Raymond Ltd:Annual Report 2023-24 Analysis

Raymond Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

Raymond Ltd. was established in 1925 by Albert Raymond. It began as a small woolen mill in Thane, Maharashtra, India.

Headquarters Location and Global Presence:

• Headquarters: Mumbai, Maharashtra, India.
• Global Presence: Raymond has a strong presence in India and also exports to various international markets including Europe, the USA, and the Middle East.

Company Vision and Mission:

While the specific officially stated vision and mission might vary and are subject to updates, generally Raymond’s vision focuses on being a leading global textile and fashion brand, known for quality, innovation, and customer satisfaction. The mission revolves around delivering superior value to stakeholders through excellence in design, manufacturing, and customer service.

Key Milestones in Their Growth Journey:

• 1925: Founded as a woolen mill.
• 1958: Launches the first blended suiting in India, Terool.
• 1969: Raymond introduces a ready-to-wear apparel line.
• 1986: Launches Park Avenue brand.
• 1996: Raymond forays into denim fabric manufacturing.
• 2004: Acquisition of ColorPlus brand.
• 2019: Raymond completes the sale of its consumer care business to Godrej Consumer Products.

Stock Exchange Listing Details and Market Capitalization:

Raymond Ltd. is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). As of October 2024, the market capitalization is approximately INR 11,000 Crore.

Recent Financial Performance Highlights:

• In FY24, Raymond recorded a revenue of INR 8,215 Crore and the PAT rose to INR 536 Crore.

Management Team and Leadership Structure:

• Chairman & Managing Director: Gautam Hari Singhania
• The company has a board of directors comprising experienced professionals from various fields.

Notable Awards or Recognitions:

Raymond has received awards and recognitions for its brand value, product quality, sustainability efforts, and employee practices. Some recent recognitions include:

• India’s Most Trusted Apparel Brand 2022 by TRA Research
• ‘Iconic Brand of India’ by The Economic Times

Their Products #

Complete Product Portfolio with Categories:

• Textiles: Suiting, Shirting, Denim, Fabrics (Wool, Cotton, Linen, Silk, Blends)
• Apparel: Ready-to-wear (Suits, Jackets, Trousers, Shirts, Casual Wear), Ethnic Wear (Raymond Ethnix), Formal Wear, Casual Wear.
• Retail: Multi-brand outlets, exclusive brand outlets (Raymond, Park Avenue, ColorPlus, Ethnix).
• Garmenting: Manufacturing of garments for domestic and international brands.
• Engineering: Tools and hardware.
• Real Estate: Real estate and property development.

Flagship or Signature Product Lines:

• Raymond Fine Fabrics: Premium suiting fabrics known for their quality and craftsmanship.
• Park Avenue: A formal and casual wear brand known for its contemporary designs.
• ColorPlus: Premium casual wear brand.

Key Technological Innovations or Patents:

Raymond has invested in innovations in fabric technology, including wrinkle-free finishes, stain-resistant treatments, and sustainable fabric production processes.

Manufacturing Facilities and Production Capacity:

Raymond has multiple manufacturing facilities located across India, producing a wide range of textiles and apparel. The plants are equipped with advanced machinery to produce high-quality products.

Quality Certifications and Standards:

Raymond adheres to stringent quality standards and holds certifications such as ISO 9001 for its quality management systems.

Unique Selling Propositions or Technological Advantages:

• Legacy and Brand Reputation: Raymond has a long-standing reputation for quality and trust.
• Extensive Retail Network: A wide network of stores provides accessibility to customers across India.
• Innovation in Fabrics: Continuous innovation in fabric technology to enhance product performance.

Recent Product Launches or R&D Initiatives:

Raymond has launched collections featuring innovative fabrics like anti-viral and anti-odor textiles.

Primary Customers #

Target Industries and Sectors:

• Fashion and Apparel Industry
• Retail Sector
• Corporate Clients (Uniforms, Gifting)

Geographic Markets (Domestic vs. International):

• Domestic: India is the primary market.
• International: Exports to Europe, the USA, the Middle East, and other countries.

