Raymond‘s aerospace and defense segment are steadily heading towards a 25% margin over the next two to three years, driven by the indigenisation of raw materials, according to Managing Director-Engineering Business Gautam Maini.
The division recently recorded 72% growth, though margins faced slight pressure due to immediate research and development write-offs and rising commodity prices. The company expenses all research and development (R&D) work — including tool, personnel, and machine costs—in the year it is incurred.
“You know, when you grow 72% and all of that is coming from new product and you write off R&D, there will be some pressure,” Maini explained, adding that the overall operational leverage has improved.
Historical margins for the segment have hovered around 22% to 23%, making the 25% mark a longer-term ambition. A gradual shift toward domestic sourcing of raw materials over the coming 24 to 36 months is expected to secure this profitability target.
Beyond aerospace, the firm is expanding into the automotive aftermarket, introducing approximately 800 different parts, including water pump assemblies. While many components will be manufactured in-house, the strategy also involves white-labeling products and leveraging an existing supply chain to provide a comprehensive market range.
To support broader growth, a ₹430 crore capital expenditure plan is slated over the next five years for a new facility. Operations have already been accelerated by establishing a brownfield site near the upcoming greenfield project. Return on capital employed is projected to remain consistent with historical performance, following initial setup costs and the time required for customer approvals.
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Raymond targets 25% aerospace margin in two to three years, says MD Gautam Maini
The precision components business continues to outperform, benefiting from significant operating leverage and synergies realised after the merger of three distinct entities.
“You can now actually see those positive results. So, I’m pretty optimistic on the trend being maintained, even though we would go into new facilities,” Maini noted.
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