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Within the next three years, Raymond hopes to have no net debt

In the next three years, Raymond Group, which is involved in a number of businesses, wants to be debt-free and is concentrating on managing its liquidity.

June 24, 2022 3:26 IST | India Infoline News Service
According to the company's most recent annual report, Raymond wants to be net debt-free in the next three years and is concentrating on managing liquidity through cost-cutting efforts and working capital optimization.

Raymond's net debt has been reduced to Rs1,088 crore for the fiscal year that ended March 31, 2022. In FY21, it was Rs1,416 crore, while in FY20, it was Rs1,859 crore.

According to the research, the top Indian branded fabric and fashion retailer's net debt-to-equity ratio decreased from 0.8 in FY20 to 0.4 in FY22.

With a declared goal of being a net debt-free company in the following three years, the company is "focused on liquidity management through cost reduction measures and working capital optimization," according to the statement.

Speaking to the shareholders, its Chairman and Managing Director Gautam Hari Singhania said that the company has reduced operating costs by Rs453 crore, as compared to pre-COVID levels of FY19-20, which was "critical" for its business. This has been accomplished through a sustained focus on cost optimization.

Profitability and effective working capital management have produced free cash flows, which have significantly decreased our indebtedness, he continued.

In addition, the company has decreased the NWC (Net Working Capital) days by more than 50%, from a peak of 98 days in September 2019, according to Raymond Group CFO Amit Agarwal.

The number of days it takes a business to turn its working capital into income is referred to as NWC.

With operations in branded textile, branded apparel, retail, clothing, engineering, real estate, and FMCG, the diversified group Raymond reported consolidated sales of Rs6,348 crore in FY22, up from Rs3,648 crore the previous year.

In order to realize synergies and create a targeted business-to-consumer (B2C) operation, Raymond is demerging its B2C business, including the apparel business—Raymond Apparel Ltd, a wholly-owned material subsidiary into the firm.

In addition, Raymond is considering the initial public offering (IPO) of JK Files and Engineering Ltd (JKFEL), which manages its tool and hardware business as well as its vehicle ancillary business and filed its DRHP with market regulator SEBI on December 8, 2021.

However, Raymond has chosen to wait until an "opportune time" for the IPO of JKFEL because to the volatility in the global equity markets brought on by the protracted conflict between Russia and Ukraine.

The Raymond annual report stated that it "expects to be on a profitable growth momentum" while discussing the outlook for FY23. Due to the summer wedding season and an increase in social gatherings, consumer sentiment is generally good in the domestic market.

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