Raymond plans unit in China

Mumbai: Keeping its long-term interests in mind, Raymond Ltd is considering the possibility of setting up a manufacturing unit in China in a joint venture with a local Chinese manufacturer to make garments.

The key reasons for the decision are: 1) Costs are substantially lower in China in comparison to India. An example. The conversion cost for a shirt in China is only $1.70 while the same conversion in India costs $2.25. 2) Conditions in China are more suitable for doing business in comparison to countries like Pakistan, Bangladesh and West Asia, where the current war-like situation has cast a shadow on their long-term prospects.

China is likely to emerge as a major business hub for Raymond due to the reasons cited above. But before Raymond does this, it will study and understand the Chinese market well. The company has already started operating in China by opening a representative office in Shanghai in September called Raymond China. Raymonds entry into China is part of its overall strategy of making China an outsourcing base.

To expand its market size, Raymond has acquired a Portuguese garment manufacturing unit, Regency Textiles Portuguesa Limitada, for $3 million. Regency already has an established presence in the European retail markets, where its products, mainly suits, are sold under the Regency brand. Regency boasts of four exclusive showrooms in Europe, two each in Spain and Portugal.

Raymond plans to expand this retails outlet chain and has no plans to replace the name Regency with Raymond. Regency also has a manufacturing unit, which has a capacity of manufacturing 400 trousers and 400 jackets per day.

Raymond China, Raymonds representative unit in China, will buy and outsource garments such as suits, jackets, trousers and waistcoats, from Chinese manufacturers and sell them into the European markets through the Regency brand and Regency showrooms. Raymond also plans to include corporate wear in its product range, which include uniform markets for airlines and retail chains, and sell the same in the European markets.

Raymond, meanwhile, has announced its working results for the second quarter ended 30 September 2001. On sales of Rs 294.90 crore, it has posted a net profit of Rs 40.80 crore. In the corresponding period of the previous year, the company had posted sales of Rs 444.40 crore and a net loss of Rs 151.70 crore. The figures are strictly speaking not comparable, because in the corresponding quarter, Raymond had booked a loss of Rs 176 crore on sale of its steel unit.