fund Schemes (TUFS) during September 2010. The industry is expected to continue to grow at a significant rate in the future, as it is fuelled by a strong domestic consumption.
PEST analysis of the Textile sector The Government runs the scheme of TUFS, under which the industry is assisted to modernize by aiding the technological upgradation. Government also gives a 10 % capital subsidy and a 5 % interest subsidy on installation of machinery. A national fibre policy has also been set up. The economic situation of the world can also affect the industry as increasing inflation rate make the cost of production high and thus reduce the profit margin of the industry. The demand of garments and apparels also depends upon the changing lifestyle of people. Also wants and needs across different demographics affects the demand in the garments. The textile sector has recently witnessed some major technological developments. These technological advancements have come about through in all the five stages of production.
SWOT analysis Strength – The textile sector is one of the most labour intensive sectors. This is where India has its first strength i.e. man power. Availability of abundant and cheap human resource in comparison with other countries is a prime consideration. The sector also enjoys supportive government policies for growth. Weakness – After the dissolution of the MFA in 2005, the competition in the global market has increased. The sector remains unorganized at many levels, and needs more attention towards the supply chain management. Also despite the funding policies of the government, many sections of the industry lag behind when it comes to modernization and technological upgradation. Opportunities – The outsourcing in the field of manufacturing of garments in countries like India present a lot of opportunities. As the labour costs in the traditional centres like China and some of the Asia-pacific countries increase, more opportunities are available in the Indian textile sector. Threats – The increasing cost of raw materials and high domestic inflation are cause of concern. Also the proposed increase in the tax in some areas on branded garments, adds to the obstacles in the growth of the sector.
Competitor analysis The domestic apparel industry constitutes of five segments – menswear, women’s wear, kids wear, unisex and uniforms. Menswear is the largest segment whereas uniforms and women’s wear are the fastest growing segments. Apparel manufacturing is the least capital intensive section of the textile value chain and is therefore characterized by low entry barriers. At the same time, it is highly labour intensive and requires skilled, unskilled and semi-skilled labourers. To remain competitive in the international market, Indian apparel industry needs to build up a strong weaving and processing link so as to provide support to the apparel manufacturers and also set up large units for reaping the benefits of economies of scale. Apparel industry’s profitability is mainly influenced by the raw material and input prices. Domestic players enjoy better margins as against the exporters. The raw material prices for apparel players have been on rise in the recent past due to the soaring cotton and crude oil prices. The players have been unable to pass on the rise in cost to the consumers due to the stiff competition and limited pricing power. Therefore, the margins of the apparel manufacturers are expected to remain subdued over the medium term.
Company Analysis Raymond Group Raymond Limited started operations in 1925 and is India’s leading Textile and Apparel Company and largest integrated manufacturer of worsted fabric in the world. With a capacity of 38 million meters in wool & wool-blended fabrics, Raymond commands over 60% market share in worsted suiting in India and ranks amongst the first three fully integrated manufacturers of worsted suiting in the world. The Raymond Group is headquartered in Mumbai, Maharashtra.
The Share holding pattern of Raymond Ltd is as follows Promoters Financial Institutions Foreign Institutions N Banks Mutual Funds Other Companies General Public 39.52% 11.70% 9.03% 15.20% 3.06% 20.11%
The top management of Raymond Ltd Gautam Hari Singhania Gautam Hari Singhania H Sunder Aniruddha Deshmukh Rakesh Pandey Shreyas Joshi Harshal Jayavant Chairman and Managing director CEO President - Finance & CFO President - Textiles & FMCG President - Retail & Business Development President - Group Apparel President - Engineering Business
Financial status Raymond Ltd. Has a market capitalization of Rs 2310.65 Cr. FY12 consolidated a net profit of 190 % to Rs 156 Cr. Board of Directors recommended a dividend of 25 %. Consolidated Net Sales for the year grew by 20 % to Rs 3642 Cr. while EBITDA was up to 535 Cr.
Segments as percentage of total Revenue in FY 12 Worsted Brand Apparel Denim JV Cotton Shirting Garmenting Tool & Hardware Auto Component 49 20 11 3 5 9 3
SWOT Analysis of Raymond Ltd. Strength – The Company has a superior technology-based manufacturing capacity. Raymond Ltd has deep pan-India retail network accompanied by strong and successful brands. It has Strong research and development for products and innovations. Weakness – The Company derives much of its revenues from tits operations in the textile sector. The other sectors like Engineering and Aviation, where the company has interests, have been neglected for technological modernization. The imports of wool from Australia are always susceptible to the fluctuation in the exchange rates. Thus the supply chain management can be better than the present state. Opportunities – The strong domain expertise, powerful brand positioning and strength and resilience of the brands combined with the deep retail market penetration, growth potential of the tier 2, 3 and 4 towns; provide opportunities in the newer markets, new segments of customers, new channels of distribution, etc. Threats – Sharp increase in raw material prices, Fluctuating exchange rates. Higher domestic inflation and proposed mandatory levy on branded apparels
Raymond Ltd - Operations The company has leveraged its Raymond brand for fabrics and has expanded to apparels. Currently, it focuses on four key brands, with the flagship brand Raymond and Park Avenue in the formal wear category, and Parx and Colorplus in casual wear. Makers is a recent brand targeted at the mass market. Recently it discontinued five loss making brands and started to focus more on the variants under Raymond Apparels. These brands are predominantly marketed through the company’s own retailing network. The company has maintained its advertising and promotion spending at 4% of revenues. In the last 4 years the company has expanded aggressively in smaller cities. With over 850 stores, it owns about 25 % of them. Thr Company has a land of 125 Acres in city of Thane near Mumbai at a prime location. The plant that exists here has been closed down. The market value of this land is estimated to be around 132 million Rs. This land can be sold or developed (fully/partially) by the company. Raymond Ltd has witnessed significant restructuring in the last 5 years and has even more optimized operations in the new manufacturing facilities in the country. There may be benefits from the men’s wear segment due to the increase in income levels. Raymond’s fast expansion in new markets like smaller cities may provide a first mover’s advantage. Merger of Solitaire apparels Ltd with Raymond Apparels Ltd has helped to increase operational efficiencies and rationalizing of costs.
doc_575072329.docx