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Madhurima \n Nandy , MINT (A Wall Street Journal Partner)<\/i><\/p>\n Madhurima \n Nandy , MINT (A Wall Street Journal Partner)<\/i><\/p>\n
Bangalore, \n April 30, 2013<\/i><\/p>\n
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After \n focusing on consolidation and margin improvement for a year, apparel \n maker Raymond Ltd intends to return its sights to growth and higher \n profitability in the current fiscal year.
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Top Raymond executives sent out the signal in a conference call \n with analysts on Monday in which Raymond’s newly appointed \n chief financial officer M. Shivkumar indicated that the company’s \n net debt may go up by Rs.150-200 crore this financial year owing \n to the company’s capital expenditure plans.
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Around Rs.342 crore of debt is due for repayment in the third \n and fourth quarters of 2013-14 which will be replaced by long-term \n debt, or other loans, he said.
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Raymond appointed consultancy Accenture Plc last year for a margin \n improvement programme and consolidated its apparel business structure \n to improve cost efficiency. These measures have resulted in the \n firm boosting cash flow from operations by 42% to Rs.326 crore \n in the year ended March, according to brokerage PhillipCapital \n (India) Pvt. Ltd.
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The management indicated that 2013-14 will see a lower proportion \n of discounted sales and better control over inventory levels, \n two factors that analysts say typically eat into profitability \n and dent cash flows.
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“The company has been focusing on improving cash flows and \n margin improvement. While the net debt, at Rs.1,347 crore, has \n remained almost same compared to a year before, investors would \n ask for reduction in debt by sale of non-core assets,” said \n Ankur Agarwal, an analyst at Nomura Equity Research.
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On the analysts’ call, Raymond executives said a team is \n exploring options to realize value from its 120 acres of land \n in Thane on the outskirts of Mumbai.
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The inventory days—a measure of efficiency based on the \n number of days that a company holds its inventory before selling \n it—declined from 155 days to 144 days in FY13 and the improvement \n is largely led by textile business as well as liquidation of inventory \n in branded apparel business, said a report by PhillipCapital.
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In the March quarter, Raymond opened 22 new stores and closed \n 14 stores.
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Raymond has restructured its top management, splitting its portfolio \n and separating the strategy and finance divisions in March. H. \n Sunder, who was the chief financial officer and headed both finance \n and strategy portfolios, will now focus on strategy, while Shivkumar, \n who joined Raymond last year from Jet Airways (India) Ltd, was \n made CFO.
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Robert Lobo, who earlier headed the brands ColorPlus and Raymond \n Premium Apparel is now president-group apparel at Raymond, and \n will oversee all the four brands in the branded apparel business \n segment such as Park Avenue, Parx, Raymond Premium Apparel and \n ColorPlus.
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“The company has initiated a restructuring process for its \n apparel business structure which involves getting a distinct strategy \n for each of its brands. It only helped that the company has put \n one person in complete charge, instead of two people heading the \n brands earlier,” said an analyst, who didn’t want to \n be named.
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Last Friday, Raymond posted an 80.75% drop in net profit for \n the March-ended quarter from the year-ago period to Rs.61 lakh, \n while revenue rose 13% to Rs.1,081.36 crore. The firm said that \n the net profit falling to Rs.61 lakh was “mainly due to reversal \n of deferred tax asset provisioning”. The fall in profit came \n after adjusting for exceptional items and taxes.
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A Nomura Equities Research report said the streamlining of Raymond’s \n branded apparel business includes fine-tuning the communication \n strategy for each brand and focus on sales channels that would \n help in brand visibility.
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One of the key measures that Raymond has taken up in branded \n apparel business is the transitioning of Park Avenue from The \n Raymond Shop (TRS), a retail store format, to exclusive brand \n outlets (EBO). Raymond Premium Apparel, the high-end segment will \n be sold through TRS.
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Raymond executives mentioned on Monday that while the first phase \n of transitioning Park Avenue to exclusive outlets has been completed, \n the company will decide on the second phase depending on consumer \n demand for the brand and Raymond Premium Apparel.
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Gautam Hari Singhania, chairman and managing director, said in \n a statement that the focus has been on improving the operational \n efficiencies, through supply chain management initiatives, cost \n rationalization and consolidation of apparel business operations, \n which resulted in pull back of profitability and improvement in \n cash flows.
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Raymond shares rose 5.43% to close at Rs.281.3 on Monday on the \n BSE while the benchmark Sensex gained 0.52% to close at 19,387.5 \n points.<\/p>\n
Apparel companies have been struggling to garner sales, along \n with high levels of inventory of unsold stock and discounted sales \n eating into healthy margins, said analysts.<\/b><\/p>\n
“The key challenges for apparel brands today are to get \n adequate sales per outlet and maintaining an excitement about \n product ranges to pull (in) consumers. Discounted sales have also \n put the margin mix of companies and their cash flows out of balance \n for a while now, including promotions that are done to drive footfalls,” \n said Devangshu Dutta, chief executive of retail consultancy Third \n Eyesight.<\/b><\/p>\n","protected":false},"excerpt":{"rendered":"
Madhurima Nandy , MINT (A Wall Street Journal Partner) Bangalore, April 30, 2013 After focusing on consolidation and margin improvement for a year, apparel maker Raymond Ltd intends to return its sights to growth and higher profitability in the current fiscal year. Top Raymond executives sent out the signal in a conference call with analysts […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-3122","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n