Betting big on the real estate boom, textiles-to-engineering company Raymond is in various stages of negotiations with landowners to sign joint development agreements (JDAs) worth Rs 5,000 crore. On the retail front, the group is looking at opening 300 stores in FY25, the highest store in a year in its history. “We have signed five to six JDAs and will continue to sign more. We are becoming a preferred JDA partner,” said Gautam Hari Singhania, chairman and MD, Raymond.
In JDA, while land owner brings in the land, a realtor develops it and gets to sell properties built on the plot. Singhania said the company has 11 million sq ft with a development potential of 30,000 crore in Thane alone. The company is doing projects in Mumbai’s Bandra, Sion and Mahim, which has a revenue potential of Rs 6,000 crore. It has also signed a project in Chembur in Mumbai. The bookings stood at 1,500 crore in FY23 and RS 2,400 crore in FY24. Overall, Mumbai saw a 27% growth in residential sales in Q1 CY24. The city saw maximum sales in the Rs 1.5-3 crore price segment, according to JLL, a real estate consultant.
On the question of probability of residential sales facing headwinds due to high interest rates and prices, Singhania said, “South Mumbai prices have gone up. Whether it can sustain, my answer is no. We are not doing South Mumbai. Even if we do, pricing will be conservative. Prices are `1-2 lakh per sq ft. It doesn’t make any sense to me,” he said. On the oversupply in Thane market, he said even if it is so, the product has to sell first given its quality and pricing. “If we make the best product at the best price, why do we have to care about oversupply?” he said.
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Retail pipeline
The company opened 250 stores in FY24 and it should be another 300 in FY25. “Last year, we had set up about 150 ethnic wear stores and we will open another 80-100 this year, apart from Raymond brand stores, TRS stores, Park Avenue and Color Plus,” Singhania said. “While we haven’t finalised the numbers for FY26, it will certainly be more than 200,” he added.On the garment business, he said, the expansion plans are on track and the ethnic wear brand, Ethnix, is also doing well. “We are hoping for the signing of the FTA (free trade agreement) with the UK. It hasn’t happened yet. But it may happen after the UK elections on July 4. It is going to be beneficial for India,” he said. The group had earlier earmarked Rs 200 crore as capex to hike production capacity to 11 million pieces from present 8 million over the next 18 months. The capacity expansion would be mostly in Bengaluru and some in Ethiopia.
Demerger talks
On the demerger of its lifestyle business, which was expected to be completed by July, would now happen by August. “The delay is on the procedural front, the process is on before the National Company Law Tribunal.” The company’s consolidated revenue of its engineering business was at about Rs 1,800 crore and the consolidated Ebitda was at Rs 270 crore in FY24, following the acquisition of Maini Precision Products (MPPL). “With India buying more and more aircraft and becoming a sourcing ground for aviation components, this sector is poised for growth,” Singhania said.In November last year, Raymond Group entered into an agreement to acquire a 59.25% stake in MPPL for Rs 682 crore, a move to help it foray into the sunrise sectors such as aerospace and defence. The acquisition was completed in March.The group is also looking at the inorganic route. “We are always scouting for deals to create value,” he said, adding that recently a firm was being looked at, but it didn’t work out. On reports that he is lining up a succession plan, Singhania said, “I will do what’s best in the interest of the shareholders.”
From: financialexpress
Financial News
