From a heritage brand to diversified conglomerate, Raymond charting its success path
21 August 2024, Mumbai
Founded in 1925, Raymond, is name synonymous with quality and style in India. It is not merely a brand, but a testament to resilience, innovation, and strategic vision. With a rich legacy spanning nearly a century, Raymond has consistently adapted to changing times, establishing a formidable presence not only in India but also on the global stage. From its humble beginnings as a textile manufacturer to its evolution into a diversified conglomerate encompassing lifestyle, engineering, and real estate, Raymond's journey is a saga of transformation and growth.
A seven-year turnaround plan
The COVID-19 pandemic posed significant challenges for Raymond, as it did for businesses across the globe. Store closures and economic uncertainty led to a decline in sales and a rise in debt. However, Gautam Singhania and his team responded with a clear and decisive strategy: a seven-year turnaround plan focused on debt reduction, business optimization, and strategic growth.
The plan involved divesting non-core businesses, such as the FMCG division, and using the proceeds to reduce debt. Raymond also acquired Maini Precision Products (MPPL) to expand its engineering capabilities and launched multiple real estate projects. These efforts have paid off. The company's stock price has surged, and its balance sheet is now healthier than ever. Raymond is now poised to enter the next phase of its growth journey, with a renewed focus on expansion and innovation.
Expansion in lifestyle
Raymond's lifestyle business, which will soon be listed as a separate company, Raymond Lifestyle, is a key growth driver. The company sees great potential in manufacturing garments for the Western market and is in the middle of an expansion that will increase its annual manufacturing capacity from just under 8 million to 11 million garments.
Raymond is also focusing on expanding its store footprint, adding new categories like men's innerwear and sleepwear, and relying on its core suiting fabrics business. The company plans to open 500 stores in the next three years, including multi-brand retail outlets.
Brand Ethnix rdefining ethnic menswear
One of big initiatives in Raymond's lifestyle portfolio is Ethnix by Raymond, an occasion/ceremonial menswear brand. Launched in 2017, Ethnix has quickly become a success, driven by the growing trend of wearing Indian ethnic wear on special occasions. The brand offers a wide range of ethnic wear for men, including kurtas, sherwanis, and suits. It has also expanded into casual ethnic wear with its 'Smart Ethnix' range, which features short kurtas, linen trousers, and parallel trousers.
Ethnix is planning an aggressive expansion in the coming years, with plans to open 300+ stores in the next two years. The brand is also working on building a robust omnichannel strategy to increase the contribution of revenue from online channels. As per Bidyut Bhanjdeo, Chief Business Officer of Ethnix the key trends driving the growth of the ethnic menswear market are:
• Increasing popularity of Indian ethnic wear for occasions and celebrations.
• The shift from unorganized to organized players in the market.
• The expansion of branded stores in Tier II, III cities.
Meanwhile, the engineering business has been revitalized with the acquisition of Maini Precision Products. The company's product range has doubled with the addition of new categories and Raymond is looking to scale the aerospace and defense businesses, which have been placed under a separate company within the engineering business. Real estate business is also poised for growth. Raymond will amortize its 100-acre Thane land parcel by 2032-33. The remaining 60 acres should be sufficient to build about 7 million sq. ft. of saleable real estate, resulting in revenue of Rs 16,000-18,000 crore over the next 7-8 years. Raymond has also entered into joint development agreements in Mumbai to diversify its real estate business beyond its captive land parcel. The company is exploring expansion into Pune under the same model.
Raymond's future goals are clear: to create shareholder value, grow its businesses, and focus on innovation. The plans include expanding its manufacturing capacity, store footprint, and product categories in the lifestyle segment. The company will also focus on building its omnichannel capabilities. Scaling its engineering business. Growing its real estate business and focusing on innovation with new product offerings, designs, and silhouettes. The company will also focus on incorporating sustainable fabrics into its products.
