There are good days ahead for textile and apparel brand Raymond as it hopes to increase its free cash flow in the current financial year ending March 31, 2019. As the company’s stock price multiplied over two-and-a-half times in the last three years, it posted a profit in four out of last five quarters. The company, most recently, declared a net profit of Rs 260 million in the three months between October and December 2018.
Dealing with debt issues
Although debt of Rs 2,300 crore has been a major cause of concern for Indian markets for a long time, Gautam Singhania, the 53-year old Chairman of the company is not too bothered by it. He has already formulated a few plans to repay debt. Singhania earlier planned to sell a 20-acre land in Thane, in the outskirts of Mumbai, as well as non-core business like engineering and auto parts for repaying debts. But now, he plans to develop the project on its own. Although this has raised concerns of adding to the company’s debt, Singhania dismisses these claims as in the last two years the company has made many changes in its management, brand positioning, disclosures, rationalising store network, etc.
Penetrating deeper in Indian markets
Raymond today is present in 515 towns. Its franchisee model allows it to reach deeper into smaller towns without having to invest big money. In the last 18 months, the company has added over 200 mini-TRS (The Raymond Shop) stores in over 180 towns, penetrating smaller cities.
As of now, the company makes over 70 per cent of its revenue from fabrics and branded apparel. Going forward, it will focus on relatively new verticals like fast-moving consumer goods space. Having decoupled the group companies from the parent through management changes, the FMCG vertical will have to make its own business decisions.