Raymond to get out of FMCG

Mumbai: Apparel maker Raymond plans to exit its fast moving consumer business as part of a strategy to focus on its core apparel segment, and is seeking a valuation of ₹2,500 crore, an official close to the development told ET. The company, which sells fragrances, condoms and personal care products though brands such as Helene Curtis, KamaSutra and Park Avenue, approached a few suitors through investment banker Rothschild, the person said. A spokesperson of Raymond Consumer Care said, “As per company policy, we do not comment on market speculation and rumours.” Some possible buyers ET spoke with said that while the portfolio of brands is strong, the valuation being demanded is too high. Last fiscal, Raymond announced demerger of its branded apparel and lifestyle business into a separate consumer firm to unlock value. Other businesses such as real estate, tools & hardware, and automotive components would be under the existing listed entity while FMCG and denim business will continue to be operated through associates and joint ventures. 78862945Over the past few years, Raymond has been deleveraging its balance sheet with asset monetisation and internal accruals. The company has brought down long-term borrowing ratio to total borrowings to 27% in 2019-20 from 51% in FY18, helped by land sale by its associate company.People close to the cash-strapped group said it is looking to raise funds to plough into its core business. Raymond’s FMCG business gets over 80% of its revenue from fragrances and condoms. The FMCG business is housed in two entities—JK Helene Curtis and JK Investo Trade. Over the past year, Raymond’s stock price nearly halved to ₹283 a piece, but analysts said the steep correction provides opportunity to invest as the company enters the pandemic’s unlock phase.“The demerger of its lifestyle business and rapid strides taken in its real estate business along with the consolidation of its FMCG business, should in our view put to rest street apprehensions, if any, on its future-focused strategy,” an investor note by LKP Securities said. “Execution of its strategy on various non-core business verticals in our view should only help hasten the recovery process going forward,” it said.The 95-year-old company reported revenue of ₹620 crore for FY20.

from Economic Times https://ift.tt/3oqhvtD
via IFTTT