In the past couple of decades, Gautam Singhania, chairman and managing director, Raymond, has been busy getting out of businesses that aren’t a part of his vision for the group. In the past, he has exited businesses like steel, cement and synthetics. The recent sale of the consumer care business to the Godrej group for Rs 2,825 crore in an all-cash deal was part of that journey.
“We have always said that if we can monetise some assets at a good price for the FMCG business, it will be a win-win situation for both parties. As a result, today the company is 100% debt-free,” he said, adding that every business can be sold for a price.
And the numbers reflect his drive to make the group profitable and, of course, get rid of debt. In FY23, the net debt of the group was at Rs 689 crore, down sharply from Rs 1,088 crore in FY22. At the same time, net profit has also more than doubled from Rs 260 crore to Rs 529 crore. And once the first-quarter results come in, the group would indeed be debt-free.
But what led to the exit from the consumer care business? “Covid had hit everybody hard. Besides that, there were management and other issues. And when all the problems come at the same time, you need to focus. We also made mistakes, every company does so. I am not getting into that, but we have to learn from the mistakes,” said Singhania.
So at a time when the world was still grappling with the pandemic, a restructuring plan aimed at turning around the group was put in place. Under the plan, there was severe cost-cutting of about Rs 700 crore across the board. In addition, another Rs 400 crore of cost reduction in the long term was envisaged. The focus was on making the businesses efficient and profitable, and then deleveraging the balance sheet. And then, things started falling in place.
“The restructuring was a launch pad to do more things. The turnaround has happened, but it doesn’t end here. Now the aircraft has to take off,” he added.
Going forward, the group intends to restructure Raymond into three businesses – real estate, lifestyle/textiles and engineering.
The recent announcement of the demerger of the lifestyle businesses into Raymond Consumer Care will create a listed entity with a pure-play B2C focus.
Singhania said that two years back, his focus was on survival. However, he can focus on growth now. “In the last four years, we have built a solid real estate business, which is doing well for us today. It will continue to do well, as we have a lot of plans in the real estate space,” he added.
According to him, every business has got a game plan over the next 3-5 years. Eventually, the target is to show 17-20% Ebitda growth and 15% revenue growth, and there is a strategy for each business to do that. The overall group’s target: Revenues of Rs 10,000 crore in FY24.
At the company’s annual general meeting this year, Singhania told shareholders that next year’s meeting would be a “special one” as they would have two separate listed companies – Raymond and Raymond Consumer Care.
While Singhania is holding the cards close to his chest, stating business plans are “confidential”, he is also optimistic. “The future looks bright.”
The good news: After the restructuring and the monetisation initiatives, it has emerged as a zero-debt group, all geared up for a fresh start.