'We re-engineered ourselves': Behind Raymond's remarkable turnaround under Gautam Singhania

Perseverance, grit, strong leadership skills, high risk appetite, and a flashy and fast lifestyle don’t necessarily go well with naiveté. But Gautam Hari Singhania, 58, has shades of them all. No matter what you think of the Chairman & MD of Raymond, the fact is that he has shown exemplary leadership skills in the toughest of times to pull his organisation out of the losses wrought by Covid-19, and onto a sustained growth trajectory. In a candid conversation with Business Today, Singhania lays bare his strategy for Raymond’s turnaround. Edited excerpts:  

BT: The pandemic was a bad time for Indian industry. Are there any instances that stand out for you as symbols of what happened and what changed the company or you as a person?  

You’re right, the pandemic was an extremely difficult time, especially for a company like ours where retail was closed, we had no revenue, plus we had manufacturing on the side. So, we had people to carry, interest cost... it was a very difficult time. There’s a very famous saying. It’s called success is relative—more the success, more the relatives. But when you don’t have success, those same people disappear. There was a day when, for a group of this size, a private limited bank refused to roll over an existing loan of Rs 5 crore because it said it won’t get it [the money]back. But we had the conviction that we will make it happen… that this, too, shall pass. And we put our heads down, rolled up our sleeves and did what we had to do. And I’m happy to say today things have changed dramatically. So, the pandemic taught us a lot of things, also showed us who’s on our side and who’s not. What really stood by us is our trade, our dealers, our relationships. We did away with our fair-weather friends. The same people now stand in line looking for business again, but obviously, it’s not going to be. But you know, such is life. You asked me what I learnt? You learn to survive. The key is to learn to survive.  

BT: Would you say that the pandemic has made you and Raymond stronger than before?  

Infinitely stronger. Look at the amount of cost we took out of the system. We re-engineered ourselves on doing business. And in the pandemic, in three years, we built a very strong real estate business as a counter strategy, as insurance, for balancing if one went bad and if one went good. In less than three years, at 11:30 am on December 10 (2022; this interview was taken on December 5), we’re delivering the first apartments two years ahead [of the RERA deadline]. No builder in India has ever delivered a project of this scale and size in three years, out of which two years were [during a] pandemic.  

 BT: That is a very precise date and time to arrive at so much in advance…  

It’s my daughter’s birthday [Niharika Singhania, 17]. We always set ourselves a deadline. Typically, somebody’s birthday, some occasion… To be honest with you, I need to find an excuse to pin the coat on. I thought my daughter’s birthday was a far enough time, but realistically near time, and I thought it was achievable. It was a stretch, but what it does is it gears the organisation. We made a public announcement. We put it on our website. We put a countdown timer. Then it aligns the whole organisation. Every builder said we can’t deliver. But we did.    

BT: Did it not strike you as a risk? Especially in a new business?  

I think sometimes, it’s easier to achieve things if you are naive. Because then you don’t know. Sometimes, not knowing the business is a big advantage.    

BT: The organisation turned around its finances in this time, coming off a bad period. What were the key pillars of your strategy?  

Every business had its own strategy. And it was not something that we said we will do after 12 months. When it comes to survival, and you wonder what’s going to happen next, you have to say, what am I going to do today? And every day, every step you took forward, you came out of the deep water. If you’re in six feet of deep water, you got to take one step up the slope, before you can even think of running outside. That’s how it goes. But you know what… nothing wins like a positive mindset. If you have a positive mindset and say, ‘No, I will survive’, period. Vision is 20:20 in hindsight, but we built a real estate business, we built a full new team of people, we built a profitable business, you’ve seen four quarters of proper delivery, it’s all happened, not by chance.  

BT: If we were to look ahead now, what would be the key pivots around which you will take this momentum forward?  

See, there are four lines of business—lifestyle, engineering-auto, FMCG [sold off recently to Godrej Consumer Products], and real estate. Each business has its own strategy. Lifestyle has tremendous challenges, or opportunities more than challenges, in the sense that can we come up with new product lines, whether it’s home, ethnic, made to measure… Our legacy businesses, like fabric, may grow at 6-7-8 per cent, maybe 9 per cent. But then everything else will grow at an exponential pace. If you see our own example of shirting [fabric] over the last six-seven years, we have built a Rs 600-700 crore over-the-counter shirting business. Everybody talks about how readymade shirting is growing… apparel, apparel, apparel. But why are we selling 25 million metres of shirting fabric across the counter?  

That’s because it’s a better value proposition for you to go and buy 1.8 metres of fabric and stitch it customised to yourself. What the world charges you a premium for, I’ll give you a discount on. You go to Zegna and you say made-to-measure, and they’ll say you pay 40 per cent premium. Here I give you made to measure; I’ve been doing it all my life. Plus I can do it the same day for you because I’ve set the backend up. Nobody else can do that. Today I have built up a 4 million metre linen business, again made to measure. This is mass customisation.  

