Financial Daily from THE HINDU group of publications
Saturday, Jul 06, 2002
Raymond's views future with `cautious optimism'
Mr Gautam Singhania, CMD, Raymond, at a company showroom.
MUMBAI, July 5
RAYMOND Ltd has said in its 2001-2002 annual report that the company's future outlook is one of "cautious optimism."
Last fiscal, concluded as a tough year for industry in general and the textile sector in particular, saw Raymond register a net profit of Rs 81.13 crore on a gross turnover, lower by 33.6 per cent at Rs 980.74 crore.
In the outlook for its textile division, Raymond has noted that the textile sector continues to pass through difficult times and government policy initiatives have not been forthcoming to correct the structural issues facing the industry. "Owing to the company's inherent strong manufacturing and marketing capabilities, the future outlook is one of cautious optimism," the report said.
Raymond's exports, which slipped last year to Rs 60.27 crore, is expected to recover in current fiscal and reach the levels of 2000-2001. It says there are signs of improved overseas demand.
However, the forecast on raw material prices betrayed some concern. According to the report, steady wool prices had suddenly taken an upswing from December 2001, due to both reduced output of wool in Australia and New Zealand and a spurt in demand.
"Fortunately, our requirements were well hedged for the year under review to cushion the volatility. The impact of the recent increase in prices will be felt in the current financial year. Man-made fibre prices which were steady till February 2002, have moved up due to spurt in prices of petro-products. It is expected that raw material prices will stabilise during the middle of the current year," the report said.
In 2001-2002, Raymond's output of finished fabric had reached an all time high of 247.93 lakh metres.
Last fiscal, capacity utilisation for the denim industry had picked up worldwide, reflecting demand revival. Alongside, there was a marked shift in consumer preference for specialty denim. On the other hand, cotton prices, which showed a downward demand for the most part of 2001-2002, have started firming up.
Though the demand for denim is projected to stay buoyant for sometime to come, the report says, "Cyclical nature of international denim market and changing consumer preferences for other fabrics could slow down the growth in the medium term." Raymond's own denim division is in the process of expanding production capacity by 5 million metres in 2002-2003.
On Raymond's files division which is the world's largest producer of files the report, while acknowledging its improved performance, has said that the global growth rate in the files business" is almost stagnant with the usage of files in developing countries in the engineering and industrial sectors gradually declining and insignificant growth in the agricultural and horticultural sectors."
Despite concerns, including the phasing out/removal of export incentives like DEPB, 80 HHC, growing labour costs and competition from cheap, low quality imports, the report noted on the files business, "the thrust in future will be to increase volumes in USA, Canada, China, CIS and East European countries. Brand leadership also holds out prospects for strategic alliances with global players."
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