Economic Review
Global Economy and Outlook
The global economy witnessed a challenging CY2023. While fluctuations in commodity prices led to inflation in both developed and developing nations, persistent geopolitical issues resulted in supply chain disruptions. Additionally, the global economy recorded the sharpest increase in interest rates in 40 years. As a result, the global growth decreased from 3.5% in CY2022 to 3.2% in CY2023.1
However, several economies demonstrated resilience in these times of adversity. Emerging markets and developing nations such as India, Mexico and Vietnam observed robust growth and foreign capital inflow. Furthermore, with debottlenecking of supply chains and easing of restrictive monetary policies, global inflation rate fell from its peak in CY2022 to 6.8%2 in CY2023. Certain low-income and frontier economies also reclaimed their position in the market.
Indian Economy Overview and Outlook
Despite a sluggish global economy, India maintained its trajectory as one of the fastest growing economies in the world. This economic growth can be primarily attributed to robust domestic consumption and less reliance on foreign imports. While government initiatives facilitated domestic demand, increased investments to bolster manufacturing sector and improve digital and physical infrastructure mitigated supply chain issues effectively. The governments emphasis on improving infrastructure, as evident through initiatives such as the PM Gati Shakti National Master Plan, logistics upgradation and industrial corridors, is anticipated to increase industrial competitiveness and spur future growth. In FY2024, Indias GDP touched 7.6% with Current Account Deficit (CAD) at 1.9% of GDP.
With the improvement of business accessibility, the general investment climate is growing more favourable. Furthermore, with rising consumer confidence, progression of labour markets and increasing private consumption, the Government aims to improve capital investment and lower budget deficit.3
Industry Overview
Global textile industry
The global textile industry comprises textile manufacturing, refining and retail clothing. A multi-billion dollar manufacturing sector, the global textile business consists of production, refining and sale of synthetic and natural fibres. As of 2024, the textile market size is estimated at USD 748 billion and is expected to reach USD 889 billion by 2029, growing at a CAGR of 3.5% between 2024 and 2029. The textile industry is a dynamic market with key players being China, European Union, US and India. China is the largest textile producing and exporting country in the world. On the other hand, the European Union comprises Germany, Spain, France, Italy and Portugal at the forefront with a value of more than one-fifth of the global textile industry. India is the third-largest textile manufacturing industry and is responsible for more than 6% of the total textile production globally.
With rapid industrialisation and the advent of technology, textile industry is incorporating modern installations to increase the production of textiles. The industry is also observing a paradigm shift towards natural fibers such as cotton, silk, linen, wool, hemp, jute, and cashmere. These fibers are favored for their low density and high strength compared to conventional fibers, leading to a rise in demand for fiber fabrics. Additionally, postpandemic awareness of hygiene products has contributed to the growing popularity of natural fiber fabrics in the textile industry.5
Indian Textile Industry
As one of the largest textile industries in the world, the Indian textile industry contributes approximately 2.3% to the countrys GDP, 13% to industrial production and 12% to total exports earnings. India is one of the largest producers of cotton and jute in the world. It is also the 2nd largest producer of silk, with 95% of the worlds hand-woven fabric comes from India. Indias total textile exports are expected to reach USD 65 Billion by FY2026 and is expected to grow at 10% CAGR 2019-2020 to reach USD 190 Billion by 2025-2026. The textiles and apparel industry in India has strengths across the entire value chain from fibre,
yarn, fabric to apparel. The Indian textile and apparel industry is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool and silk products. India has been observing a robust trade in technical textile products and the country has been a net exporter. The government has also launched the Production Linked Incentive Scheme with an approved outlay of H 10,683 crore to promote production of Man-Made Fibre Apparel, Man-Made Fibre Fabric and products of Technical Textiles in the country.6
Despite observing a muted consumer demand and challenging market conditions, the branded textile segment maintained H 3,450 crore revenue for FY2024 and EBITDA margin stood at 20.9%.
