Raymond’s sales growth was subdued during the first quarter due to a high base effect. However, margins improved because of lower advertisement spends cost control initiatives and a noticeable turnaround in the branded apparel segment. Due to a steep rise in raw material (cotton and wool) prices, margins in this segment may remain under pressure. As demand revives during the wedding and festive season, increase in sale volumes and higher realisations could possibly offset this disadvantage.
Raymond is one of India’s leading branded fabric and apparel manufacturers. The company’s six segments include branded formal wear fabrics, branded high-value shirting fabrics, branded casual cum semi-formal apparel, garmenting, tools cum hardware components, auto components and fast moving consumer goods.
Economies of scale by virtue of improved machine utilisation rates at Raymond's linen fabric factory at Amravati should lead to operating leverage, consequently resulting in margin accretion. In mid fiscal ’18, Raymond commenced manufacturing of formal wear garments like jackets, trousers, shirts for men at its Ethiopian facility, which has a capacity of 2.6 million pieces per annum. The rationale behind the move was to enter the European and US markets at zero rate of duty besides taking advantage of low costs and subsidies in the African nation.