Raymond Limited (RAYMOND) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Raymond Limited Q1 FY '22 Results Conference Call, hosted by Antique Stock Broking. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhijeet Kundu of Antique Stock Broking. Thank you, and over to you sir.

Thanks. On behalf of Antique Stock Broking, I would like to welcome all the participants in the earnings call of Raymond Limited. I have with me Mr. J. Mukund, who is the Head of Investor Relations of Raymond Limited. Without taking further time, I would like to hand over the call to Mr. Mukund. Over to you, sir.

Thank you, Abhijeet. Good evening, everyone, and thank you for joining us for our Q1 FY '22 earnings conference call of Raymond Limited. I hope all of you would have received a copy of our results presentation. I would like to urge you to go through this along with the disclaimer slides. Today, we have with us, Mr. S. L. Pokharna, Director of Raymond Limited; Mr. Amit Agarwal, Group CFO; Mr. Ganesh Agarwal -- Ganesh Kumar, Chief Operating Officer, Lifestyle Business; and Mr. Harmohan Sahni, who has recently joined in June '21 as CEO of our Realty Business. I will now hand over the call to our group CFO, Amit Agarwal, who will give you the summary of our company's quarterly performance before we open up the floor for our Q&A session. Over to you, Amit.

Thank you, Mukund. Good evening, ladies and gentlemen. These are testing times, and I hope you and your near and dear ones are safe. Thank you for joining us today on this earnings call to discuss our results of first quarter of fiscal '22. Let me give you an overview of the market. The market witnessed a bullish start at the beginning of the calendar year 2021, that is January to March quarter, with improvement in consumer sentiments, opening up of the economy and recovering of sales. The momentum was expected to continue in the first quarter of the current financial year, that is the April to June quarter on the back of strong wedding season and positive consumer sentiments. However, from beginning of April '21 there was COVID-19 which is considered to be more severe from the first wave, which occurred in last year, resulted into local lockdowns across the country, starting from west followed by north, east and southern regions. Throughout the quarter, varying degrees of lock -- regional lockdowns were implemented by local authorities. There were restricted hours of store operations on weekdays, complete shutdown on weekends, market opening on alternate days and essential to nonessential categorization, which largely affected the consumer footfall in retail network at -- impacting sales. At the trade level, primary sales dipped during the quarter as channel partners became cautious, as unsold inventory was slowing all across supply chain. At retail level, especially the retail outlets and large-format stores were impacted due to mall closures, resulting into delays in end of season sale as well. From online channel perspective, sales of nonessential items also slowed down as some of the key states put restrictions on e-com deliveries. However, from later half of the June month with [ phase-wise ] unlocking and partial ease of restrictions, some recovery in consumer sentiment was witnessed. Also, the secondary sales improved with ease of mobility, mainly contributed by recovery in lower-tier markets compared to metros and Tier 1 and 2 cities. Now let me give you some key financial highlights for the quarter, fiscal '21 first quarter. Second wave of pandemic resulted in structural lockdowns across India, impacting sales recovery during the quarter. As the unlock began, we witnessed slightly better sales in the later part of the June month. Our consolidated revenue stood at INR 862 crores, up 289% as compared to INR 222 crores in fiscal quarter FY '21. Our continued focused approach on optimizing operating expenses during the odd quarter continued. While the revenue increased by 3x, the operating expense increased by 26% over the previous year from INR 275 crores in first quarter fiscal '21 to INR 347 crore in fiscal quarter 1 FY '22. Our reported EBITDA was INR 7 crores for the quarter as compared to an EBITDA loss of INR 167 crores in first quarter of fiscal '21, resulting in an improvement of INR 175 crores in this quarter. The net loss before exceptions for the quarter was INR 114 crores as compared to INR 242 crores in the previous year. During the quarter, the company had considered an exceptional loss of INR 43 crores, which includes the following: gain on recognition of fair value of development rights received as non-monetary compensation in lieu of acquisition of land by Thane Municipal Corporation, Thane, amounting to INR 92 crores. We also received an interim insurance claim on account of fire occurred at one of the company's premises at Thane, amounting to INR 10 crores. In the apparel business, the company also made a provision for discount sharing with customers on trade receivables of INR 117 crores and certain inventory write-down of INR 29 crores due to second wave of the pandemic. We will discuss this in more detail in our Branded Apparel segment. Net loss