Diversified group Raymond will take a call if it is to proceed with the IPO of its group company JK Files and Engineering (JKFEL) once turmoil in global markets calms down and inflation at home cools.
Speaking to FE, Group CFO Amit Agarwal told Raymond the company was in no rush to proceed with the IPO. The Securities and Exchange Board of India (Sebi) approved the proposed IPO in February and the company has until February next year to decide, he said.
“The war between Russia and Ukraine started around the time we got the go-ahead from Sebi to go public, but market conditions have since deteriorated and have yet to fully recover. Geopolitical factors aside, things are not encouraging on the inflation front at home either. We have until February 2023 to start the JKFEL IPO. We monitor and monitor the markets continuously. When the time is right, we will proceed with the IPO,” Agarwal said.
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Agarwal said the listing process for the group’s real estate arm, Ten X Realty, will begin once the same has been done for JKFEL. However, Raymond’s board has approved a resolution to inject funds in the form of stocks/preferred stocks/debentures/interim deposits/loans (repayable/non-repayable/convertible/optionally convertible/non-convertible) up to 150 crore in excess of one tranche.
Raymond Group operates in segments such as Branded Textiles, Branded Apparel, Retail, Apparel, Engineering, Real Estate and FMCG.
Proceeds from the IPO will be used to deleverage Raymond’s balance sheet and not to grow the business or day-to-day operations. According to Agarwal, the company is on track to become debt-free by 2025 as not only has profitability increased but efficiency in controlling costs has improved.
As of March 2022, Raymond Net Debt was Rs 1,088 crore compared to Rs 1,416 crore in FY21 and Rs 1,859 crore in FY20. Agarwal said the debt rose again to Rs 1,400 crore in June 2022 as the company needed working capital to build up inventory for the festive season, which would boost overall sales, he said.
Raymond posted a profit of Rs 82 crore for the April-June quarter of the current fiscal year compared to a loss of Rs 157 crore for the same period last year. Revenue doubled from Rs 800 crore to almost Rs 1,700 crore in the same period. “We expect FY23 to be a record year in terms of sales and profitability over the last 10 years for the company,” Agarwal said.
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