RAYMONDNSEMay 8, 2023

Raymond Limited

3,895words
60turns
6analyst exchanges
5executives
Management on call
S L Pokharna
DIRECTOR – RAYMOND LIMITED
Amit Agarwal
GROUP CFO
Jatin Khanna
HEAD CORPORATE DEVELOPMENT
J. Mukund
HEAD INVESTOR RELATIONS
Abhijeet Kundu
ANTIQUE STOCK BROKING LIMITED
Key numbers — 29 extracted
INR2,825 crore
group structure. These initiatives are sale of FMCG business to GCPL for a cash consideration of INR2,825 crores. Next, de-merger of lifestyle business from Raymond Limited into Raymond Consumer Care Limited
49.7%
is for a cash consideration of INR2,825 crores. The shareholding of RCCL is held by promoter with 49.7% share, Raymond Limited with 47.7% share and 2.66% with some of the other shareholders. Sale of
47.7%
2,825 crores. The shareholding of RCCL is held by promoter with 49.7% share, Raymond Limited with 47.7% share and 2.66% with some of the other shareholders. Sale of the FMCG business is along with th
2.66%
e shareholding of RCCL is held by promoter with 49.7% share, Raymond Limited with 47.7% share and 2.66% with some of the other shareholders. Sale of the FMCG business is along with the trademarks of
49.1%
ard of directors of both the companies. Currently the shareholding in Raymond Limited stands with 49.1% of the promoter and balance 50.9% by public. Post this demerger initiative the shareholding in Ra
50.9%
es. Currently the shareholding in Raymond Limited stands with 49.1% of the promoter and balance 50.9% by public. Post this demerger initiative the shareholding in Raymond Limited will continue to rem
54.87%
same. Now shareholding in the RCCL which is the demerged lifestyle business would be promoter at 54.87% and public at 45.13%. The increase in the shareholding of promoter in RCCL is due to promoter's h
45.13%
ng in the RCCL which is the demerged lifestyle business would be promoter at 54.87% and public at 45.13%. The increase in the shareholding of promoter in RCCL is due to promoter's holding of 49.8% in th
49.8%
c at 45.13%. The increase in the shareholding of promoter in RCCL is due to promoter's holding of 49.8% in the FMCG business which has been sold for INR2,825 crores. The promoter will be allotted 73 la
73 lakh
49.8% in the FMCG business which has been sold for INR2,825 crores. The promoter will be allotted 73 lakh shares for their value in the FMCG business post tax estimated at INR1,100 crores which translate
INR1,100 crore
omoter will be allotted 73 lakh shares for their value in the FMCG business post tax estimated at INR1,100 crores which translates into promoter being issued shares at approximately INR1,450 per share in the RC
INR1,450
estimated at INR1,100 crores which translates into promoter being issued shares at approximately INR1,450 per share in the RCCL which is the demerged lifestyle business. This also reflects the promoter
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Guidance — 20 items
Amit Agarwal
opening
“The lifestyle business consists of Suitings business with its manufacturing plants, B2C shirting and MTM business, branded apparel with its portfolio of brands Raymond Ready to Wear, Park Avenue, ColorPlus, Parx and Ethnix by Raymond and subsidiaries include garmenting business with manufacturing facilities, B2B shirting business with its manufacturing plants will be demerged into Raymond Consumer Care Limited, which will become a pure play lifestyle business on a net debt free listed entity.”
Amit Agarwal
opening
“RCCL will receive a cash consideration on account of slump sale and demerger of lifestyle will be done along with all debt and assets and liabilities.”
Amit Agarwal
opening
“The consideration after tax payment will be utilized to repay debt which will result into listed lifestyle business becoming net debt free.”
Amit Agarwal
opening
“Raymond Limited, which will be primarily real estate business with investments in engineering and denim JV will also be a net debt free listed business.”
Amit Agarwal
opening
“The promoter will be allotted 73 lakh shares for their value in the FMCG business post tax estimated at INR1,100 crores which translates into promoter being issued shares at approximately INR1,450 per share in the RCCL which is the demerged lifestyle business.”
Amit Agarwal
opening
“Overall to sum up, post completion of sale transaction RCCL with lifestyle business will be a pure play branded consumer listed company with the following segments branded textile, branded apparel, garmenting and high value cotton shirting.”
Amit Agarwal
opening
“Through a combination of free cash flows generated from the business and the promoter group contribution, we will not only be achieving the status of becoming a net debt free much ahead of the stated two years of time as our target.”
Amit Agarwal
opening
“surplus cash of INR1,300 crores in the Raymond group on a pro forma basis which will be available for growth and expansion plans for the Raymond group.”
Amit Agarwal
opening
“To conclude, I would like to state that we have been able to achieve this right at the beginning of this current fiscal and we are hopeful that going forward we will be able to deliver value for all of our stakeholders and as we inch towards our centenary year in 2025, the brand Raymond is set to achieve many more milestones.”
Amit Agarwal
opening
“Now we will be opening the line for questions.”
Risks & concerns — 1 flagged
And right now, it would be difficult to get that number, what is exactly for contract manufacturing.
— Nishant Sharma
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Q&A — 6 exchanges
Q
Yes, hi. Good afternoon team and congratulations, many congratulations on the transaction. So first question, if you can give some color on the timelines on two things. Firstly, how much time do you think this separate listing of RCCL will take? And secondly, what is the time period in which you think we can repay our debts and start saving on the interest cost as to by when you think the money will come in and we will be able to become completely debt free?