after the above-mentioned exceptional items for the quarter was INR 157 crores as compared to INR 242 crores in last year. Now let me talk about the operational performance in more detail. If you look at other revenue, the first quarter of fiscal '22 revenues were severely impacted by the local lockdowns across the country due to second wave of the pandemic. All the B2B businesses' performance were well and contributed to almost 40% of the total revenues. In our core Branded Textile segment, there was a dip in price as trade channel and market remain muted. This was due to lower secondary sales as the retail network was either shut or operated with restricted timing due to regional lockdowns. However, with phase-wise opening of states, along with continued restrictions, the market witnessed some recovery in part of the June month. In our B2B segments, the quarter witnessed continued momentum in both of our engineering business as well as auto business, spot markets remained buoyant with strong demand in global markets. Despite strong order book, lockdown-induced operational disruptions and port conditions resulted delay in dispatches. In case of Garmenting business, while we have a robust order book, stringent lockdown restriction in Karnataka impacted the dispatches. In our Real Estate business, while the sale of the new units were affected as major part of the quarter was impacted due to local lockdowns, however fast-paced construction activity during the quarter in all the 10 towers of the project resulted in higher revenues and milestone completions during the quarter. Let me talk about the EBITDA and the operating costs. We reported an EBITDA of INR 7 crores for the quarter as compared to an EBITDA loss of INR 167 crores in first quarter of fiscal '21. There was a continued profitable performance by both the engineering business B2C Shirting and Real Estate businesses. On the operating cost front, their continued focused approach on optimizing operating expenses resulted in controlling the cost during the quarter. The overall increase of INR 72 crores to INR 347 crores as compared to INR 275 crores in first quarter of fiscal '21 is primarily due to increased level of operations. The OpEx cost has increased by INR 72 crores over first quarter of fiscal '21 to INR 347 crores in first quarter fiscal '22, while revenue has increased by 289% during the same period. We began our cost rationalization exercise in first quarter fiscal '21 immediately after the lockdown. For ease of reference, in the last financial year of fiscal '21, we were able to achieve cost reduction to the tune of 40% as compared to fiscal '20. If we talk about the OpEx cost in the first quarter of fiscal '20 was INR 531 crores, which reflects a reduction of INR 184 crores in first quarter of fiscal '22. Now let me explain the key operating costs in detail. Our employee cost increased from INR 171 crores in first quarter fiscal '21 to INR 194 crores in first quarter of fiscal '22 due to normalization of employee benefit expenses. Also, as already stated, our store rationalization is in progress to make our retail portfolio healthy. Net store closures is 27 for the first quarter of fiscal '22, taking the retail network to 1,459 stores as of 30th of June 2021. Let me talk about the working capital. We continue to stay focused on efficient working capital management despite lockdowns and lower secondary sales with continued efforts across all businesses. Our collections have been very encouraging, and we could maintain the receivable levels similar to March 21 levels. During the quarter, though the plants operated at lower levels, however, due to severity of the lockdown, the sales and dispatches were significantly impacted, and thereby, the inventory levels increased -- resulted in overall increase in net working capital by INR 92 crores from INR 1,117 crores as of March 31, 2021, to INR 1,209 crore as of 30th of June 2021. Due to above reasons, the operating cash flow was negative at INR 108 crore, and free cash flow was negative to the tune of INR 196 crore for the first quarter fiscal '22. Our net debt increased by INR 200 crore, from INR 1,416 crore as of 31st of March 2021 to INR 1,617 crore as of June 30, 2021. The average interest rate level was maintained at the March '21 level at 8.34%. The company believes that during these pandemic times, it is prudent to ensure and maintain healthy adequate liquidity levels of around INR 600 crore to INR 650 crore. And as on 30th of June, our liquidity level stood at INR 645 crores, which includes cash and cash equivalents. Now let me talk about our various segments in detail. In our Branded Textile segment, the sales grew to INR 283 crore compared to INR 17 crore in the previous year for the same quarter. The recovery was hampered due to second lockdown across the country, impacting the primary and secondary sales. However, the segment witnessed recovery in the month of June as primary sales picked up with partial unlocking of states in a phased manner in later part of the June month. Suitings business grew by higher volumes in wholesale and trade channels and increased offtake of premium gifting