Major Client Segments (agricultural, industrial, residential, etc.):

Primarily caters to:

• Retail Consumers (Individuals)
• Corporate Customers (For uniforms, bulk purchases, gifting)

Distribution Network and Sales Channels:

• Exclusive Brand Outlets (EBOs)
• Multi-Brand Outlets (MBOs)
• Large Format Stores (LFS)
• Online Retail (E-commerce websites)
• Direct Sales (Corporate Clients)

Major Competitors #

Direct Competitors in India and Globally:

• India: Grasim Industries (Aditya Birla Fashion and Retail), Arvind Ltd., Siyaram’s
• Global: Dormeuil, Scabal, Ermenegildo Zegna

Competitive Advantages and Disadvantages:

• Advantages: Strong brand recognition, extensive retail network, wide product portfolio.
• Disadvantages: Higher price point compared to some competitors, challenges in adapting to fast-fashion trends.

How They Differentiate From Competitors:

Raymond differentiates itself through its brand heritage, focus on premium quality, and its diversified product portfolio that caters to different consumer segments.

Industry Challenges and Opportunities:

• Challenges: Increasing competition from international brands, changing consumer preferences, raw material price volatility.
• Opportunities: Growing demand for branded apparel, expansion into new markets, adoption of sustainable practices.

Future Outlook #

Expansion Plans or Growth Strategy:

Raymond is focusing on expanding its retail presence, strengthening its brand image, and investing in digital channels to enhance customer experience.

Sustainability Initiatives or ESG Commitments:

Raymond has been taking steps towards sustainability. It implemented a Zero Liquid Discharge policy. Also, the company uses raw materials that are renewable or recycled and strives to minimize waste.

Industry Trends Affecting Their Business:

• Sustainable Fashion: Increasing demand for eco-friendly and ethically produced garments.
• Digitalization: Growing online retail and demand for personalized shopping experiences.
• Athleisure: Rise of athleisure wear and demand for comfortable and versatile clothing.

Long-term Vision and Strategic Goals:

Raymond’s long-term vision is to strengthen its position as a leading textile and fashion brand by focusing on innovation, sustainability, and customer-centricity. The strategic goals involve expanding its market presence, improving operational efficiency, and creating long-term value for its stakeholders.

Financial Performance Analysis (FY24 vs. FY23 & 3-Year Trend) #

Consolidated Performance (FY24) #

• Achieved highest-ever revenue of ₹9,286 Crore, an 11% increase from ₹8,337 Crore in FY23.
• EBITDA grew 19% to ₹1,575 Crore (FY24) from ₹1,322 Crore (FY23), with EBITDA margin improving to 17.0% from 15.9%.
• Profit Before Tax (PBT) before exceptional items stood at ₹916 Crore (FY24) compared to ₹829 Crore (FY23).
• Net Profit surged to ₹1,643 Crore.

Detailed Analysis #

Financial Position #

Balance Sheet Analysis #

Consolidated Financial Analysis #

Comparative Analysis of Assets, Liabilities, and Equity (Consolidated) #

Data extracted from “Robust Financials - 5-year Performance Trend” (Page 20) and Consolidated Balance Sheet (Page 264) for FY22 to ensure Total Liabilities calculation.

Note: Total Liabilities = Total Assets - Total Equity. FY24 & FY23 Equity and Total Assets are from Consolidated Balance Sheet (Page 264). FY22 Total Assets and Equity (Net Worth) are from 5-year performance trend (Page 20).

Key Observations: #

• Total Assets: Significant growth in FY24 (58.41%) primarily due to the acquisition of Maini Precision Products Limited (MPPL) and growth in the Real Estate business. FY23 also saw an 11.52% growth.
• Total Equity: Substantial increase in FY24 (89.12%), driven by strong profitability, including exceptional gains from the sale of the FMCG business and the MPPL acquisition’s impact on Non-Controlling Interest.
• Total Liabilities: Increased by 43.11% in FY24, aligning with asset growth and business expansion, including debt for the MPPL acquisition.

Significant Changes in Major Line Items (Consolidated - YoY FY24 vs FY23) #

Data from Consolidated Statement of Profit and Loss (Page 265) and Consolidated Balance Sheet (Page 264).

Operating Performance #

Income Statement #

Cash Management Analysis of Raymond Limited #

Cash Flow Analysis #

Raymond Limited demonstrates significant activity in investing and financing cash flows. Operating Cash Flow (OCF) is supported by operational efficiencies and profitability.

Operating Cash Flow (OCF) #

Strong operating cash flow generation is driven by operational efficiency and working capital management. Profitability improvements contribute positively to OCF.