Apparel and Retail Industry
Global Industry
The apparel and retail industry recorded persistent challenges. While Europe and the US observed a muted growth throughout the year, Chinas initial robust performance faded during the second half. On the other hand, the luxury segment which initially performed well, began to succumb to the reduced demand in the latter part of the year, resulting in decrease in sales and an overall uneven performance. For FY2024, the apparel market size is estimated at USD 1.36 trillion and is expected to reach USD 1.78 trillion by 2029. This growth can be primarily attributed to increase in the popularity of e-commerce platforms, facilitating manufacturers to serve a global clientele base.7
Indian Industry
Through embracing innovative strategies, leveraging technological advancements, facilitating retail expansion, employing better sustainable practices and improving employee engagement, the Indian fashion and lifestyle industry is poised for dynamic growth. The revenue in the apparel market in India is projected to reach USD 105.5 Billion in 2024. The reported year marks an opportunity for brands to expand their geographical footprint. In addition to retail expansion, brands have also established a strategic focus on various niches, including e-commerce, omnichannel approaches and incorporating advanced technology, especially Artificial Intelligence. The Indian fashion industry is observing a paradigm shift towards sustainability, paving the path for a greener future. With increasing awareness about environment, brands and retailers are recognising the need to embrace sustainability. The growth of ethical fashion market is a testament to this shift. Furthermore, Indias burgeoning population, increasing disposable income and evolving fashion
6
Textile Industry in India: Insights into the Garment & Apparel... (investindia.gov.in) 7The State of Fashion 2024 report : McKinsey8
Apparel Industry in India: Trends, Challenges & Solutions (unicommerce.com)trends are anticipated to bolster the growth of Indias apparel market. The government has also launched certain initiatives such as the Amended Technology Upgradation Fund Scheme and the Advance Authorisation Scheme that are focused on strengthening and increasing the production of textile and apparel products in the country. Government of India has also approved the continuation of the Rebate of State and Central Taxes and Levies scheme (RoSCTL) till March 31,2026.8
The branded apparel segment recorded topline growth of 20%, with sales at H 1,587 crores in FY2024 as compared to H 1,328 crore in FY2023. Despite subdued consumer demand, the growth can be primarily attributed to expanding distribution reach with the opening of 200+ stores in last 12 months with focused approach on premiumisation, casualisation and newer designs.
The growth was witnessed across all Raymond brands and channels. It has been especially popular among consumers during festivities, celebrations and weddings. This year witnessed the 100th milestone store of Ethnix by Raymond.
The segment continuously improved and delivered an EBITDA margin of 11.9% in FY2024 as compared to 10.8% during last year.
Digitisation
The Company is enhancing customer engagement through the adoption of the Customer Connect platform, which gathers real-time customer feedback post-purchase. This platform is complemented by a Live NPS (Net Promoter Score) Dashboard that allows lifestyle business managers to conduct swift analysis and informed decision-making. To facilitate the seamless flow of information, the Company utilizes Synapse LIVE, which integrates real-time data synchronization with Dynamics 365 finance and operations. Embracing a ‘Digital First approach, the Company leverages advanced digital tools such as Digital Booking-Regio, which enhances the B2B customer experience by providing a premium interface for premium product lines. Moreover, the integration of AI-driven Video Messaging empowers broader digital engagement by allowing customers to create personalized video messages that can be shared directly via WhatsApp. Additionally, the Raymond Rewards CRM 2.0 loyalty program, an internationally recognized unified CRM system, remains central to the Companys strategy. This program not only consolidates customer interactions across all Raymond textile and apparel brands but also ensures high security and personalized service through OTP verification, thereby offering numerous benefits to Raymonds customers.
Real Estate
Global real estate Market
Increased interest rates, inflation and European economic growth remain the primary concerns for the global real estate market. It is also expected that an AI shakeup and surging construction costs continue to blight the real estate sector.
The real estate market is undergoing significant changes. Innovators and occupiers in the sector are prioritizing high- quality spaces that enable companies to adapt to modern working practices and ensure long-term sustainability. Simultaneously, the importance of ESG (Environmental, Social, and Governance) factors continues to rise. Investors recognize that a commitment to ESG principles can be advantageous in the long term.
While the economics of decarbonisation, high construction costs and labour shortages pose as significant risk for the Real Estate market. Furthermore, demographics play a pivotal role in influencing the future of real estate. With Ukrainian refugees fleeing to Poland, Hong Kong citizens taking British residency and South American migrants moving to Spain, different societies will shift demand of related real estate in many different ways.
Indian Real Estate Market:
The housing demand in India is projected to reach 93 million houses by 2036. This is primarily owing to the increase in demand in housing basis growth in key parameters including population in both urban and rural areas, healthy macro-economic indicators and favourable demographics, with several Tier II, III cities projected to spearhead both demand and supply.
