Raymond lays off hundreds of employees— some of them say they haven’t received the promised severance pay
- The textiles and branded apparel major started firing employees as early as February, long before the COVID-19 lockdown struck.
- While the spokesperson admitted to ‘cost cutting measures’, the company did not reveal the total number of employees retrenched.
- The group debt was already too high and the slowing economy had choked the cash flow.
- The stock has lost over 80% of its value since May 2019, and now the market value of the company is less than the gross debt at the end of December.
AdvertisementOne of India's biggest textiles and apparel maker Raymond has fired hundreds of employees across the board. The layoffs began as early as February — the group debt was already too high and a slowing economy was squeezing the cash flow — and the COVID-19 crisis only made it worse, sources told Business Insider on the condition of anonymity.
Not just that, for those who lost their jobs, many of them are complaining that they didn’t receive the promised severance pay.
Just like Indiabulls, the story of Raymond layoffs caused a stir on social media, not on Twitter but on Reddit. A blog post that went viral alleged that 1,100 people have been asked to leave, which would account for about 15% of the workforce of the company, which had 7,087 permanent employees at the end of March 2019. However, sources close to the management told Business Insider that the total number of employees laid-off may not exceed 700.
The count of 1,100 was corroborated by many employees Business Insider spoke to but the spokesperson for Raymond said that it was “incorrect” and “based on speculation”. Even while admitting to “cost cutting measures”, the company did not reveal the total layoffs so far.
Firing employees during the lockdown is not unique to Raymond. Many companies like Ola, Zomato, and even Reliance Industries owned by Asia’s richest man Mukesh Ambani have cited the COVID-19 crisis to reduce headcount or the employee salaries. In fact, Chairman Gautam Hari Singhania had even issued a video last month warning his employees of “tough decisions” that have to be taken. However, the video was later taken ‘private’.
Thousands of people in India have lost their jobs despite the call from Prime Minister Narendra Modi not to cut salaries of people they employ. “Please understand that they too have to run their families and keep them healthy too,” Modi appealed in March.
It’s not just because of COVID-19 crisis
At least two people Business Insider spoke to were asked to leave as early as February 2020 long before the lockdown started on March 25. When asked to comment on the layoffs in February, the Raymond spokesperson said this was “completely false” and described it as “rumours spread by the vested interest with malicious intent and are unsubstantiated.”
The many concerns about the company’s prospects are not hidden. The market value of the shares had dropped to ₹4,193 crore by Jan-end — when the gross debt was ₹2,420 crore — and to ₹1,418 crore by May 22.
AdvertisementThe stock has declined over 80% since May 2019. Interestingly, much of the sell-off in Raymond shares happened between Jan 17 and March 24 of this year. The lockdown had not been announced until that point and since then, the stock has been stable and range-bound.
The COVID-19 lockdown could not damage the stock any more than what was already done. After the last quarterly earnings, the management reportedly told analysts that it did not expect to be free cash flow positive for the full year ending March 2020, according to a Karvy Broking report dated January 30.
The cash on Raymond’s books in FY19 was less than half of what it was a year earlier
|Year||Cash and equivalents|
“When we were asked to resign, they said we would be paid a full three-month salary. Although they paid us full salary in March,they paid us just the basic salary in April without any intimation," said one of the fired employees. A few others told Business Insider that they got only 25% of their salary for the month of April.
They also said that the attempts to contact the Human Resources Department did not yield any answers. Raymond has denied this charge saying, “all the employees received the salary for the month of March in April without any delay.”
"Forced to resign”
Many employees said they were forced to resign. “Otherwise, they will threaten you with things like it will be difficult for you in future, we won't give you a salary, and people are left with no choice," one of those laid off told Business Insider.
Here’s the full text of the statement from Raymond:
“Firstly we would like to put on record that most of the information that you have gathered from your sources is factually incorrect, malicious and misrepresented with vested interests. We would further like to state that in line with the prevailing market conditions and unprecedented challenges, the company has undertaken the process of cost rationalisation to minimise the impact on business due to the pandemic. All the said measures and actions are taken in the overall interests of all stakeholders,” said the Raymond spokesperson.
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