With long-term vision, I aimed at creating 3 separate businesses: Singhania

Raymond Lifestyle, the newly spun-off entity from the Raymond Group, is set to make its stock market debut soon. This new company will encompass the group's apparel business, a significant segment of the Mumbai-based conglomerate. As Raymond Lifestyle prepares to list on the bourses, Gautam Singhania, chairman and managing director of the group, shared his vision and outlook for the company, which is approaching its centennial in 2025. In an interview with Sharleen D'souza and Samie Modak in Mumbai, Singhania says he has laid the groundwork for a promising future. Edited excerpts:

Soon Raymond Lifestyle will list separately. Can you take us through the journey and the thought process?

As you're aware, Raymond previously operated three distinct businesses, resulting in a substantial holding company discount. With a long-term vision, I aimed to create separate businesses with independent management, governance, and reward structures. Following the sale of our fast-moving consumer goods (FMCG) business, we repaid our debt and became cash surplus. We then initiated a two-phase demerger process. First, we announced the demerger of our lifestyle business, and second, we plan to demerge our realty business next year. This strategic move will unlock value by allowing like-for-like comparisons. Within Raymond Lifestyle, our wedding collection business can be compared to Manyavar (Vedant Fashions), our apparel business to Aditya Birla Fashion & Retail (ABRL), and our export business to Gokaldas. This clarity will enable investors to assess each business's true potential.

Are there plans to raise more debt or equity?

We don't require additional capital, as our focus is on retail expansion rather than manufacturing. Our plans to open 300 new stores will be entirely franchisee-led, comprising a mix of exclusive brand outlets and The Raymond Shop. This will be followed by another 300 stores next year, across all our brands.

How is the approach different this time around?

We've made significant strides in enhancing our governance structure. Our board now boasts an impressive array of high-caliber individuals, including Ravindra Dhariwal, former chief executive officer (CEO) of Bennett, Coleman; Vineet Nayar, ex-CEO of HCL Tech; Anisha Motwani, former executive at Abbott; G.C. Chaturvedi, former chairman of ICICI Bank; and most recently, Rajiv Sharma, global CEO of Coats Group. This large, independent board will provide expert guidance as we build the company for the future. Notably, these respected leaders have joined us because they believe in our vision. Raymond is a national treasure, and we're transforming the organisation to unlock its full potential. The sum-of-the-parts valuation of our efforts will be immense.

People may ask why it didn’t work in the past.

Why dwell much in the past. Rather look at our strong performance over the last 8-10 quarters. Many things in life don’t happen as per plan and it's essential to learn from them and move forward. I believe we're now on the right track.

What are the revenue and profit growth targets that you have set?

We anticipate exponential growth from new verticals we've entered or are entering. Our internal goals aim to increase top-line revenue by 15 per cent and boost bottom line and operating profit by 20 per cent.

Will any large investors come into Raymond Lifestyle?

We've completed a comprehensive roadshow, and while we can't predict who will invest, we're encouraging investors to view this with a fresh perspective. While this is not an IPO but it is similar to an IPO in that we're inviting investors to assess our company's value anew. For context, consider our peers: Manyawar trades at 16x sales. Applying this multiple to our wedding business, valued at Rs 2,500 crore, yields a significant figure. Similarly, our exports, worth Rs 1,200 crore, can be compared to Gokaldas, and our garmenting business to ABRL. Adding the value of our brand, we believe investors will arrive at a compelling valuation.

What will be the promoter holding in each of the three companies? Any plans to divest?
 

We are above 50 per cent in all three. I have not sold a single share in my life.

How smooth will this transition be from a family-managed business to professionally-managed one?

We're adopting a hybrid approach. I'm committed to driving shareholder value as the Group CEO and will continue to lead the organisation unless God forbid, I get hit by a bus. I'm creating these boards to ensure a blend of expertise and perspectives. I don't claim to be the smartest person. I believe in the collective wisdom of the group. Therefore, I'm surrounding myself with talented individuals, as evident in the high-caliber board we've assembled. Similarly, I plan to establish quality boards for our real estate and engineering verticals, ensuring we have the best minds guiding our growth.

The retail landscape has changed so much with so many new brands and foreign players entering the fray.

Raymond is an iconic brand, which will be celebrating its 100th year soon. While competition is inevitable, our brand's strength and resilience have enabled us to thrive. Today, we are among the top 10 brands in India, according to the brand survey report.

Are you ramping up the wedding collection business? Also, any plans to venture into women’s wear?

We're focused on expanding our wedding collection business, but we're not venturing into women's wear just yet. Our priority is to fully leverage the potential within the Raymond brand itself. We're exploring various verticals, such as sleepwear, which we launched this year and plan to scale up, capitalising on the lack of branded players in this space. Our vision for Raymond Lifestyle is to become a comprehensive lifestyle company, unlike others in the market that focus on niche areas. This approach will unlock significant value and drive margin expansion through economies of scale. We've invested in capacity expansion a couple of years ago, which is now coming online, positioning us to capitalise on the opportunities arising from the challenges in Bangladesh.