'We're working on debt, working capital management'
Textile and apparel major Raymond has been in the red intermittently for the last couple of quarters. It also pulled down a few brands which did not do well. In an interaction with Sharleen D’souza & Raghavendra Kamath, Chairman and Managing Director Gautam Hari Singhaniatalks about the company’s plans. Edited Excerpts:
With losses in the last few quarters, what is your turn-around strategy?
We ran into a problem because of a wrong decision on denim. But, I think we focused on our core businesses, put time and energy in that instead of spending time on fire fighting with banks and the denim issues. And I am happy to say that our core business is very strong now.
Why do you say denim went wrong?
Because of our decision to merge with an international company. Lots of things happened, September 15 (collapse of Lehman Brothers), the US and European market dried up. Strategically though, it was a correct decision. But the recession that took place then was not thought of, consumption was affected; it threw a lot things into a spin.
With rising interest rates, how do you plan to manage your debt?
It is tough. We have to continuously look at working capital management, reducing our debt and focus on the business. But, with interest rates going up, it is a challenge. It is part of the business to manage day-to-day challenge.
Raymond has been perceived as a premium brand, you plan to diversify into other segments?
Well, we have launched a whole bunch of accessories under the Raymond brand. Premium apparel, which is an extension under the Raymond brand, as well as cosmetics. Makers is a new brand, the second brand that we have launched. The test marketing is on in the Northeast. There is a lot of learning.
When do you expect to break even?
I can't comment on that.
Analysts say Raymond has not been able to leverage on the distribution network...
Can u tell me if any company has done it better?
With high inflation and interest rates, how is the current macro environment panning out on your business?
I think it is tough with the international scenario the way it is. With sovereign risks and Indian inflation being high and interest rates going up regularly, there is a bit of a gloom or a negative sentiment around the place on the macro side. The fundamental domestic demand is still strong. I think we have just got into the habit of complaining and saying it was not good. But, if you look at it globally with India growing at seven to eight per cent, where else would you rather be? We should appreciate that we are in a country that is far better than most countries in the world.
Are you saying there is no particular impact on your business?
Things are tough, but, fundamentally if your branded and doing business with the right reasons, there shouldn't be an issue.
If inflation continues for some more months, do you see your margins coming under pressure?
Everybody's margins will come under pressure. October-November are critical months. The season has just started and we are going into Diwali. So, these are very critical months in terms of sales. But, I don't expect a drop in demand.
With retail being the buzzword for several textile companies, what are your plans in this segment?
It is not a buzz word for us. We have been there since 1959, with the evolution of new India there are many more markets that are opening up. Gone are the days when people travel for 20 kilometers. Everything is getting localised. If you take a city like Mumbai, south Mumbai is a market, Bandra is a market, Andheri is a market. There are multiple markets. So markets have tremendously increased. Identifying those markets and going to those markets is what is really changing in the country.