Raymond, the Singhania group's flagship company, has forayed into real estate development.
The board of the company today approved using 15-20 acres of surplus land in Thane for developing affordable residential property. The real estate development would be handled by a division of Raymond.
"Depending on the response to this project, we will decide our future strategy for the real estate business," Chairman and Managing Director Gautam Singhania said.
Mumbai-based Raymond is the world's third-largest maker of worsted fabric, used in making men's suits. The company has a plant in Mumbai's neighbouring town, Thane, which has surplus land. It declined to specify the full size of the surplus, but just said 15-20 acres had been earmarked for the first phase of development.
"The plant will remain there. We will use a part of the surplus land according to the regulatory approvals we have received," said Singhania.
He declined to give any details regarding the investment or time frame for the projects. "We have just got the board's approval. Now we will look into details," he said. The company is appointing an internal team to start with. It would gradually recruit experts for the real estate business.
The realty sector has caught the fancy of quite a few textile companies, including Bombay Dyeing, Century Textiles and Alok Industries. Since most textile mills in Mumbai have shifted operations to the hinterland of Maharashtra or Gujarat, the land thus freed is being used by real estate developers for building residential and commercial complexes.
The textile industry has failed to attract foreign direct investment and, with the slump in the international markets, textile companies are venturing into different sectors.
For instance, Century Textiles had shut operations in Mumbai's Worli area last year. The 30 acres owned by the Birla company is to be converted into commercial real estate, especially for IT and IT-enabled services.
The company had reported Rs 231 crore (Rs 2.31 billion) of loss for the financial year 2008-09, against a profit of Rs 18 crore (Rs 180 million) in the previous year.
The revenue of the company for 2008-09 grew to Rs 2,628 crore (Rs 26.28 billion), against Rs 2,444 crore (Rs 24.44 billion) in the previous year.