Amit Agarwal
Yes, thank you, Himanshu. The first one, separate listing, demerger, you know, it is a process through the NCLT and through the regulatory process what we have understood with our various advisors, consultants, that it takes anything between 12 to 14 months. So that's a time frame which will be required in order to become a listed entity for the lifetime. As far as the money is concerned, as you know, we are targeting in a very short order that the money will come into the RCCL on the cash consideration for the slump sale, which will be quickly used to repay the debt so that we will start gett
Q
Yes, so thank you for the opportunity. So my first question is with regards to, you know, in 2020, we had come up with a restructuring and we had indicated that the B2C business, B2C shirting business had some legal issues due to which we could not demerge that business. So is there any issues with that? Is that continuing?
Amit Agarwal
No, there are no issues around that and we have reviewed that situation. You're right at that point of time, there were certain issues which we have been able to resolve and we see very clear path for doing a demerger of entire B2C, B2B business of shirting as well in this process. Okay. And so my second question would be with regards to, you know, what would be the component of the working capital debt of the total debt that we have in our bookseller right now? Actually, you look today, the most of the, there has not been a significant capex in the last four, five years. So the capex debt for
Q
Thank you for the opportunity and many congratulations for the deal. My first question is related to the contract manufacturing business, which we will be retaining in the FMCG space. So right now or before this deal, were we doing any contract manufacturing stuff or the entire manufacturing for our own consumption? And going forward, what could be the revenue and EBITDA that we can generate from this business?
Amit Agarwal
You look at it, the condom manufacturing facility which we have at Aurangabad. Primarily supplies almost 50% to 55% for the KamaSutra brand. And the balance 45%-50% is for the B2B businesses in the domestic and in the international markets. So that is the business which we are retaining. And we are not giving the split as we speak today of that between the B2B businesses, what kind of a revenue. There is a small margin which we make on the B2B business as well. So, just now earlier 50 to 55, which we are using for KamaSutra, now that is also available for B2B business. Is that okay? No, no. As
Q
Just two short questions, sir. First of all, thank you for the opportunity and congratulations on the sales. My question was regarding, actually, I am a new investor in your company. And just looking at the previous years of your listing, I came to know about the, that you were also eyeing for the sale of ColorPlus and your engineering business. So, but that didn't materialize. So, are you still looking for that or they will be housed in the new listed entity?
Amit Agarwal
So, I think, I can't comment on the speculation which has been done in the past. Absolutely very clear. We are very focused on the brands to build and create. And as we have earlier outlined also, we are having a very large retail expansion plan, which also include our marquee brand of ColorPlus. So, we will be opening more EVOs for the ColorPlus and expanding that retail expansion. Similar is the case with the Park Avenue apparel, which we are going to expand. Okay. Got it. Thank you so much.
Q
Sir, my question was with regards to what is the value at which the shares in RCCL would be valued at?
Amit Agarwal
No, so what I explained earlier that, the promoter has got or will be allotted to share at INR1,450 per share in the RCCL demerged Lifestyle business. Okay, and for the public, public also would be at INR1,450? Yes, exactly same. There is no difference. So, there is a very little number for the public because as far as the shareholding which, so if you look at it in the RCCL, first the shareholders of Raymond Limited because of the demerger will get four shares of RCCL for every five shares held into Raymond Limited. So, that is number one. Post that that the promoter and small number of publi
Q
Okay, thank you very much. Look forward talking to all of you in next few days when we announce our fourth quarter results.
Management
Speaking time
Amit Agarwal
25
Priyanka Trivedi
9
Moderator
8
Himanshu Nayyar
7
Nishant Sharma
7
Chaitanya Rao
2
Abhijeet Kundu
1
J Mukund
1
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Opening remarks
Abhijeet Kundu
Thank you. On behalf of Antique Stock Broking, I would like to welcome all the participants in the Raymond's Corporate Initiative call. I have with me Mr. J. Mukund, who is the Head of Investor Relations of Raymond Limited. Without taking further time, I would like to hand over the call to Mr. Mukund. Over to you, Mukund.
J Mukund
Thank you, Abhijeet. Good evening, everyone, and thank you for joining us for our Corporate Initiative Call of Raymond. I hope you would have received a copy of our presentation and media release. I would like to urge you to go through this along with the disclaimer slides. We have with us from senior management, Mr. S L Pokharna, Director of Raymond Limited; Mr. Amit Agarwal; Group CFO; Mr. Jatin Khanna, Head of Corporate Development. Now, I would like to hand over the call to our Group CFO, Amit, who will give you a brief summary of the company's corporate initiative before we open up for Q&A. Over to you, Amit.
Amit Agarwal
Thank you, Mukund. Good evening, everyone. Thank you for joining us today on this call. It gives me an immense pleasure to share that the Raymond Limited yesterday announced major corporate initiatives that will chart out a long-term growth trajectory at the group level with clear roadmap to shareholder value creation. These corporate actions are in line with our stated objective of making Raymond net debt-free and simplifying the group structure. These initiatives are sale of FMCG business to GCPL for a cash consideration of INR2,825 crores. Next, de-merger of lifestyle business from Raymond Limited into Raymond Consumer Care Limited and making it a pure play lifestyle listed net debt-free business. Achieving zero net debt- free in both lifestyle and real estate entities with healthy liquidity for future growth. Now, let me give details about each of these initiatives. RCCL, which is Raymond Consumer Care Limited, has sold the FMCG business to Godrej Consumer Products Limited, GCPL, o
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