See better demand in garments biz in Japan, US: Raymond

A: This is the fourth quarter and not third quarter. Growth has been 13 percent but the overall growth for the year has been 17 percent. There have been good milestones this year, revenues have crossed Rs 5,000 crore. For the first time it is Rs 5,333 crore. Our stores count across 1,000 now it is 1,003. Our apparel revenue has crossed Rs 1,000 crore. Working capital has been to the extent of Rs 150 crore.

There has been significant increase in the advertisement spends both in the quarter and during the year which is why the EBITDA numbers have been on the lower side, significant increase in the advertising cost to the tune of about Rs 45 crore. Having said we have had our won problems in the engineering segment and automotive segment which has been a set back. We have lost certain volumes both in the domestic and export market which would at least take about another 12-15 months to get back to those kind of volumes partly on account of the situation prevailing in Latin America.

Apart from that our fast-moving consumer goods (FMCG) segment where share of profits which used to get good ones, we had envisaged for growth but market is little muted so our profits after tax (PAT) on a yearly basis is increased by Rs 5 crore to Rs 113 crore above last year. This is despite engineering business impacting us negatively over last year by Rs 24 crore, FMCG by Rs 12 crore and ad spends during the year having gone up by Rs 90 crore. If you look at textile sector and apparel sector the overall revenue growth has been 17 percent during the year, textile story 34 percent and apparel 15 percent.

Sonia: By the end of this fiscal you have done about an 18 percent growth on our topline but given that you are seeing slowdown in some Latin America countries etc do you think you can do the same kind of growth in FY16 as well or will it be much lower than 18 percent?

A: Those place that I referred to both in automotive sector primarily engineering which is files and tools segments that we are talking about. On the garmenting side while we are reasonably okay with the growth but there is some amount of demand slacken both witnessed in US and Japan which I believe will come back in 2-3 months time.Otherwise growth is good as of now, if growth in textile and apparels segments reflecting consistent trends in the last 3-4 quarters barring one quarter in third which is mainly in the apparel. We are hoping for a good outcome in the coming year subject to of course any macro economic factors impacting our business adversely.

Latha: Would you have to persist with such high marketing spends, this Rs 1,063 crore that you spoke about?A: The incremental spending was of the order of Rs 90 crore. As such group wide we spend on a annual basis advertising and the promotional spends, generally is about Rs 228 crore whereas last year it was at about Rs 140 crore. We had spend lot of money in the World Cup and all of the order of over Rs 24-25 crore may be to that extent there could be some reduction in advertising cost. It all depends how the market takes us and where we need penetration of our brand, it is a brand building exercise in nay case. Sonia: Your core textile business as you said has picked up quite well. In fact your margins are now at 16 percent in that business. Do you think you can better that in this fiscal?A: This year there has been a good take off both in textile and in the shirting fabrics both. It is too early for me to say about the next year, quarter-on quarter (QoQ) we will be able to respond but if we look at like-to-like sales growth generally across the network is about 7 percent. We have been renovating our stores and the impact of that would be felt next year. We have added 49 stores in the 'The Raymond Shop' (TRS) network. We expect good amount of traction going forward. We will also be renovating existing stores so that it will be more apparel centric rather than completely fabric centric so a mix of growth both in the textile and apparel segment.

Latha: This softening of your overall EBITDA margins in the fourth quarter to 7 percent from 10 percent in the last reported quarter do we see it reverting back to 10 percent?A: EBITDA margins mainly got impacted on account of advertising. Only the second and third quarter is the peak quarter for the textile and apparel industry.Latha: This Gokaldas subsidiary that you bought, what is the acquisition for, what is the price you paid and what kind of gains are you expecting to squeeze out? A: We have committed to purchase this unit. This is one of the units of the Gokaldas. They have got many units but we are talking about one unit in Bangalore which we are acquiring. It will take another month or so before it comes into our bracket.