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| Edited By: Swati Khandelwal |Source: Zee Business |Updated: May 08, 2019, 06:30 AM IST
Raymond has performed well in both the segments, branded textile and apparel, this year as revenues, margin and profitability have gone up, says Sanjay Bahl, group CFO, Raymond. During an interview with Swati Khandelwal, he also threw light on the company’s quarterly results, segmental growth, capex and real-estate business.
Edited Excerpts:
First, I will like to provide a quick highlight of the quarter where our revenue has grown 11% and total profitability has grown 25%. Similarly, our revenue has grown 11% during the year as well, and Ebitda went up to 29%.
So, it was a satisfying year for both, branded textile and branded apparel. If we look within the segments, then branded textile has grown 9%, whereas the branded apparel segment rose 17%.
Both these segments have performed well. But, a margin impact of 100 bps on the textile front was felt this year due to higher wool prices.
Apart from this, the wage settlement put pressure as it was a one-time cost for us. Later, we increased our prices and its benefit can be seen this year due to lack of one-time cost in the business. Hopefully, this price hike will help us in restoring our margins this year and reap its benefits.
When it comes to branded apparel, its margin stood at 7% in the fourth quarter and it was quite encouraging for us because our revenue has been marching ahead for last eight quarters, and this time we had the target of improving our profitability in the segment. And, we posted an Ebitda margin of 4.2% this year against 1.6% reported in the same quarter of the last fiscal. The journey will continue from here.
We follow the asset-light expansion strategy and have a target of keeping our capex below depreciation and have achieved it last year. In fact, record 283 stores were opened last year of which 95% were franchise stores. So, asset-light expansion strategy is going well. We have control on the capex, which stood below Rs 250 crore in the last fiscal.
In addition, we will have a consolidated capex of around Rs 200 crore across all businesses this fiscal and will continue with the asset-light expansion strategy. This will bring capital efficiency in the business and in return will improve our return on capital, which went up from 8.9% to 11.3% last year and we have plans to take it to 13.5-14% this year.
The real-estate project was announced last year (in 2018). The board has approved our proposal of developing a residential project on a plot spread on a 20-acre land. The project will be developed by Raymond itself and we have received all the requisite approvals for the project. Interestingly, a soft-launch of the project, which was announced in the last quarter of the previous fiscal, has garnered a good response. The project will be developed in two phases and the first phase will see the construction of 10 towers spread across 14 acres. Interestingly, almost 400 bookings have been completed in three towers whose bookings were announced in the recent past.
Response to soft launch is encouraging us and the formal launch will be announced in the first week of May, and it is expected that its sales velocity will be a good one.
And the momentum is here to continue as our product, which is a 2bhk flat, is value for money and is in the best location.
The project will be completed in five years and we will not have to go for any additional debt for the project as it will be largely funded through revenue being generated by itself, which means we will have a good cash flow from the project.