The real estate market is expected to thrive in 2024, owing to robust Indian economic conditions and increase in capex. To encourage work-from-office post-pandemic, leading occupiers prioritise quality spaces for growth. Economic growth and strategic policies propel a growing diversity in office space beyond technology firms. At the same time, Global Capability Centres or GCCs continue their significant expansion, solidifying Indias position as a key growth market.
India has experienced a notable increase in Real Estate investment flows, attributed to its strong economic performance and improvements in the regulatory framework.
For domestic players, luxury residential witnessed high sales figures and new launches, co-working spaces has been a big game changer along with rise of senior living projects and geographical landscape transformation with sunrise warehousing and data centres segments.
Average Housing prices in India rose 10% YoY at H 10,845 per sq.ft. during Q1 2024. This was led by continuation of healthy
demand which in turn was buoyed by stable repo rates, controlled inflation levels and optimistic sentiments.
It is anticipated that new property launches and sustained launches will sustain the sectors buoyancy despite the potential challenges. While the sector is expected to observe divergent asset pricing trends across different markets, the premium and luxury residential segments will likely continue flourishing as discerning buyers prioritise spacious homes against conventional amenities.
Raymond ventured into Real Estate development business in 2019 as part of its ‘Raymond Re-imagined vision. The Companys Real Estate vertical has continued to perform exceptionally well, achieving a total booking value of H 2,249 crore in FY2024. In February 2024, Raymond launched its first Joint Development Agreement (JDA) project in Bandra, Mumbai. This project received an overwhelming response from customers, with more than 60% of the launched inventory sold within 40 days.
Further, during the, year Raymond signed two additional JDAs in Mahim and Sion in Mumbai this year. These three JDA projects in the Mumbai Metropolitan Region have a combined revenue potential exceeding H 5,000 crore.
Existing Projects:
Thane Market:
TenX Habitat, maintained strong momentum of robust sales and fast paced construction activities driven by efficient execution. ~ 90% of the total inventory have already been sold. TenX Habitat have also set a new benchmark in the real estate sector by delivering its first 3 towers, 2 years ahead of RERA timeline.
Raymond Realty added premium projects to its portfolio with the launch of ‘Address by GS - Season 1 in FY2022. Till the end of FY2023-24, the Company has sold 92% of the total inventory.
To further cater to the demand for 2 BHKs and compact 3 BHKs, the Company launched ‘Ten X Era in Thane in February 2023 and successfully sold more than 40% of the total inventory by the end of FY2023-24.
Building on the success of ‘Address by GS - Season 1, the Company introduced ‘Address by GS - Season 2 in July 2023, receiving an overwhelming response from customers. Within nine months of its launch, approximately 52% of the Launched Inventory was sold.
Recognising the potential of luxury real estate demand, the Company launched ‘Invictus by GS in August 2023, with
approximately 40% of the Launched Inventory sold by the end of FY2023-24.
In Q4 FY2024, the Company launched Ten X Vibes - Convenience Retail shops within the Ten X project and sold more than 85% of the units by the end of FY2023-24.
Outside Thane Market:
Based on success of our Thane projects, we spread our wings outside Thane Market and launched our first JDA project in Bandra Mumbai, which has received an overwhelming response with ~ 62% of the launched inventory sold within 40 days.
Additionally, this year Raymond Group has signed two new JDAs in Mahim and Sion in Mumbai, taking the combined
revenue potential from these three JDA projects in the Mumbai Metropolitan Region to over T5,000 crore.
The total order value from existing projects amounted to approximately H 2,250 crore during the year. Total Sales for the year under review stood at H 1,593 crore. The Total EBITDA for this segment for the year under review was H 370 crore with a healthy EBITDA margin of 23.2 %.
Currently, the Company has five ongoing projects worth H 9,000 crore on our Thane land, with a further potential to generate more than H 16,000 crore making total potential revenue from Thane land of more than H 25,000 crore of 100-acre Thane land over the next few years.