Investing Cash Flow (ICF) #

• Inflows: A major inflow resulted from the divestment of the FMCG business for ₹2,825 crore. Proceeds were used for debt repayment and strategic growth.
• Outflows: A significant outflow was the acquisition of a 59.25% stake in Maini Precision Products Limited (MPPL) for ₹682 crore. Capital expenditure on expanding garmenting capacity and real estate development in Thane also represents outflows. Purchase of property, plant, and equipment is another outflow.

Financing Cash Flow (FCF) #

• Inflows: NCDs were issued to Raymond Lifestyle Limited (RLL) amounting to ₹1,700 crore.
• Outflows: Significant debt repayment occurred using FMCG sale proceeds, leading to a net debt-free status for the group. A dividend payment of ₹10 per share (₹66.57 crore appropriation) is a key outflow. Redemption of NCDs (Series L, M, N) also constitutes outflows. Outflows include repayment of long-term and short-term borrowings, and dividend paid.

Working Capital Management Efficiency #

The company highlights effective working capital management. Ratios monitored include Debtors Turnover Ratio, Inventory Turnover Ratio, and Trade Payables Turnover Ratio. The improvement in the Current Ratio suggests an enhanced ability to meet short-term obligations.

Capex Analysis by Segment #

Capital allocation across segments is evident:

• Lifestyle (Garmenting): Expansion of garmenting capacity by approximately one-third of current levels.
• Engineering: Significant investment through the acquisition of MPPL (₹682 crore), foraying into aerospace, defence, and EV components.
• Real Estate: Continued development of the ~100-acre Thane land bank. Expansion in the Mumbai Metropolitan Region (MMR) is pursued via an asset-light Joint Development Agreement (JDA) model. Launch of new projects signifies ongoing investment.

Dividend and Share Buyback Trends #

• Dividend: A final dividend of ₹10 per equity share has been recommended for FY24, a substantial increase from the ₹3 per share dividend paid for FY23 and FY22. This represents a 100% dividend on the face value, with a total appropriation of ₹66.57 crore, marking a record-high dividend.

Debt Service Coverage #

The company has significantly improved its debt position.

• Deleveraging: Raymond Group became net debt-free (consolidated) post the FMCG business sale. Net Debt reduced from ₹1,230 crore in FY23 to -₹1,006 crore (surplus) in FY24.
• Debt Repayment: Proceeds from the FMCG divestment were utilized for debt repayment. NCDs (Series L, M, N) were redeemed during the year.
• Outstanding Debt: Listed NCDs Series P (₹200 crore due Feb 2031) and Series Q (₹100 crore due Dec 2024) remain outstanding. Inter-company NCDs of ₹1,700 crore issued to RLL are slated for cancellation upon demerger.
• Credit Rating: CRISIL upgraded the long-term rating to AA (Stable). CARE rating is AA (Watch with Developing Implications). This indicates a strong capacity to meet financial obligations.
• Debt Service Coverage Ratio is a monitored metric.

Liquidity Position #

The company reports a liquidity surplus available for growth. The increase in the Current Ratio further supports a comfortable liquidity position.

Key Performance Indicators #

Raymond Limited: FY24 Financial Analysis #

Consolidated Financial Performance & Key Metrics #

Raymond Limited reported its highest-ever consolidated revenue of ₹9,286 crore in FY24, an 11.4% increase from ₹8,337 crore in FY23. Consolidated EBITDA reached ₹1,575 crore, up 19.1% from ₹1,322 crore in FY23, with the EBITDA margin improving to 17.0% from 15.9%. Profit After Tax (PAT) saw a significant surge to ₹1,643.07 crore (205% growth YoY), largely influenced by exceptional income from the sale of the FMCG business. Excluding this, the highest-ever EPS stood at ₹98. Operational Return on Capital Employed (ROCE) was 25.1% for FY24. The company achieved a net debt-free status post the FMCG business divestment. A dividend of ₹10 per share (100%) has been recommended.

Standalone revenue for FY24 was ₹6,593.32 crore (14% YoY growth), with operating profit at ₹741.35 crore (12% YoY growth) and net profit at ₹526.67 crore (28% YoY growth).

Market Share and Competitive Position #

• Branded Textile: Market leader in worsted suiting fabrics in India and a significant global player. Largest Over-The-Counter (OTC) branded shirting player in the domestic organized market. Commands near 100% brand awareness.
• Garmenting: Largest exporter of men’s tailored suits, jackets, and trousers from India. Expanding capacity aims to position Raymond as the third-largest suit maker globally.
• Branded Apparel: A leading player in the menswear segment with a portfolio of market-leading brands.
• Engineering: JK Super Drive is the No. 1 brand in steel files in India and Raymond holds the largest installed manufacturing capacity of steel files globally. Post-MPPL acquisition, the engineering business is positioned as a key supplier to global automotive OEMs and aerospace/defense sectors.
• Real Estate: Rapidly established itself in the Thane market, delivering its first project ahead of RERA timelines, and is expanding into the Mumbai Metropolitan Region (MMR).

