Fundamental problem is lack of money: Raymond CMD
The downturn in the auto sector could have a multiplier effect on other sectors of the economy, says Gautam Hari Singhania, CMD, Raymond in an interview. Excerpts:
What is the state of the economy?
The economy is a little tough now. There is no liquidity. Banks do have the money but they are not lending. You were travelling at 300 km per hour and suddenly, somebody slammed the brakes. So, there is going to be discomfort till the car stops and starts again. These are tough times but Raymond always embraces such times.
How is the retail sector doing?
Auto sector is in a terrible condition. NBFCs are in a bad state. The fundamental problem is lack of money. But if you are a good company and have good products with value for money, at best you will be flat or have little growth. That is a good thing because others will be negative.
The pain in the auto sector is huge. The multiplier effect of that is going to be over the whole industry because auto sector does not stop at cars. If you take unemployment in auto companies, ancillaries and dealerships, it would be lakhs of people. It even affects industries like steel, tyre, engine, component manufactures and leather manufacturers.
Every manufacturer has a [trickle] down effect on employment. If one sector affects 20 other sectors, then those 20 will affect 20 other sectors. Today, we see auto getting the highest pain.
One can deal with 5-10% up or down in sensitivity index but when you see 40%, it is a systemic change. We need to react to this quickly. We need to correct it quickly. Whatever needs to be done, let’s get it done and let’s move on. Is there a problem? The answer is yes.
How is Raymond doing in this environment?
With the slowdown, everybody has been impacted. But we are doing better than other companies because eventually Raymond sells value-for-money products. We are not overleveraged; we continuously do product innovation. I am worried for the overall sentiment. There will be collateral damage on everybody.
Do your store expansion plans remain?
We are continuously opening new stores. Today, we have 1,406 stores in India across 600 towns and 52 stores in nine other countries. We will continuously be aggressive not only in Raymond shops but in different formats and new formats. Today, Raymond is present in over 500 towns and new locations are opening up. Our next big penetration will be via another company that has presence in 375 towns and that will go on expanding. Today, there are people in Central India who have never been to Mumbai. I remember, once a 50-year-old Punjabi man came for a product launch, he said he had never seen the sea before and he thanked me for showing him the sea [from the terrace of Raymond flagship store at Breach Candy].
When I asked what he meant, he said he had never left Punjab. What you and me take for granted, in India you have to go to the markets [to understand trends].
Recently, Raymond forayed into real estate. What are your overall plans?
Raymond has historical land. The company’s policy is to monetise the asset. We have multiple plans. Currently, we are developing the first phase of 20 acres. In the wisdom of the company and the directors, it s the correct way to optimise shareholder value. Construction has started. The response has been very good. We are doing 2BHK compact homes.
Raymond has a Non-scheduled Operator’s Permit (NSOP). Would you be keen to start a scheduled or regional airline?
The idea of NSOP is to bring our cost down. So when the assets are not in use, we charter them. I am very passionate about aviation. But passion is one thing and business is another.
I was at one point extremely close to investing in one of the largest airlines of this country. It was conceptualised in our office and in 24 hours from signing, I said I am not doing it. The airline has done extremely well, earned millions of dollars but I have zero regrets. I still believe that I did the right thing. It could have brought different sets of problems for Raymond.
How did your passion for motorsport come about?
I have been passionate about motorsport starting from age of 4 when did go karting. I collect cars and I love cars. I have a Ferrari and Lamborghini, vintage cars. I have modified cars and off road cars. I have taken the passion one step forward as I now sit in the FIA World Motor Sport Council as a member. This is a great matter of pride and honour for me. I hope I will contribute a lot towards motorsport. It is my passion and I am living that dream.
Your comment on the differences between you and your father [former Raymond chairman Vijaypat Singhania]?
It is what it is. He wants me to do things which are against corporate governance norms of the company. All that he asked for was put forward to the board, to shareholders and it has been rejected. There is nothing I can do. He does not want to understand that. At the end of the day, I am a professional running a professional firm and am trying to set the highest standards of corporate governance. If I have to save the company and lose my family, so be it. I am not going to do something wrong or against the interest of the company and the shareholders. And that’s what my father has to understand. It is sad.
You stay in Mumbai. The infrastructure is crumbling and there is hardly any green space. What needs to be done?
I think this government is doing a phenomenal job in building infrastructure. I am very vociferous on what this government has done in terms of infrastructure projects, especially the coastal road. It is sad that people oppose things like this. These environmentalists who make such a big deal about, do not know the positives of the roads that we are creating in terms of less fuel consumption, less carbon emission etc. Recently the city was flooded and they are not talking about why it flooded. People took five to six hours from Powai to come to my house [at Breach Candy] for dinner. If we had the coastal road, these traffic problems could have been avoided.
The same environmentalists who talk that we should not have a coastal road, travel by cars and taxi. Are you not putting emission out there? Do you travel by the underground or metro? Go by cycle. Why travel by car if you are so concerned about the environment? The government is trying to do an incredible job, not only it is environment-friendly in the long run. Look at the amount of investment, job creation and what it does for the economy. Whether you take the New Mumbai airport, the trans harbour link, the coastal road, the under ground metro system and east west corridor, these are big infrastructure projects for the city. If we are all going to oppose this, then we have no right to complain. My 200% support is with the government for the project it is doing. These environmentalists just oppose anything and every thing. They can not come on the way of development.
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