A.
Name of the company: RAYMONDS LIMITED
B. Industry: Textiles, Engineering, Aviation & Real estate
C. Major brands: Raymond, Raymond Premium Apparel, Park Avenue, Park Avenue Woman
ColorPlus, Park Avenue FMCG, ethnix, Parx, Kamasutra & Raymond Realty.
D. Major business segments:
· T
extile: Which includes Branded Fabric.
· D
enim & Shirting: Which includes Denim and Shirting Fabric.
· A
pparel: Which includes Branded Readymade Garments.
· G
armenting: Which includes Garment manufacturing.
· T
ools & Hardware: Which includes Power & Hand Tools.
· A
uto Components: Which include s Components & Forging.
· O
thers: Which includes non-scheduled airline operations and real estate development.
Domestic Subsidiaries: Overseas subsidiaries:
Raymond Lifestyle Limited* Jaykay Org AG
Raymond Apparel Limited Raymond (Europe) Limited
Colorplus Realty Limited Silver Spark Apparel Limited
Raymond Luxury Cottons Limited Raymond Lifestyle International DMCC
Dress Master Apparel Private Limited
Celebrations Apparel Limited Associates and JV:
Everblue Apparel Limited Raymond UCO Denim Private Limited
Raymond Woollen Outerwear Limited J.K.Investo Trade (India) Limited
JK Files (India) Limited PT Jaykay Files Indonesia
JK Talabot Limited
Ring Plus Aqua Limited
Scissors Engineering Products Limited
*incorporated on November 14, 2019 to house the demerged Lifestyle business undertaking, not yet commenced any operations.
E. Major competitors: Arvind, Louis Philippe, Sara Group, Blackberrys, Matias, Kaaryah
Lifestyle Solutions and Planet Fashion, ABG, Grasim
F. Key personal information
● Gautam Hari Singhania Managing Director
● Surya Kant Gupta Non Executive Director
● Mukeeta Jhaveri Independent Director
● Pradeep Guha Independent Director
● Ashish Kapadia Independent Director
● Nawaz Gautam Singhania Non Executive Director
● Dinesh Kumar Lal Independent Director
● I D Agarwal Independent Director
● Shiv Surinder Kumar Independent Director
● Ganesh Kumar (Lifestyle business) COO
● Sanjay Bahl CFO
● Amit Agrawal CFO
G. Management discussions and analysis
Economic Overview:
- For
the Year 2019 projected global economic growth was 2.9%. Despite the US-China trade war
and Global Manufacturing sector slowdown.
- Indian Economy grew by 4.2% down from 6.1% in 2018-19.
- IMF forecasts a Global contraction of 4.9%, and 4.5% contraction for Indian Economy in 2020.
Industry Overview
- Global Textile and apparel trade is predicted to grow at a CAGR of 6.4% during the period
2020-29. Rising disposable income and rapid urbanisation to be the key drivers.
- Indian textile and apparel exports were estimated at $35.5 billion in 2019 and are expected to
grow at a CAGR of 11% to reach $100 billion by 2029.
- Currency fluctuations remain a challenge for the Indian textile trade.
- The Indian Apparel Industry was estimated to be worth $62 billion in 2019 and is projected to
reach $129 billion by 2029 growing at a CAGR of 7.6%
- Major challenges are increasing competition, sustained discounting that is expected to moderate
the gross margins and product obsolescence due to evolving fashion trends
Company Performance
- Raymond’s Branded Textile segment, has a commanding presence in Indian Market as a B2C
player for suiting and shirting fabrics.
- Robust demand across Tier 1 to Tier 6 Towns, although retail consumption is subdued.
- Lower raw material costs and price hike has positively impacted profitability.
- Increased penetration with ‘The Raymond Shop’ offering textile, apparel and custom tailoring
services under one roof.
- Retail presence of 1589 stores in 600 Indian cities, and 49 overseas stores in 9 countries.
Covid-19 Impact
- The Garment Sector is impacted by deferred payments and order cancellation, by global
brands.
- The Sector is reeling under liquidity and cost pressures due to unprecedented changes.
- Raymond launched a comprehensive range of PPE and sanitisation products.
- Digital capabilities are being scaled up, cost rationalisation and cost control measures related to
Sales and marketing, manpower, rentals etc. are undertaken to minimise the impact
H. Financial Analysis and Snapshot
Timeline - 2017 - 2018 - 2019
Liquidity:
TYPE Ratio Mar-17 Mar-18 Mar-19
Quick ratio 0.602 0.466 0.394
Current ratio 0.990 0.913 0.836
LIQUIDITY RATIOS
Cash ratio 0.211 0.179 0.133
Acid-Test ratio 0.625 0.585 0.582
In terms of Liquidity, Raymond seems to be struggling, as we see no ratio is above 1 which
indicates that short term debt payment could be a hindrance.
Moreover the decreasing liquidity seems to be pointing towards a constriction in terms of payment of
it’s short term debts.
Solvency:
TYPE Ratio Mar-17 Mar-18 Mar-19
Debt to equity ratio 1.315 1.243 1.268
Interest cover 1.310 1.621 1.635
SOLVENCY RATIOS
Long-term Debt to Asset
ratio 0.130 0.102 0.044
Long term debt payment seems to be better in comparison, however, Interest Cover is something
that needs to be worked upon, a little push into D/E to raise it near 1.5 will also not hurt much as it
has declined a bit.