Key Products/Services Performance #

• Branded Textile: (Sales: ₹3,450 Cr; EBITDA: ₹721 Cr, Margin: 20.9%)
  • Suiting business saw growth, particularly in wool blends and gifting. Shirting recorded volume growth. Made-to-Measure (MTM) witnessed increased demand. Home textiles (bed & bath) experienced volume growth. Exports were strong in US and European markets.
• Branded Apparel: (Sales: ₹1,587 Cr, 20% YoY growth; EBITDA

Risk Assessment: Raymond Limited (FY23-24) #

Overall Risk Management Framework #

Raymond Limited employs a risk management framework overseen by a Risk Management Committee. The framework includes risk identification, analysis, assessment, prioritization, response development, response assessment, monitoring, communication, and reporting. Internal financial controls are reported as well-defined, with no material weaknesses observed for the financial year ended March 31, 2024. The Internal Audit function, with Ernst & Young LLP as Internal Auditors for FY24, evaluates critical and high-risk areas, reporting findings to management and the Audit Committee. The Board, Audit Committee, and Risk Management & ESG Committee are periodically apprised of internal audit findings and corrective actions.

Specific Risk Categories and Analysis #

Financial Risks #

• Risk Description: Exposure to currency exchange rate volatility, elevated interest expenses, and raw material price fluctuations.
• Severity: Key risk impacting financial performance.
• Likelihood: Inherent in the nature of the business with international operations and borrowings.
• Trend: Currency volatility and interest rate pressures are linked to global economic uncertainty. Commodity price fluctuations are described as “heightened or frequent.”
• Mitigation Strategies:
  • Currency Risk: Strong forex policy approved by the Board.
  • Interest Rate Risk: Maintaining an optimal mix of various kinds of loans and maturities.
  • Commodity Price Risk: Sourcing wool from diverse countries, domestic sourcing of cotton yarns. Combination of forward and spot booking, inventory management, and pre-emptive vendor development.
• Control Effectiveness: Overall internal financial controls are stated as adequate and effective.
• Potential Financial Impact: Affects production costs, revenue from sales, profit margins.

ESG (Environmental, Social, and Governance) Risks #

• Risk Description: Environmental exposures, social risks, and governance-related risks (susceptibility to litigation and regulatory actions).
• Severity: Potential for litigation, regulatory action, and impact on commercial objectives.
• Likelihood: Dependent on operational practices and governance adherence.
• Trend: Increasing focus on ESG globally.
• Mitigation Strategies:
  • Risk Management and ESG Committee (board-level) to set ESG strategy and guide implementation.
  • HR department as custodian of policies for a safe and sustainable business environment.
  • Corporate Development function ensures ESG initiative implementation and reporting.
  • Sustainability agenda initiatives integrated with strategy to mitigate environmental impact.
• Control Effectiveness: Framework in place for ESG management.
• Potential Financial Impact: Litigation costs, regulatory penalties, reputational damage, impact on stakeholder confidence.

Data & Cyber-security Risks #

• Risk Description: Inadequate cyber-security protocols leading to data privacy breaches, loss of records, or security incidents.
• Severity: Potential for significant operational disruption and reputational damage.
• Likelihood: An ongoing threat in the digital environment.
• Trend: Cyber threats are generally considered an evolving and increasing risk.
• Mitigation Strategies:
  • Standardised backup tools, services, and procedures.
  • Advanced data centres (Vashi and Thane).
  • Periodic updates to security policies and procedures.
  • Regular data protection and cyber-security assessment reviews.
• Control Effectiveness: Measures in place to protect data and systems.
• Potential Financial Impact: Financial losses due to operational disruption, regulatory fines, costs of remediation, loss of customer trust.

