RAYMOND READY FOR REALTY

RAYMOND READY FOR REALTY
The Telegraph

Piya Singh, Mumbai

Raymond Ltd, the Gautam Singhania-controlled textiles company, has decided to diversify into real estate. The company’s Thane plant, spread over around 150 acres, could be the first to be developed.

According to sources, the top management has started discussions “internally” on moving out of Thane where it runs a mother plant that makes superfine worsted suiting fabrics and relocating to another company-owned plant in Vapi, Gujarat. However, the management has not yet fixed a deadline for the relocation.

On Monday, the company sent a notice to the Bombay Stock Exchange seeking shareholder approval through a postal ballot to amend the object clause of the company to include “real estate development” as a business.

Deepak Khetrapal, chief operating officer of Raymond, said, “We have sought shareholders’ approval to change the objects clause purely as an enabling resolution at this stage. The resolution will enable the company to examine the opportunities and revert with specific proposals to the board and shareholders.”

Responding to a query on whether the company was making moves to shift production facilities from Thane to Vapi, Khetrapal said, “Currently, all plants of the company, including Thane and Vapi, are operating concurrently.”

An analyst with Mumbai-based brokerage Motilal Oswal said, “Monday’s notice was a positive development for the company and it is logical to assume that the company would first develop its property at Thane.”

“The company has some 140 acres in Thane. The cost of this land would amount to roughly Rs 1,400 crore and after development the net spread (difference between cost of construction and sale price) could yield Rs 2,800 crore in revenues over the next three to four years.”

Another Mumbai-based analyst who tracks the textile sector said the management had indicated in the past that it would consider moving to Vapi as and when they expanded capacity at the Gujarat plant.

So far, Raymond has increased production at Vapi to 14 million metres per annum. A company spokesperson did not disclose how much capacity addition was expected in the future. Labour costs at Vapi would also be lower than that at the Thane plant, which employs 1819 workers, the analyst added. The Vapi plant has high-tech machinery such as warping equipment from Switzerland, weaving machines from Belgium and finishing machines from Italy.

Raymond is not the only textile company that is considering such a move. On Monday, Century Textiles, which shut down Century Mills in mid-town Mumbai a while ago, said the land would be developed for various commercial uses. Century Textiles, which has already demolished the building on this site, expects to spend Rs 625 crore over the next two years in the first phase of developing this land.