Both our net debt free companies will enable us to drive growth at an aggressive pace.: Amit Agarwal, Raymond

“If you see very, very clearly, we have outlined almost 10 days back that we are going to have two separate entities; one focused on lifestyle and one focused on the reality business. And those two entities will have a clear path in terms of growth opportunities,” says Amit Agarwal, Group CFO, Raymond.

EBITDA margins have improved in this quarter on the back of benefits because of low cotton prices and freight cost. Any other factors which are added to the recovery and what is your guidance going forward?
In terms of this quarter, I think we have delivered over 17% EBITDA margin on a consolidated basis and I think this is also to do with the certain factors; one in terms of managing the growth which we have been able to achieve. Second is also in terms of some of the control of the cost. And the third is there has been a slight improvement in the pricing of our products which has helped to get this margin. Now going forward, it would be not appropriate for me to give a specific guidance in terms of what could be the margins but you have seen that we are slowly and steadily improving the performance, operating as well as the financial performance. So we continue to hope to do so going forward as well.Change in the corporate structure, which is under way what kind of value unlocking is expected for shareholders? What is the new milestone that you would be setting up for the lifestyle in the real estate business because you would be doing 100 years in 2025?
Actually, if you see very, very clearly, we have outlined almost 10 days back that we are going to have two separate entities; one focused on lifestyle and one focused on the reality business. And those two entities will have a clear path in terms of growth opportunities. In the lifestyle business we are very clearly seeing over the next 3 to 5 years in the range of mid teens growth. And as far as the real estate business, I think you are seeing more in the range of the growth of high 20s growth and that is the way we want to move forward because the base at the real estate is smaller, which we think we can expand very, very fast.

However, the base at the lifestyle business is already quite large so that is one on the growth path. Second thing, you see the whole corporatization value and you see that an investor of what we had today was in the Raymond Limited you had both the businesses of lifestyle and real estate. Now both are separate, so you have a very pure play net debt free listed entities.

So the investor who likes the real estate would invest into the Raymond Limited, which is a real estate prime play company and if an investor prefers a branded B2C business lifestyle business, they can invest into that. RCCL, Raymond consumer business from Raymond Limited will be demerged into the Raymond Consumer. And both net debt free companies, huge growth opportunity between the two organisations we will have more than Rs 1500 crores of cash, which will also enable us to drive growth at an aggressive pace.

Can you share some timelines with respect to the corporate restructuring? How are things shaping up?
If you see in terms of the demerger process it takes anything between 12 to 15 months and the effective date of the merger is obviously 1st April 2023. So you will see in the next 12 to 14 months we should be able to complete this demerger process. As far as separately the transaction on the FMCG you know that it has been closed. We have received the money yesterday. So to that extent, we have already got the money from Godrej. So that transaction is already closed.

The momentum in real estate has continued and with the new entity, will you be accelerating the momentum even further? What does the launch pipeline look like?
We are very clear and as I mentioned all along, that our real estate business on a standalone basis is a net cash positive business. Generally the trend is that in the real estate there is a debt. But the way we have worked because of the sales velocity, our delivery capacity, capability, which is clearly reflected because we have delivered apartments two years ahead of RERA. Our first two projects are almost 80% sold out and even the third project, which we launched in February of this year within a span of seven days, we could sell 100 flats.

So that clearly reflects upon that there is a lot of appetite for good quality apartments to be sold and at the right level of pricing with the right level of amenities. So you will hear more and more from us about the various launches because if we have sold 80% percent of our inventory of the first two projects in Thane, you need to have some more launches in order to see that you should be able to sell because that is what people would look for and the projects have still a timeline to go. So I think you will hear from us very soon some of the other launches.

Now with the ABFRL-TCNS deal there could be a renewed focus on the ethnic wear space. Now through ethnics you cater to the really men’s ethnic wear segment. What are the growth prospects there?
Absolutely. I think it is a very, very important segment for us. As you know, there would not be a wedding in India where the Raymond suit does not get bought or one way or the other Raymond is not connected. So I think wedding is the one space, which is very, very close to Raymond and ethnics by default becomes a natural choice for the wedding customers so therefore we see a great opportunity for us to participate in the market. We have already opened almost 65 plus stores in the country and we have a massive expansion plan in terms of the EBOs. So over the next three years, we expect stores to reach to a 300 number and that would help us in terms of getting a decent market share in this growing market.

Raymond has witnessed a healthy growth in garmenting business in FY23. Could you highlight the factors and how is the overseas book shaping up ahead of the season?
I think the China plus one has truly helped India as a country and Raymond as a group to go and participate in the global market and gain market share. So very clearly, if you see that in terms of the revenue capability, we have grown more than 50%.

So we see very comfortable demand throughout the last year as well as on a go forward basis we are seeing till August. September we are fully booked and we are expanding also additional lines. So we are investing behind this garmenting facility in order to grow that business as we see great potential for us.