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Raymond CFO, Retail News, Retail ET said: ‘Cash generated will go towards reducing debt’


Raymond CFO said: 'Cash generated will help reduce debt'

New Delhi: Fabric and fashion retailer, Raymond plan to focus on free creation cash flow across your business activities and use that money to reduce debtAmit Agarwal, CFO of the interaction group with ETRetail said.

For the quarter ended December 31, 2022, Raymond’s net debt stood at Rs 932 billion compared to Rs 1,286 billion on September 30, 2022. The company reduced its net debt by Rs 354 billion.

“This is the highest net debt reduction in a quarter through internal accruals,” Agarwal said at the company’s investor conference on Feb.

Raymond’s total debt and liquidity stood at Rs 2,022 crore and Rs 1,090 crore as at 31 December 2022, respectively. The brand generated operating cash flow of Rs 492 crore and free cash flow of Rs 416 crore, mainly used to reduce debt.

Talk about the company cost optimization strategy, Agarwal told ETRetail that the retailer reduced working capital to 60 days from 90-95 days, which is 3-4 years ago. This leaves a lot of cash that can be used to reduce debt or grow the business, he added.

Explaining further, Agarwal said every expense spent in the company has a good reason behind it. “We are ensuring that the Rs 400 crore sustainable cost reduction we made during the pandemic stays on the books and is not diluted.”

Commenting on cash flow, he said that Raymond plans to focus on mild asset growth and not invest significantly in CAPEX. Any cash generated will go towards reducing debt.

Raymond exercised the lower corporate tax rate option, resulting in a one-time net impact of Rs 73.5 crore in profit and loss accounts, the company said in its income statement.

Raymond’s Store & Retail Expansion

The company’s retail business has strong demand, Agarwal said, adding that the average ticket value is up 25% year-over-year, especially in the wedding market. “We are seeing our customers upgrade to higher fare products.” Asked if the spending increase was mainly driven by the metro, Agarwal said that due to inflation, ‘in demand’ consumers are facing challenges. However, ‘want’ consumers, available in both tier 1 and 2 cities, are going out and spending more due to increased disposable income.

During the investor conference, Agarwal said that inflationary pressures over the past three quarters have led to a K-curve recovery. Discretionary spending has taken a hit for low-income households, in when there is an increase in consumption in high-income households.

He added that with CPI inflationary pressures easing and budgets favoring the middle class, consumption is expected to improve in the coming months. “In the near future, with a large number of wedding dates coming in February and March, we expect the commercial channel to gain momentum with strong secondary sales anticipated, expected will boost demand.”

Regarding store expansion, Raymond plans to open 70 stores nationwide in the current year mainly thanks to wear national costume stores under the Ethnix brand.

Raymond has seen a strong post-Covid recovery. It is also involved in the real estate business using its plot in Thane and has started other joint development projects in Mumbai. These projects have positive cash flow thanks to land ownership and handover ahead of schedule.

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