Companies

‘We are committed to Make in India; Ethiopia venture is for export market’

Suresh P Iyengar Mumbai | Updated on January 12, 2018 Published on June 26, 2017

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The 92-year-old Raymond Group has hogged the limelight for all the wrong reasons, belittling the big strides it has made on the business front. Despite controversy over the JK House sale to promoters, it was business as usual for the seasoned business man Gautam Hari Singhania, Chairman and Managing Director who fielded questions at ease. Excerpts:

What favoured Ethiopia over India for your fresh investment in new plant?

Ethiopia makes a compelling business case for us to serve global customers faster at a competitive price. It mitigates export risk and catapult Raymond among top five leading suit makers in the world. Having said that, we are committed to ‘Make in India’ and been manufacturing here since 1925. Our greenfield project at Amravati is a testimony to this. We have four modern suiting and shirting plants in Vapi, Chhindwara, Jalgaon and Kolhapur. Raymond forayed into B2B garmenting space in 2003 and has four modern garmenting plants in Bengaluru. As a white label-integrated supplier to leading international brands, we make garments for export to the US, Europe and Japan. We are the largest garment makers in India with annual capacity of 2.2 million jackets and 2.4 million pieces each of trousers and shirts.

Are you concerned over geopolitical tension in Ethiopia?

The democratic government of Ethiopia has largely been stable for the last two decades. Ethiopia is among the most politically stable countries in the world. There have been some recent issues which have been resolved well by the government. Of late, several international companies have invested in Ethiopia and the political will of the country ensures stability and provides the required support to carry on business operations smoothly.

What are the sops Ethiopia offered you?

Silver Spark Apparel Ethiopia PLC, a wholly-owned subsidiary of Raymond, is among the host of investors who have set up their facilities at the Hawassa Industrial Park, which would become an international hub. The Ethiopian government offers manpower at a competitive rate and highly subsidised power.

The ready-made industrial sheds at the Park reduced capital expenditure substantially. Ethiopia has duty-free access to the US and European markets. Our facility will be the single largest suit manufacturing garment in the world with over 1.4 million jackets per year.

Your expansion plans in India?

In a phased manner, we will be investing ₹1,400 crore in our green field project in Amravati.

It is likely to be commissioned by year end. This facility will provide employment to over 8000 workers.

Why was JK House sale plan put for shareholders voting when you as CMD opposed it?

It was a decision taken by the board. As a transparent company any proposal that comes to the board and concerns investors is put up for shareholders approval.

Selling apartments to related parties at a substantial discount to the prevailing market prices would have caused a major loss to shareholders.

We are contesting the matter in court based on legal advice. Having embraced the transition at Raymond, we are on the growth path and creating a ‘Reimagined Raymond’ making it future ready for enhanced value creation for stakeholders.

Will GST of 12 per cent impact your business?

This is an economic inclusion of largely unorganised apparel sector and will require routine interventions by the industry. It will not impact the garment business as the Revenue Neutral Rate is about 9 per cent and the 5 per cent credit on the fabric will be an added advantage. Capping GST at five per cent for garments priced below ₹1,000 is in the right direction.

What is the progress of your tie-up with Khadi and Village Industries Commission?

We recently launched ‘Khadi by Raymond’ in Mumbai. It is in line with the Prime Minister’s vision of promoting Khadi for fashion.

It permits Raymond to promote sale of Khadi products and forge links with established marketing agencies through the PPP mode.

We have also agreed to purchase a minimum quantity of Khadi products for five years. We will open new doors for Khadi through Raymond outlets, e-commerce portals and tap select international markets. We will procure all khadi varieties and send it to our plants for the final finishing process.

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Published on June 26, 2017
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