Talent Risks #

• Risk Description: Lack of a skilled workforce, high turnover rates, difficulties in retaining talent, and challenges in succession planning for key positions.
• Severity: Impacts operational continuity and strategic execution.
• Likelihood: Common challenge in competitive industries.
• Trend: Talent acquisition and retention are persistent concerns.
• Mitigation Strategies:
  • Strategic talent management system, training, and integration of learning and development (L&D) activities.
  • Raymond Leadership Academy to identify, nurture, and groom managerial talent for future leadership roles.
  • Performance recognition through ‘Raymond Awards for Excellence’.
  • Robust succession planning.
• Control Effectiveness: Various HR initiatives implemented.
• Potential Financial Impact: Increased recruitment and training costs, loss of productivity, impact on innovation and growth.

IT Risks #

• Risk Description: Delays in integrating advanced technologies and information systems into business operations and financial processes.
• Severity: Can hinder operational efficiency and strategic agility.
• Likelihood: Common in organizations undergoing digital transformation.
• Trend: Ongoing due to rapid technological advancements.
• Mitigation Strategies:
  • Implementing SAP across all Lifestyle division businesses to unify processes, enhance compliance control, improve information accuracy, and enable master data harmonisation.
  • Real estate business has implemented the latest SAP S4 Hana.
• Control Effectiveness: Strategic IT upgrades underway.
• Potential Financial Impact: Operational inefficiencies, higher operating costs, missed strategic opportunities.

Raymond Limited: Strategic and Management Analysis #

Long-Term Strategic Goals and Progress #

Raymond Limited is focused on unlocking shareholder value and strengthening its core growth engines. Key strategic goals include:

• Value Unlocking & Business Focus: Divestment of non-core assets (FMCG business sale) and demerger of the Lifestyle business.
• Strengthening Core Businesses:
  • Lifestyle: Expanding retail footprint and increasing garmenting capacity.
  • Real Estate: Scaling the business through Joint Development Agreements (JDAs).
  • Engineering: Consolidating and expanding into aerospace, defense, and EV components via the acquisition of Maini Precision Products Limited (MPPL).
• Financial Prudence: Achieved net debt-free status.
• Shareholder Value Enhancement: Record-high dividend recommendation and strategic demerger.

Progress is evident through the sale of the FMCG business, the ongoing demerger, the acquisition and planned consolidation of MPPL, expansion in Realty JDAs, and strong financial performance.

Competitive Advantages and Market Positioning #

Raymond Limited leverages several competitive advantages:

• Brand Strength & Trust: Iconic brand with high consumer recall.
• Manufacturing Excellence: Vertically integrated manufacturing facilities.
• Strong Market Position:
  • Leader in worsted suiting fabrics in India.
  • Largest exporter of men’s tailored suits from India.
  • Leading player in the Branded Apparel men’s wear segment.
  • Largest installed manufacturing capacity for steel files globally.
• Extensive Pan-India Network: Large retail network.
• Diversified Business Portfolio: Presence across Lifestyle, Real Estate, and Engineering.
• Strategic Agility: Demonstrated ability to undertake transformative corporate actions.
• Customer Engagement: Focus on deep engagement with channel partners and leveraging digital transformation.

Innovation Initiatives and R&D Effectiveness #

Innovation is pursued across product development, service delivery, and operational efficiency.

• Product Innovation:
  • Textiles: Introduction of specialized fabrics.
  • Apparel: Focus on premiumization and casualization.
  • Engineering: MPPL acquisition brings capabilities in high-tech sectors.
• Service & Process Innovation:
  • Retail & Customer Experience: “Made-to-Measure” (MTM) services and franchise-led tailoring hubs.
  • Digitalisation: Unified B2B platform, personalized digital gifting vouchers, real-time NPS tracking, and data capture for CROs.
• R&D Expenditure: Focused on technology absorption efforts.
• Effectiveness: Market leadership, sustained introduction of new product lines, expansion into new segments, and adoption of digital tools.

M&A Strategy and Execution #

Raymond’s M&A strategy is focused on streamlining the portfolio, strengthening core businesses, and entering high-growth adjacent sectors.

• Divestment:
  • FMCG Business: Sold to Godrej Consumer Products Ltd (GCPL).
• Acquisition:
  • Maini Precision Products Limited (MPPL): Acquired a stake to enter sunrise sectors.
• Demerger (Internal Restructuring):
  • Lifestyle Business: Demerger into a separately listed entity, Raymond Lifestyle Ltd.

Management has demonstrated effective execution in these complex corporate actions.

Management’s Track Record in Execution #

Management’s track record indicates a period of active and largely successful execution of strategic initiatives.

