Raymond to rejig biz to create value for shareholders

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The board of Raymond has approved a consolidation exercise, including the combination of its tools and hardware, and auto components businesses with its engineering business to improve synergies and explore monetisation options. In a regulatory filing on Monday (27 Sept), the company said its board has approved the consolidation of the tools and hardware, and auto components businesses into JK Files (India), a wholly-owned subsidiary.

Further, the board has approved the consolidation of its business-to-consumer (B2C) venture by transfer of its apparel business into Raymond.

Meanwhile, the real estate business division will be turned into a wholly-owned subsidiary, Raymond said.

In order to enable and execute the above decisions, the company has withdrawn the de-merger scheme of lifestyle business announced in November 2019.

Commenting on this development, Gautam Hari Singhania, chairman & managing director said, We are consolidating the business to explore all options available to us for monetization, which will enable deleveraging leading to value creation. Additionally, our Realty business has showcased performance since its launch and in order to realize its full potential, it will now be a wholly-owned subsidiary of Raymond. We continue to focus on our B2C business by bringing in operational efficiencies and synergies to strengthen our Lifestyle business.

The company said its engineering business has achieved scale and improved market share in both domestic and global markets. These businesses have demonstrated growth in EBITDA (Earnings Before Interest Tax Depreciation & Amortisation) margins, generated free cash flows and are debt-free.

The real estate business was launched in 2019 and started the development of land in Thane. It is focused on delivering a value-based offering. The real estate business will deliver around 3 million square feet of residential projects and has already achieved sales of over 70% of the launched inventory of around 2 million square feet. The division plans to extend beyond Thane.

On a consolidated basis, Raymond reported a net loss of Rs 156.51 crore in Q1 June 2021 as against a net loss of Rs 242.15 crore in Q1 June 2020. Net sales rose 406.07% to Rs 825.70 crore in Q1 June 2021 over Q1 June 2020.

Raymond is India’s largest integrated worsted suiting manufacturer that offers end‐to‐end solutions for fabrics and garments. It has one of the largest exclusive retail networks in the country with around 1,500 stores in more than 600 towns.

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