solutions, which were introduced at attractive price points. When the second wave of pandemic triggered similar lockdowns like last year, we had our learnings and we're not caught unaware. The business was [ acute ] exclusive supply chain and smarter inventory management. Our mark-to-market execution was agile as we were able to translate customer requirements into physical sales through prompt dispatches of our products. Our preparedness was a catalyst to service our customers, which resulted in high volumes of sales during the quarter that was mired by lockdowns across the country. Let me talk about our Branded Apparel segment, where the sales stood at INR 75 crores in the quarter, impacted primarily due to continued lockdown for both our trade and retail channels. Our EBOs and LFS channels continued to be impacted as most of the malls across the country remained shut during the quarter. This segment reported an EBITDA loss of INR 29 crores. Now let me explain to you about the exceptional item relating to Apparel business. As we all are aware that the apparel fashion industry works on the freshness of inventory, but due to the lockdown the stores were shut. The sales dropped drastically, resulted into an inventory buildup at the trade channel level, reflecting slow collections. Due to resurgence of COVID second wave, which impacted the summer '21 sales, our channel partners have not been able to sell in 2 consecutive summer seasons, that is summer '20 as well as summer '21, and the same have resulted an increase in inventory in the supply chain. With the objective of faster realization of trade receivables and providing fresh inventory to customers, the company decided to offer certain discounts to liquidate inventories held by channel and other inventories. Accordingly, a provision has been made to the tune of INR 117 crores on account of discount sharing and INR 29 crores towards write-down of certain inventory. Let me talk about the most strong point for Raymond, which is the retail network. As of June 2021, we had 1,459 stores spread across 600 towns. All the operational stores are complying with stringent safety guidelines, including contactless payments, since the majority of our retail outlets are spread across high streets, customer needs were addressed even when the malls were closed. As already explained, we are strongly focused on making our EBO portfolio healthy. And during the quarter, we closed 35 stores. At the same time, we are continuously evaluating opportunities which strengthen our retail footprint. During the quarter, we opened 8 stores, mainly in tier 2, 3, 4 category towns. Considering our Garmenting segment, which caters to the export market, the sales stood at INR 98 crore as compared to INR 100 crore in previous year. The revenue practically remained flat, though the order book continues to be very strong, the dispatches could not be made due to stringent lockdown in Karnataka, resulting in stoppages in plant production. The EBITDA margin for the quarter was [ 0.9% ]. If we talk about High Value Cotton Shirting, which is primarily catering to the B2B segment, the sales stood at INR 101 crores as compared to INR 6 crore in the previous year. Revenue recovery, led by higher number of orders from our B2B customers to help the EBITDA margin to achieve at 6.2%. Tools and Hardware segment, the sales continued to be strong at INR 110 crores as compared to INR 20 crore in previous year. Sales were driven mainly by exports in our key markets of LatAm, Africa and Asia. EBITDA margin for the quarter was at 11.3%. Let me talk about the Auto Components sales, where they still stood at INR 70 crores as compared to INR 21 crores in previous years. The sales were also driven in this segment because of the export market and well supported by recovery in auto sector in the domestic market. The EBITDA margin for the quarter was at 15.9%. Let me talk about our U.S. business, which is the Real Estate business. The sale of new units were affected as major part of the quarter was impacted due to local lockdown as the experience center was closed, impacted bookings. However, constant active engagement with customers during lockdown through digital medium, coupled with sustained lower home loan interest rate, triggered conversion of inquiries into bookings, especially in the month of June. Overall, we received 61 bookings in the first quarter of fiscal '22, resulting in a total of 1,448 units booked so far. That is approximately 60% of the total inventory launched till June 2021 with a booking value of close to INR 1,400 crores. The business continued fast-paced construction activity during the quarter in all 10 towers of the project. Let me give you tower-wise construction status. For the first tower 1, 2 and 3, we have completed the 40th floor slab for the tower 4, 27th floor work is in progress. Tower 5, 6 and 7, first floor slab is in progress, Tower 8 plinth work is in progress, and tower 9 and 10, is the foundation work is in progress. So this clearly reflects that our real estate team and the people who were deployed there in order to move the progress faster on the projects. Let me update you about