• Strategic Transformation: Successfully executed the sale of the FMCG business and progressing towards completion of the demerger.
• Financial Performance: Delivered the highest-ever annual revenue and EBITDA in FY24.
• Operational Efficiency & Growth:
  • Real Estate: Achieved a key milestone by delivering the first real estate project ahead of schedule.
  • Branded Apparel: Achieved sales growth driven by distribution expansion.
  • Garmenting: Expanding capacity.
• Capital Allocation: Effectively utilized proceeds from the FMCG sale for deleveraging and funding growth.
• Shareholder Returns: Recommended a record-high dividend.

Overall, management has demonstrated an ability to set ambitious strategic goals and execute them effectively.

Capital Allocation Strategy #

Raymond’s capital allocation strategy is centered on strengthening the balance sheet and investing in high-growth, high-margin businesses.

• Deleveraging: A primary focus was deleveraging.
• Investment in Core Growth Engines:
  • Engineering: Acquisition of MPPL.
  • Real Estate: Expansion through an asset-light JDA model.

ESG Framework at Raymond Limited #

Environmental Metrics and Targets #

• 8% of total energy consumption from renewable sources in FY2023-24, aiming for 20% by FY2025.
• 10,28,681 KL of water treated and reused.
• 38% reduction in air emissions (other than GHGs).
• 4% decrease in Scope 1 & 2 emissions.
• 39% of waste recycled/reused, targeting Zero Waste to Landfill by FY2030.
• Chhindwara plant nearing Zero Liquid Discharge (ZLD), Vapi plant has an Effluent Treatment Plant (ETP).
• 30.25% of total capex invested in technologies to improve environmental impact.
• Targeting up to 75% reduction in hazardous chemicals by 2030.
• Aiming for a minimum 5% overall reduction in packaging materials by 2030 (from FY2022-23 baseline).

Social Responsibility Programs #

• ₹2.64 crore spent on CSR activities in FY2023-24.
• Key CSR areas: education, healthcare, women empowerment, and natural resource conservation.
• Projects supported include: livestock development, educational support, accommodation for families of children undergoing cancer treatment, cancer survivorship and rehabilitation, citizenship and life skills programs, and paediatric heart surgeries.
• 100% of permanent employees covered by health and accident insurance.
• 12.16% turnover rate for permanent employees.
• 0.44% of total revenue spent on employee well-being.
• Raymond Leadership Academy focuses on talent development (e.g., “Shakti” for gender diversity).
• “Great Place to Work” certification for Lifestyle and Realty businesses.

Governance Structure and Effectiveness #

• Board comprised 7 Directors (as of March 31, 2024).
• Board includes Executive, Non-Executive, and Independent Directors (including women).
• All Independent Directors meet independence criteria.
• Five Board committees: Audit, Nomination and Remuneration (NRC), Stakeholders’ Relationship, Corporate Social Responsibility (CSR), and Risk Management & ESG.
• Board met 9 times in FY2023-24.
• Audit Committee met 6 times, comprising entirely of Independent Directors.
• NRC met twice, an all-Independent Director committee.
• Formal Board performance evaluation conducted.
• Whistle Blower Policy managed by KPMG with direct access to Audit Committee Chairman.
• No qualifications in Secretarial Audit Report for FY2023-24.

Sustainability Investments and ROI #

• 30.25% of capital expenditure invested in technologies to improve environmental and social impacts.
• Energy conservation investments in FY2023-24: ₹85 lakhs (Chhindwara), ₹30 lakhs (Vapi).
• Technology absorption led to cost savings: ₹122.15 lakhs (Chhindwara), ₹133 lakhs (Vapi), and ₹169.53 lakhs from energy/water-saving projects.
• Initiatives include renewable fuel, VFDs, efficient motors/pumps, and waste heat recovery.
• 100% of wool sourced sustainably (Responsible Wool Standard certified).
• Uses recycled polyester and spun yarn.
• Strategic acquisition (Maini Precision Products) for EV components, aerospace, and defense.
• EBITDA increased by 250% and PBT by 900% compared to pre-COVID FY20.

ESG Ratings and Peer Comparison #

• S&P Global (DJSI) Corporate Sustainability Assessment score of 60 for FY2023-24 (up from 18).
• Top 10 globally and top 3 in India within Textiles & Apparel (DJSI).
• Sustainalytics ESG Risk Rating of 17.0 (Low Risk), ranking 96 out of 576 companies in the Textiles & Apparel sub-industry.