BT: It’s very interesting you say this, because when I was younger, let’s say about 20-25 years ago, tailor-made apparel for middle class people like us was the thing to do…  

Even I did it, and that too stitching. I don’t like readymade. I prefer custom. Custom is luxury. In this country, we have tailors. (Pointing to his attire) my shoes are made to measure; these chinos are made to measure; this T-shirt is made to measure. I can do anything made-to-measure—shirts, trousers, jackets. We are the only brand in the world that goes from Rs 300 a metre to Rs 10 lakh a metre; that’s 3,000 times in price point under the same brand; no brand in the world could do it. Nokia had to do Vertu, Toyota had to do Lexus... Today you can buy a Lexus ES 300 and a Toyota Camry—they’re the same car built by the same company, with a different label, a different price point. You take a Four Seasons and a Ritz, it’s a rebranding. Even if you see what Taj (Hotels) did, they made many of their properties Vivanta, which were originally Taj. So, they are different branding by the same company. Raymond is the only brand that we say, from the taxi driver to Mr Tata, everybody has it.  

BT: What is your thinking behind the real estate business?  

We are providing a lifestyle. We are providing a product that has never been done. Again, it comes from naiveté. We built an experience centre that cost Rs 32 crore. And a competitor builder came and said, ‘you know, as a builder, I could never afford this’. I said I’m a Brand Builder. I’m not a [real estate] builder. I saw the potential of putting that up to build my brand, which is what has happened today. Now, has the Rs 32 crore investment been plus or minus? I think it’s been exponential.  

BT: Why aren’t you planning to go outside Maharashtra for the real estate business?  

There’s enough work to do [here]. Why should I go outside Maharashtra? Many builders who have gone across states have been extremely successful in their home state, but failed miserably in other states. I think I know why. I don’t want to get into it. There’s so much opportunity here [in Maharashtra], at least for the next five years. If something very large and very attractive comes up somewhere with some compelling reason, I’m not saying I won’t look at it. But it’s not my top three priorities today.  

BT: So, what are your top three priorities today? When you wake up in the morning, and you go to office…  

There’s only one—enhance shareholder value. That’s the only priority. Everything else falls from that priority.  

BT: You have enhanced shareholder value in the recent past. Are you quite confident that you can build on it?  

Our job is to do the right thing in the business; shareholder value creation will follow. We have delivered quarter-on-quarter results. That’s what we focus on. And then that is seen by the market. The rest is what the market does. I don’t understand the market.  

BT: If the real estate business becomes even more successful, is there a chance of that overshadowing your core business? Or is that a good thing?  

So be it. What’s there to fear? It’s there to enjoy, because you look at the whole picture. If my cake is becoming bigger, which side is white chocolate and which side is dark chocolate, how do I care?  

BT: You are a very positive person. But the positivity also comes on the back of challenges that you have overcome. So, going forward, what do you look at as the key risks, not just for your individual businesses, but for the organisation?  

Risk? So, what does Putin do tomorrow? If you say nuclear button, it’s a global risk. What happens in the UK, it’s a potential risk. What happens to Biden-Trump, it’s a potential risk. So, India is no longer worried about your or my risk. We are so globally connected, whatever happens around the world becomes a potential risk. Number two, of course, I am very bullish on India. I think India is on the right trajectory. Execution is always a risk. This is a country where anything can happen. There are risks in anything, but you stay positive, focussed.  

BT: What is your thinking on the exports business?  

If you’re sitting in a boardroom in America, and you look east, and you want to do manufacturing, what will you look at? India and China. China has its own issues. So, India has got to grow. Two things. One, labour cost is going up in Europe, inflation is going up. Number two, energy cost is going up. If you take textile & apparel, energy is a big part of it. So they’re getting a double whammy. That has to translate into exports coming to this part of the world.  

BT: Countries like Bangladesh and Vietnam have made great advances in terms of their share of global textiles trade. What is your thinking, from an industry leader point of view, about what India needs to do?  

We’ve lost ground. We need to have a little more friendly policies for export. Labour is where we had an issue, which is an inherent long-term issue where we need to have a proper labour policy. Why Bangladesh or Vietnam… look at countries like Ethiopia, the policies that they follow, the industry that they have for export. So, it’s just a matter of tweaking it around. We have a plant in Ethiopia for the American market. It’s doing very well. America needs products, where will it go? It is getting duty-free and quota-free exports from Ethiopia.  

BT: Obviously, you’re very passionate about all your businesses. But if you were to look slightly long term, which businesses are you most bullish on?  

Each one has its own challenges. Lifestyle and real estate are two large growth engines. And engineering-auto has a game plan. So, I’m bullish. Now, one might grow a little less, one might grow a little more, but all four fundamental lines of business we are in are reasonably doing well. And you’re seeing it in the consolidated numbers. The numbers talk for themselves.  

BT: In terms of branding and public perception, despite having business lines in both B2C and B2B, you’re widely perceived as a B2C business. Is that an advantage or a problem?  

You’ll always be known by your consumer-facing businesses. That’s the nature of the beast. That’s okay. You don’t need to know what my industrial businesses are. It’s irrelevant to the public at large. Eventually, identity comes from your brand. There’s no Gautam Singhania; it’s Gautam Singhania of Raymond. Without Raymond, there’s no Gautam Singhania, let’s be very clear about it.           

              

@alokeshb