Raymond is spending millions on SAP, Microsoft, PwC, and Accenture to rewire the company

Raymond is spending millions on SAP, Microsoft, PwC, and Accenture to rewire the company
  • The suits maker wants to become a lifestyle experience company targeting 'newly grown ups'.
  • The investments are going into rebuilding the entire value chain and the biggest chunk of the money is being spent on technology and digital infrastructure.
  • The sale of land parcel in Thane will give the company additional muscle as it invests in trying to reinvent the brand and the company.
Raymond has been popular for its suits for decades in India but it wants to be more than that starting next year. “So we want to evolve from a clothing company to a lifestyle experience company,” Chief Executive Officer Sanjay Behl told Business Insider in an exclusive interview.

And that would mean remodelling the entire value chain from the supply to technology to the digital infrastructure. “We have partners like SAP, Microsoft, PwC, Accenture have come together to look at every single node of our value chain and make us future-ready, for Raymond 3.0,” Behl said.

Most of its investments are going into technology as the company shifts its focus to a younger audience, which Behl likes to call the ‘newly grown ups’. “There are massive IT investments, running into multi-million dollar investments, which are happening currently in under-layering or re-architecting the IT infrastructure of the company.... Our point of sale of in each of these (outlets) is going to change. This is a partnership with Microsoft which again is going to consume multi million dollars,” he added.


In times of slowdown

Earlier this year, Group Chairman Gautam Singhania told Business Insider that the company was likely to turn free cash flow in the financial year ending March 2019 itself. That didn’t happen.

The slowdown in the economy and demand may have made matters worse in the months that followed for Raymond, which has a debt of about ₹2,300 crore on its books.

Thankfully for the group, the much-awaited deal to sell a massive land parcel in Thane (nearMumbai has come through. On October 9, the company informed the stock exchanges that the land has been agreed to be sold for ₹700 crore and will help improve cash flow amidst a broader slowdown in demand.

Raymond makes nearly 60% of its revenue in the second half of the year thanks to a series of festivities and weddings across the country. However, this year’s festive season has been off to a sombre start. “There is a definite uptick though it was muted. This time, Onam has not been as.. because there were floods in Kerala and that impacted the sentiment to a very large extent. The Middle East has slowed down a lot versus a few years ago, and Kerala has a lot of Middle East economy that helps them spend. A combination of factors, we have seen a muted response during Onam. The early signs are looking good for Durga Puja. Though it’s still not as bountiful as we expected,” he said. The interview with Behl took place on September 27.

But Behl is confident of a high single-digit growth in topline and a double digit growth in bottomline.

The share price of Raymond had lost over a third of its market value since the start of this year. However, the announcement of the land sale has given a huge fillip to the street sentiment. The share price jumped over 8% after the statement sent to the exchanges.

“The fundamentals have not changed and the stock market is a consequence of fundamentals eventually. It’s a bit of catch up that will have to be done and it will happen,” Behl had said before the announcement.

Two revelations and a fiery defence from Raymond’s boss Gautam Singhania