Regulatory Compliance and Future Preparations #

• Directors’ Responsibility Statement confirms adherence to accounting standards and effective internal financial controls.
• Complied with applicable Secretarial Standards.
• Statutory Auditors’ Report unmodified (except for a note on audit trail).
• Compliant with environmental laws.
• Implementing SAP S4 Hana to unify processes and enhance compliance.
• Managing commodity price and currency risks through hedging.
• BRSR report outlines commitments and targets with timelines up to FY2030.
• Demerger of lifestyle business and acquisition in engineering indicate strategic positioning.

Raymond Limited: Financial and Strategic Analysis for FY2023-24 #

Overview of Transformation and Performance FY2023-24 #

Raymond Limited has characterized FY2023-24 as a “marquee year,” marked by robust financial performance and significant corporate restructuring aimed at unlocking shareholder value. The company is navigating a transformative phase, focusing on three core growth pillars: Lifestyle, Real Estate, and Engineering. Key strategic actions during the year included the divestment of the FMCG business, the proposed demerger of the Lifestyle business, and the strategic acquisition of Maini Precision Products Limited (MPPL) to bolster the Engineering segment, particularly in sunrise sectors like aerospace, defence, and EV components. The company achieved its highest-ever consolidated revenue and EBITDA, becoming net debt-free ahead of schedule.

Financial Performance FY2023-24 #

Consolidated Financials: #

• Revenue: ₹9,286 crore, a significant increase, representing the highest-ever annual revenue. The Directors’ Report notes a consolidated gross revenue of ₹9,019.51 crore, up 10% YoY.
• EBITDA: ₹1,575 crore, the highest ever, reflecting a 19% YoY growth.
• EBITDA Margin: 17.0%, an improvement from 15.9% in FY23 and 13.9% in FY22.
• Profit After Tax (PAT): ₹1,643.07 crore (as per Directors’ Report), a 205% YoY increase, significantly impacted by the profit on the sale of the FMCG business. Excluding this, the EPS stood at ₹98.
• Net Debt: The Group became net debt-free, primarily due to proceeds from the FMCG business divestment.

Standalone Financials (Raymond Limited): #

• Revenue from Operations: ₹6,593.32 crore, a 14% YoY growth from ₹5,779.56 crore.
• Operating Profit: ₹741.35 crore, a 12% YoY growth from ₹662.07 crore.
• Net Profit: ₹526.67 crore, a 28% YoY growth from ₹410.46 crore.

Key Standalone Ratios (YoY Variance Explanations): #

• Current Ratio: Increased to 1.47 from 1.15 (FY23), attributed to increases in investments, trade receivables, and bank balances.
• Net Capital Turnover Ratio: Decreased to 1.53 from 2.78 (FY23), the provided report indicates an increase in this ratio due to other income.
• Return on Investment % (Current Investments): Increased significantly to 7.27% from 3.61% (FY23), indicating better returns on current investments.

Segment-wise Performance Analysis FY2023-24 #

Branded Textile: #

• Revenue: ₹3,450 crore (FY23: ₹3,364 crore). Maintained revenue levels despite market conditions.
• EBITDA Margin: 20.9%.
• Performance Drivers: Growth in suiting (wool blends, gifting solutions driven by festive/wedding demand), volume growth in shirting, and positive performance in Made-to-Measure (MTM) and Home textile segments. Strong export demand, particularly from the US and European markets. Operational efficiencies contributed to margin improvement.

Branded Apparel: #

• Revenue: ₹1,587 crore, a 20% YoY growth (FY23: ₹1,328 crore).
• EBITDA Margin: 11.9% (FY23: 10.8%).
• Performance Drivers: Expansion of distribution reach (over 200 new stores), focus on premiumization and casualization. Strong performance across all channels (LFS, MBOs, EBOs) and brands (Raymond Ready-To-Wear

Audit and Regulatory Analysis: Raymond Limited FY 2023-24 #

Auditor’s Opinion and Qualifications #

Standalone Financial Statements #

Walker Chandiok & Co. LLP issued an unmodified opinion stating the standalone financial statements give a true and fair view as of March 31, 2024, in conformity with Ind AS.

• Reservation: A reservation was noted under “Report on Other Legal and Regulatory Requirements” [paragraph 17(h)(vi)] concerning Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014. The audit trail feature was not enabled at the database level for the SAP accounting software, though it was enabled at the application level. The auditors found no evidence of tampering with the audit trail feature, other than the impact of this exception.

