gautam singhania: Raymond’s Gautam Singhania remains cautiously optimistic on future

Are you seeing demand picking up? Where are we in the up cycle and what are the trends on ground?
The recovery is different in different sectors. The FMCG sector is already 100% recovered, real estate is doing well, auto is doing well. Fashion apparel is getting there. March will be a watershed month leading to 100% recovery. Things are getting better. The country is getting vaccinated and more people are stepping out. We are on the right trajectory and I am cautiously optimistic.

What kind of consumer trends are emerging in the Indian market — be it food or fashio or tech — post the worst of the pandemic?
In retail, while a lot of stuff went online, a reversal is taking place now. The weekend sales are back to pre-Covid level. That indicates consumers are willing to come out and spend on good things. Maybe that is why we are seeing better sales in real estate and not only in the big cities, but also in suburbs or farm houses. A lot of people are still working on Zoom. It really does not matter where you live and that I think is a great change. It will take time to come back to physical meetings like before but I would say I am now 75% back to physical meetings. I do not prefer Zoom.

What about the demand in tier two, tier three towns? Is there reason to expand further into those segments?
The tier two, tier three towns got less impacted and the bounce back in those cities is far higher. Having said that, Raymond has always believed in market penetration and not only in tier two, tier three cities. We go all the way down to tier 10. We are present in towns that have 50,000 people and that strategy has worked for us. We have got a distribution network that goes to over 500 towns and we continue to believe in that.

Cotton price is up over 13% since the beginning of the year. Since it is a raw material, how is that going to impact margins?
It is difficult to predict raw material pricing. There is pent up demand and that is driving the prices up in the short term. Whether you see cotton or steel, across-the- board, there are similar trends. It is cyclical. In a branded apparel business, raw material is a lower percentage of the final selling price. So while raw material pricing will impact a little bit, it is not going to impact a great deal.

Fuel prices have also gone up and in shipping, there is a shortage of containers. How are these factors impacting logistics and how much has cost gone up because of this?
Yes, input costs are going up — whether it is fuel prices going up or shortage of containers. One has to take it in stride. While the shortage is there, it is not going to be there forever. As prices go up, demand will come down and one has to live with this.

There has been an anti-China wave in the US. Brands have been looking for alternatives to sourcing from China. There has been a lot of discussion on whether India will emerge as a preferred destination. Are you seeing any interest on the back of that?
US customers have realised that they do not want to be in China and that is, of course, helping us. In the auto component business, we are getting more orders. Fashion apparel is still taking time to open up but I am pretty confident that the US customers would look for an alternative to China. It is really a question of how well we position ourselves to take advantage of this current sentiment.

How has the export business been shaping up? What kind of recovery have you seen in your retail business?
It is different in different businesses. It has picked up far better in auto component and engineering businesses. In the apparel business, it is still slow. It may take a couple of quarters for things to be back to normal.

Have you seen an uptick in the demand for real estate? Are you moving toward some of the new launches?
The stamp duty reduction has been a big boom but the fundamental change is that people want to get their own homes and Raymond is in the affordable luxury segment — small homes with a lot of amenities. It is really doing well for us. Today we are the number one project in Thane. We are outstripping sales to competition and that is really a factor of the right product, right price, right location, right amenities, the trust for the brand, etc.

I continue to see strong demand for our real estate. We have a few new launches. Currently we have 1 BHK and 2 BHK and we are looking at other products to cater to the demand in that market.

What about the demand that you are seeing in the auto parts and engineering division? Are you sensing a sharp uptick after we have seen things gradually open up and things getting back to normal?
I would say those businesses are back to pre-Covid level. Auto globally and internationally and domestically as you are aware are doing very well. So we continue to remain and have strong order books on that business. And I certainly expect that to continue at least for the next few quarters.

What is your outlook for FY22? Growth plans with respect to the kind of top line and, bottom line that you are looking at going forward?
If we achieve 2019 levels, we would have done well. I still say cautiously optimistic. But on a balance scorecard, we have recovered reasonably well. Can we do better? Of course! But we have to slowly wait and watch and like I said, be cautiously optimistic.