Raymond cautiously optimistic on second half post good Q2

Textile major Raymond's realisations were strengthened by the massive rupee fall seen in Q1 and Q2 i.e, between April and September, says M Shiv Kumar, chief financial officer, Raymond.

Speaking to CNBC-TV18, Kumar says the company’s strong Q2 performance has been the result of a revival in its apparel business that has also helped make profits. "All other business segments too have seen an all-round improvement," adds Kumar.
Kumar is cautiously optimistic on the company’s Q3 performance given the macros won't change drastically.
“Our thrust will now be on exports,” he highlights while saying the company is a net earner of foreign currency and will continue to up its export realisations.

Below is the edited transcript of Kumar's interview to CNBC-TV18. Q: It has been a good improvement that you have seen both in the well performing textile segment as well as in the branded apparels segment where you guys were facing some hits in the year gone by. Is there more margin improvement that one can expect in the quarters to come well beyond this 15.5 percent level you have clocked in this time?
A: There has been an all-round improvement in the performance of most of the business verticals. Lower rupee vis-à-vis dollar also helped us. In the textile segment we have a better product mix, higher realisation and continued increase in the offtake of combo packs.
Besides, operational efficiencies improved our textile performance which has contributed to better overall performance. Apparel is definitely showing signs of revival after a roller coaster ride for over six quarters and has returned to profits now. Secondary offtake in the consumer facing channel is witnessing good momentum and all are B2B business segments including denim, shirting, garmenting, they are continuing to do well.
In our engineering segment, notably tools and hardware is doing well and auto components, despite a tough economic environment in the automotive industry has performed well.
Our FMCG segment business has continued to do very well. Despite extreme volatility in the currency, high inflation and slowing GDP, Raymond was able to overcome the tide very well. Our interest cost was flat despite rising short-term rates and debt equity is reasonably under control. Q: So going forward, what is the expectation both in terms of top line growth as well as margin estimates?
A: We are cautiously optimistic going forward subject to any change in the macro economic factors. Going by the first 15 days, it looks that the quarter is going to be good but it is too early to say beyond this because we have to go through this season and after that, we would like to see where we stand with respect to all our other businesses. It is also dependent on the economic revival and also any macro economic changes that may impact growth including interest rates.
We are also constantly engaging ourselves to evaluate various options and opportunities to maximize value in other segments of our businesses to increase the shareholder value. We are interacting with investment bankers, private equity players, and strategic partners with a view on expansion, debt reduction and unlocking value in the investment. Q: Is there anything that you get by way of rupee deprecation help, do you have much by way of exports?
A: We have an export of about USD 200 million and import of about USD 100-110 million, so we are a net earner of foreign currency. We are in the denim segment exports to a large extent and the tools and hardware segment where our realisations have definitely improved between April and September on account of rupee depreciation. Q: And you expect that this is going to give you more business in terms of volume and margins in the second half?
A: Our thrust is now on exports in these particular segments and we are running to good amount of capacity as of now. We will be increasing our export realisation in the garmenting segment. It has more to do with Silver Spark Apparel Limited and files and segment and there are some issues concerning realisation and export particularly in the tools and hardware segment. The moment we get into a different line of products, will go on for that improved export realizations on that segment as well.