Consolidated Financial Statements #

Walker Chandiok & Co. LLP issued an unmodified opinion on the consolidated financial statements, based on their audit and reports of other auditors for certain subsidiaries, associates, and joint ventures.

• Reservation: Similar to the standalone report, a reservation was noted under “Report on Other Legal and Regulatory Requirements” [paragraph 19(h)(vi)] regarding the audit trail feature. For the Holding Company, its subsidiaries, associates, and joint ventures, the audit trail (edit log) facility was not enabled at the database level for SAP. Additionally, one joint venture’s accounting software (Denim) did not have an audit trail feature. For one subsidiary using third-party operated software (STAGE), the auditors were unable to comment on the audit trail feature in the absence of an Independent Service Auditor’s Assurance Report.

Key Audit Matters (KAMs) #

Standalone Financials #

• Impairment testing of investments in and other recoverable from a joint venture (Raymond UCO Denim Private Limited): Due to losses suffered by the JV, management performed an impairment assessment using a Discounted Cash Flow (DCF) model. This involved significant management estimates. An impairment of ₹2,900 lakhs was recognized in the current year. The materiality and subjectivity involved made this a KAM.
• Revenue recognition from real estate project under development: Revenue of ₹159,090.63 lakhs was recognized over time based on Ind AS 115. This required significant management judgment in determining satisfaction of performance obligations, estimating total contract costs (including contingencies), and the proportion of contract work completed. The materiality and judgment involved made this a KAM.

Consolidated Financials #

• Revenue recognition from real estate project under development: Same as the standalone KAM, involving significant management judgment in cost estimation and percentage completion for revenue of ₹159,090.63 lakhs.

Key Accounting Policies and Changes #

Basis of Preparation #

Financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention, except for certain financial assets/liabilities at fair value, assets held for sale, and defined benefit plan assets.

Key Policies #

• Revenue Recognition: Recognized upon transfer of control. For real estate property development, revenue is recognized over time from the financial year in which the entity’s right to payment for performance completed is established, based on the percentage of completion method (input method, i.e., costs incurred to date as a proportion of total estimated costs).
• Property, Plant & Equipment (PPE): Stated at cost less depreciation and impairment. Depreciation is generally on SLM for factory buildings/specific non-factory buildings/plant & equipment/aircraft and WDV for other assets, over Schedule II useful lives (except for certain plant & equipment and aircraft based on technical evaluation).
• Intangible Assets: Carried at cost less accumulated amortization and impairment. Goodwill is tested annually for impairment. Software is amortized over 3 years (SLM).
• Leases (Ind AS 116): Right-of-use assets and lease liabilities recognized. Incremental Borrowing Rate (IBR) is used for discounting lease payments.
• Inventories: Valued at lower of cost or net realizable value. Cost includes purchase, conversion, and other costs. FIFO, Weighted Average, or Specific Identification methods are used. Property under development includes land cost, construction costs, overheads, and incidentals.
• Impairment of Non-Financial Assets: Assets are tested for impairment if events indicate the carrying amount may not be recoverable.
• Investments in Subsidiaries, JVs, Associates (Standalone): Carried at cost less impairment.
• Financial Instruments: Classified as amortized cost, FVOCI, or FVTPL based on business model and cash flow characteristics.
• Employee Benefits: Short-term obligations recognized as incurred. Long-term benefits (earned leave, sick leave) measured at present value. Post-employment benefits include defined benefit (gratuity, pension, certain PF) and defined contribution plans. Actuarial valuations are used for defined benefit plans.
• Share-Based Payments: Fair value of options under ESOP 2023 recognized as employee benefits expense over the vesting period.
• Foreign Currency Translation: Transactions recorded at prevailing rates. Monetary assets/liabilities translated at year-end rates.
• Income Tax: Current tax based on taxable income. Deferred tax recognized on temporary differences using the liability method.

Changes in Accounting Policies #

The accounting policies are stated to have been applied consistently. The impact of recent amendments to Ind AS 8, Ind AS 1, and Ind AS 12 was not material.

Internal Control Effectiveness #

Standalone Financial Statements #

The Auditor’s Report on Internal Financial Controls (Annexure B) expresses an unmodified opinion that the Company has, in all material respects, adequate internal financial controls with reference to standalone financial statements and such controls were operating effectively as at March 31, 2024.

Consolidated Financial Statements #

The Auditor’s Report on Internal Financial Controls (Annexure A) expresses an unmodified opinion (based on their