Raymond aims to be a net-debt-free company within the next 3 years, report says
Diversified Raymond Group aims to be a net-debt-free company over the next three years and is focused on cash management through cost reduction initiatives and working capital optimization, according to the latest annual report from the company.
For the year ended March 31, 2022, Raymond’s net debt was reduced to Rs 1,088 crore. It was Rs 1,416 crore in FY21 and Rs 1,859 crore in FY20.
The net debt-to-equity ratio of India’s leading branded fabric and fashion retailer also fell to 0.4 in FY22 from 0.8 in FY20, according to the report.
“The company is focused on managing liquidity through cost reduction and working capital optimization initiatives with the stated goal of becoming a net-debt-free company within the next three years,” it said. -he declares.
Addressing shareholders, its Chairman and Managing Director Gautam Hari Singhania said that by focusing on cost optimization, the company has reduced its operating costs by Rs 453 crore, compared to pre- COVID of the 2019-20 financial year, which was “critical” for his business.
“Profitability and working capital management helped generate free cash flow, thereby significantly reducing our debt,” he added.
Additionally, the company also reduced the number of NWC (Net Working Capital) days by more than 50% to 45 days in March 2022, from record highs of 98 days in September 2019, the group’s chief financial officer said. Raymond, Amit Agarwal.
NWC is called the number of days a business takes to convert working capital into revenue.
“The above measures resulted in a reduction in net debt of Rs 940 crore through free cash flow generation during the pandemic-affected period of FY20-21 and FY21-22,” it said. -he declares.
Diversified Raymond Group, which operates in segments such as – branded textiles, branded apparel, retail, apparel, engineering, real estate and fast-moving consumer goods – recorded a consolidated revenue of Rs 6,348 crore in FY22, compared to Rs 3,648 crore a year ago.
“Our strategy of focusing on the core business and recalibrating the fundamentals of each business, such as revenue, costs and working capital, has paid rich dividends to Raymond Group,” Singhania said.
As part of the group’s restructuring exercise, Raymond is spun off its B2C business, including the Apparel business — Raymond Apparel Ltd, a wholly owned hardware subsidiary of the company, to achieve synergies, creating targeted business-to-consumer (B2C) activity. .
In addition, Raymond is also considering the IPO of JK Files and Engineering Ltd (JKFEL), which runs its tools and hardware and automotive ancillary businesses and filed its DRHP with market regulator SEBI on December 8. 2021.
However, due to volatility in global stock markets caused by the protracted conflict between Russia and Ukraine, Raymond decided to wait for an “opportunity time” for JKFEL’s IPO.
“The Board of Directors expects to finalize the Offer to Sell (OFS) during the 2022-23 financial year, when the market conditions for the fundraising would be favourable. The proceeds of the offer will help Raymond deleverage its balance sheet and progress on its path to becoming net debt free,” he added.
While sharing the outlook for FY23, Raymond’s annual report says it “expects to be on a path of profitable growth.”
In the domestic market, general consumer sentiment is positive with the summer wedding season and increased social gatherings.
“In the export market, the business-to-business (B2B) apparel and engineering businesses are expected to maintain healthy order flow. The consolidation of the B2C businesses, including apparel, into Raymond Limited will generate synergies in the design and innovation, supply and operational efficiency,” said Raymond, who is approaching his centenary in 2025.
In addition, the consolidation of its engineering activity should generate synergies in business development, raw material supply and logistics and overall administrative processes.
“In the real estate sector, construction activity is in full swing in accordance with all relevant guidelines and the company continues to closely monitor and manage rising input prices and inflation.
“The spin-off of the real estate business is expected to be completed in fiscal 2022-23, which would help achieve a differentiated focus and attract growth capital,” he said.
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