Consolidated Financial Performance
For the Company, FY2023-24 was a year of multiple initiatives in operational performance driving financial metrics such as revenue, profitability and net debt reduction. The Company has recorded highest ever consolidated revenue of H 9,286 crore as against H 8,337 crore in FY2023, higher by 11% on a year-on-year basis with operating expenses at H 2,499 crore. EBITDA stood at H 1,575 crore being highest ever against H 1,322 crore in FY2023. Continued focus on cost optimisation enabled reduction in overall operating cost in FY2023-24. Profit before tax and exceptional items stood at H 916 crore for the year under review whereas net profit was at H 1,643 crore which also represents highest ever performance.
Key ratios*
| Particulars | FY23-24 | FY22-23 | Explanation of Y-o-Y variance higher than 25% |
| Debtors Turnover Ratio | 8.68 | 8.89 | - |
| Inventory Turnover Ratio | 1.93 | 1.90 | - |
| Interest Coverage Ratio | 3.89 | 4.60 | - |
| Debt Equity ratio | 0.92 | 0.82 | - |
| Current Ratio | 1.76 | 1.37 | Increase in current ratio due to increase in investment, Trade receivable and bank balance other than cash. |
| Operating Profit Margin% | 15.08 | 15.85 | - |
| Net profit margin% | 7.99 | 7.10 | - |
| Return on Networth % | 18.69 | 18.22 | - |
*The ratios presented are calculated on a standalone basis
Risks and Concerns
The broader economic trends are poised to directly affect a companys growth potential. Persistent inflation has resulted in increase in commodity prices worldwide. Furthermore, the anticipated rise in central bank interest rates in the coming year may dampen growth and strain economies, especially in emerging markets. It is thereby important to manage cost pressures to sustain the Companys overall performance in these conditions.
Reduced purchasing power and increased demand could result in significant shifts in consumer behaviour, negatively impacting the textile and apparel market. Consumers might seek more budget-friendly options, potentially leading to reduced growth and profitability for the Company.
Detailed risk management strategies, including risk architecture and principal risks with their mitigation plans, are outlined on Page 26 of this Annual Report.
Internal Control Systems and their adequacy
Your Company has effective internal controls and risk- mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of operations.
The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and are also apprised of the internal audit findings and corrective actions.
The Company has robust internal financial controls which are adequate and effective during the year under the review.
Outlook and Strategy
The Company anticipates to maintain a profitable growth trajectory. In the domestic market, consumer sentiment is expected to remain positive, driven by approach of wedding and festive seasons and surging demand for formal and daily wear categories. The Company aims to introduce new initiatives to bolster growth.
In the branded apparel segment, Raymond aims to diversify its product range through demerging its lifestyle business, facilitating new launches in its core portfolio, emphasising casualization and expanding the Ethnix wear category.
Upon acquisition of MPPL business, the Raymond Group aims to venture into sunrise sectors of Aerospace, Defense and EV Components. On the other hand, the real estate market is poised for sustaining its growth momentum, buoyed by factors such as increased affordability, supportive government policies, a revival in the consumption cycle and an increasing demand to upgrade homes.
Composite Scheme of Arrangement
The Board of Directors at its meeting held on April 27, 2023 had granted its approval for withdrawal of the Scheme of Arrangement between Raymond Limited and Raymond Realty Limited (formerly known as Raymond Lifestyle Limited). The Company has initiated demerger of its lifestyle business into Raymond Lifestyle Limited ("RLL") (formerly known as Raymond Consumer Limited) as a result of which Raymond Group will have two separate listed entities with significant liquidity surplus available for growth. On demerger of its lifestyle business in RLL, the Company will continue to be a real estate Company with investments in Engineering & Denim business.
This demerger will lead to simplification of group structure, focused investors opportunity and better access to capital. Under the Scheme, every shareholder of Raymond Limited will be entitled to 4 shares of RLL for every 5 shares held in Raymond Limited. The Company has received shareholders and Creditors approval and is awaiting final approval from Honble National Company Law Tribunal.
Forward Looking Statement
The statements made in this Management Discussion and Analysis Report regarding the Companys objectives, projections, estimates, expectations, or predictions may constitute ‘forward-looking statements as defined by applicable securities laws and regulations. Its important to note that actual results could vary significantly from those expressed or implied in these statements. Several crucial factors could impact the Companys operations, including the availability and pricing of raw materials, cyclical demand and pricing trends in its primary markets, alterations in government regulations and tax regimes, economic developments both in India and in the countries where the Company operates, and other related factors.
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