Activity:
Inventory turnover 2.904 2.321 2.225
Total Asset turnover 0.775 0.748 0.765
Fixed Asset turnover 4.971 2.727 3.082
ACTIVITY RATIOS
Debtors turnover 3.920 4.521 5.064
Creditors turnover 4.697 4.267 3.522
Net working capital -184.5 -1,894.40 -4,380.90
While negative working capital is not necessarily a bad sign, the continuous decline in it. puts
suspicion in the minds of investors.
The Total asset turnover indicates that focus has to be on total sales , which then suggests that
Raymond has not been able to mobilize their products effectively.
Profitability:
Operating margin 5.800 7.400 7.600
Net profit margin 1.200 1.700 2.700
PROFITABILITY Return on Equity 2.800 4.200 6.900
RATIOS (ROTA) 1.000 1.400 2.200
(ROCE) 1.200 1.800 3.100
Gross Margin Ratio 0.330 0.322 0.334
I. Common size statement and comments.
·
Balance Sheet Summary with Common Size Statement
Mar-18 Mar-19 Mar-20
12 mths 12 mths 12 mths
Total liabilities 40,361.70 100.0% 42,941.10 100.0% 47,146.10 100.0%
Total Capital 613.8 1.5% 613.8 1.4% 665.8 1.4%
Reserves and funds 12,556.80 31.1% 13,074.30 30.4% 17,162.10 36.4%
Balance as per profit & loss account 1,075.80 2.7% 1,130.80 2.6% 1,770.50 3.8%
Long term borrowings excl current portion 4,106.80 10.2% 1,894.60 4.4% 3,199.50 6.8%
Long term borrowings incl current portion 8,892.90 22.0% 4,509.30 10.5% 4,998.00 10.6%
Deferred tax liability 410.6 1.0% 356.8 0.8% 274.8 0.6%
Other long term liabilities 610.6 1.5% 144.4 0.3% 153.1 0.3%
Current liabilities & provisions 22,063.10 54.7% 26,857.20 62.5% 24,411.80 51.8%
Short term borrowings 7,483.20 18.5% 12,852.30 29.9% 11,269.60 23.9%
Short term trade payables & acceptances 6,283.70 15.6% 7,668.90 17.9% 6,717.10 14.2%
Total assets 40,361.70 100.0% 42,941.10 100.0% 47,146.10 100.0%
Net fixed assets 11,070.80 27.4% 10,657.30 24.8% 12,163.50 25.8%
Long term investments 4,740.40 11.7% 4,581.70 10.7% 4,725.70 10.0%
Long term loans & advances 3,550.10 8.8% 2,622.30 6.1% 2,432.40 5.2%
Current assets and loans & advances 20,768.00 51.5% 24,293.10 56.6% 26,481.70 56.2%
Inventories 9,368.80 23.2% 10,590.80 24.7% 12,901.10 27.4%
Trade & bills receivables 6,201.80 15.4% 6,771.60 15.8% 5,463.20 11.6%
Cash & bank balance 669.4 1.7% 1,018.40 2.4% 3,007.70 6.4%
Short term investments 3,350.90 8.3% 2,518.20 5.9% 1,800.20 3.8%
Short term loans & advances 1,104.80 2.7% 3,187.40 7.4% 3,030.30 6.4%
Comparison with its peers.
Trend analysis for the last five years of important financial figures.
Major shareholders, FII Holdings and changes in the last three years. - KC
·
Auditors
a) Statutory Auditor
Messrs Walker Chandiok & Co. LLP, Chartered Accountants were appointed as Statutory
Auditors of the Company for a period of five consecutive years 2017-22.
b) Cost Auditor
The Board of Directors, on the recommendation of the Audit Committee, has re-appointed
Messrs R. Nanabhoy & Co., Cost Accountants, as Cost Auditor to audit the cost accounts of
the Company for the Financial Year 2020-21.
c) Secretarial Auditor
Following Section 204 of the companies Act and rules made thereunder, the Company has
appointed Messrs Robert Pavrey & Associates a firm of Company Secretaries in Practice to
undertake the Secretarial Audit of the Company.
d) Internal & Operational Auditors
Mahajan & Aibara Chartered Accountants LLP
·
Change in any accounting policy. - Arun
·
Contingent liabilities as percentage of net - KC
worth and its nature.
·
KEY PERFORMANCE INDICATORS. Arun
Indicators fy19 fy20
Revenue 6,708 6,571 -2% Growth
(in Rs.
Cr.)
EBITDA 702 440 -37%
(in Rs. Growth
Cr.)
EBIDTA 10.5 6.7 -377 bps
Margin
(%)
Net 168 202 Up by 34
Profit(i crore
n Rs.
Cr.)
ROCE* 11.2 4.7
(%)
Total 6,664 7,287 9.35 %
Assets Growth
(in Rs.
Cr.)
SEGMENT SUMMARY
Branded 3,153 2,917 -7% Growth
Textile
sales(i
n Rs.
Cr.)
Branded 1,647 1,619 -2% Growth
Appare
l
sales(i
n Rs.
Cr.)
CREDIT RATING
financial year 2019-20
Rating agency Type of financial instrument Rating
CRISIL Long Term Borrowing/ AA
Non-Convertible
Debentures
Long Term Borrowing/ A1+
Non-Convertible
Debentures
CARE Long Term Borrowing/ AA
Non-Convertible
Debentures
Long Term Borrowing/ A1+
Non-Convertible
Debentures
·
Details of debt, security and important terms
and conditions.
·
Limitations and assumptions for future
profitability, liquidity and efficiency.
·
Porters five forces analysis/ SWOT analysis. Lalit
