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Gautam Singhania says Rs 2,000 crore debt not a big worry for Raymond

Gautam Singhania says Rs 2,000 crore debt not a big worry for Raymond

Gautam Singhania says Rs 2,000 crore debt not a big worry for Raymond
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By Nigel D'Souza  Sept 5, 2018 1:50:49 PM IST (Updated)

Diversified Raymond Group on Thursday said that Rs 2,000 crore debt not a big worry for the company.

Diversified Raymond Group on Thursday said that Rs 2,000 crore debt not a big worry for the company.

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In an exclusive interview to CNBC-TV18, Gautam Singhania, chairman and managing director, said that Raymond is looking to grow ethnic wear market.
Watch: 
"At the end of the capex cycle, your capex in Amravati and Ethiopia that took the debt up. Moving forward, we have not got any capex plan. Your cash flows will become positive and your debt will come down," Singhania said.
Edited excerpts:
Q: Why is it that you bought your company’s shares in the market?
A: The fact that I bought shares in the market and it is a disclosed information is I believe there is great value in it. Number two, I believe in my company. So, the fact that I am willing to invest in my own shares and I had bought it levels higher than what it is today.
Q: Do you have a particular target that you want to take the promoter shareholding to?
A: That is an internal target, I won’t discuss.
Q: But you are a buyer at these levels?
A: I have bought. So whether I am a buyer today or not is not for me to say, but the fact is that I bought it at Rs 900-950 levels. A thousand rupees I bought, so that is all disclosed.
So, if I am a buyer at Rs 1,000, I am certainly a buyer at Rs 750. We are clear that we wanted to launch this 20 acre project, this is to unlock value and we are in the right direction. We look at it every day, every week, that is the top priority. I am not able to tell you exactly what we are doing because nothing is done. Like they say, it is not done until it is done.
Q: Let us talk about the other non-core assets, the auto space, the hardware business, those business, they have been doing very well?
A: Extremely well.
Q: But at some point of time, would you be looking at a buyer?
A: Show me the money. I have demonstrated in my career that I am not averse to buying and selling businesses. If somebody had shown me the money, it would have been gone by now, you might sell it, you might be looking at other options. The fact is philosophically, it is on our radar how to monetise that asset or whatever we have to do. Selling is one option. That doesn’t mean we are not looking at other things.
Q: Could the other things include a demerger of the business?
A: It could be anything. Sometimes these things take longer than you expect.
Q: What is the roadmap there, do you have a particular target in minds in terms of scalability of that business, is there a possibility you list that business separately, you must be having a plan, right?
A: What we have done in the last 12-18 months, let me explain to you. We had a partner in JK Ansell. The fast moving consumer goods (FMCG) business, we bought in a whole new management team, we put a focus into it, we revamped the board, we have an external chairman, this is the only promoter listed company, holding company where a promoter stepped off as chairman of the company.
The bottomline is the same. How do Raymond shareholders get value out of this? We are in the business of making money. That is what we are going to do.
Q: What about the debt in the books? On a quarterly basis, you are spending around Rs 50 crore or thereabouts as interest cost, so the debt in the books should be roughly around Rs 2,000 crore very approximately, you will have a target in mind to bring down that debt?
A: At the end of the capex cycle, your capex in Amravati and Ethiopia that took the debt up. Moving forward, we have not got any capex plan. Your cash flows will become positive and your debt will come down.
Number two, getting rid of non-performing assets (NPAs), whatever we can get rid of – suppose we get rid of the auto component, it will bring it down. If you are able to monetise some of the land, that will bring it down. Efficiencies, better working capital management etc. all those will bring debt down. So, it's in the right direction. I don’t think we are alarmed about our debt. We might be Rs 2,000 crore and not Rs 2,00,000 crore, but we want to be debt-free over a period of time.
Q: How long would that be?
A: It's very difficult to say. Today, if I monetise the land, tomorrow I will be debt free. If it takes three years, it will take three years, but the intent is there to be that direction. I would rather under-commit and overdeliver.
Q: Positive cash flows in FY20 is on the cards with margin uptick as well, that is something that you have set out, we have seen it on your presentations as well but that is on the cards?
A: Yes.
Q: You have mentioned this in the past that you believe that Raymond is going to be blue-chip company, so what is the growth plan, how do you make this a blue-chip company?
A: It again comes back to my same answer. You have to do the right thing for the company. So, each business has a plan. Let me give you an example, in the textile business, whilst we have the legacy business, which is the fabric business, which grows at a particular growth rate, that doesn’t satisfy us. We have the new verticals, ethnic wear today, where we have a big potential now. If you take the ethnic wear market, it's Rs 5,000 crore market. Can I get 20 percent of it?
Q: Is that a possibility?
A: Why not.
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