the demerger, which is an important step for the group. We expect the overall process to be completed in the current financial year, that is fiscal '22. As and when we have a meaningful update, we will inform each one of you accordingly. Let me see how the status of the operation is as we see today and in near-term outlook in an environment which is the uncertain, considering the possibility of the third wave and so on and so forth. We are witnessing recovery in the primary sales due to phase-wise unlocking of the scape with ease of lockdown restrictions and improving status of vaccination. However, concerns of the third COVID wave making great channel cautious in buying significantly large quantities. Higher presence of TRS in high street and lower-tier aided moderate recovery despite majority of their retail network continue to operate with limited store timing on retail and weekend closures, impacting footfalls, leading to overall slower recovery in sales. Recovery in LFS is low due to continued closure of malls. Export markets are witnessing recovery in B2B businesses of Garmenting and engineering businesses of both Tools and Hardware and Auto Components, with very healthy order book as global economies are opening up with steady growth in demand. Construction activity in our Real Estate business is in full swing, and we are complying with all the relevant guidelines. As far as liquidity is concerned, we are focused -- continued focus on liquidity management continues through the cost reduction initiative and net working capital optimization and followed by strong vigil on the CapEx. Thank you very much. Now we'll be taking the questions. Operator?

[Operator Instructions] The first question is from the line of Dixit Doshi from Whitestone Financial Advisors.

Sir, my question is, last year in FY '22, we had done around INR 1,600 crore top line in Branded Apparel division. So my question is, do we manufacture entire raw material used in this Apparel division? Because we also have purchase of stock in trade was INR 1,250 crores. So we get this apparel manufactured outside the textile that is used for this Apparel division, is entirely in-house manufactured and supplied? Or we have to purchase from outside? This is my first question. And historically, the EBITDA margins in Apparel division has been very low. So what is the sustainable kind of EBITDA margins in Apparel business once things normalize? Also, sir, we -- what are the plans for the future monetization of the remaining land parcel in Thane? Are we going to develop it entirely ourselves? Or we also have plans to sell or enter into a JV with someone? So -- and my last question is, sir, what is the construction cost per square feet in the towers that we are making right now? What is the construction cost per square feet? And what kind of realization per square feet we are getting here? These are my few questions. I'll again get back in the line, sir.

Sure. No, I appreciate it. So let me talk in the sequence the way you have said and my colleagues are -- I'll request them to add as necessary. So if I look at in terms of the Branded Apparel, clearly, you see our focus is that we produce very high-quality fabric and our fabrics get used in the making of the apparel. However, all the apparels which we sell under our branded name gets manufactured by third party, except for some quantities where we have the facilities in Bangalore for our garmenting unit. There, we manufacture some of the products which we sell. So thereby, we see very clear that you have the right structure by which you use the MSMEs to manufacture the -- do the contract manufacturing of the apparel, which is getting sold under our branded name. So that's number one. Second thing, in terms of the EBITDA margin, EBITDA margins, what happens is in a sustainable basis. I think the most important part, you have to see is that what we had the cost structure in FY '20, FY '19, we have pruned down the cost structure in a dramatic manner, and we have brought almost 50% reduction in that cost structure. And that will enable us and certain channels, which we have taken, will help us to improve the margins. So there is a very clear path the company has in terms of improving the margins. However, I would not like to spell out a number, but we will see progressively over the quarters how the improvement in the EBITDA margins are happening. In terms of monetization of Thane land, look, you know it very well that in 2018, we sold 20-acre parcel land for a INR 700 crores, which translates into almost INR 35 crore an acre. So we have also demonstrated that we will sell the land. Similarly, when we are doing the construction on our parcel of a 14 acre -- sorry, 16-acre parcel, we are constructing 3.2 million. So it will be a mix bag. We will see the opportunities. You know very well that during the COVID times, it is inappropriate, we will not get the right offer. So therefore, it is not something that we will not look into it. We will take the opportunity to sell the Thane land as well as we continue to see the construction. And maybe it is today we are doing into the residential, maybe we have an opportunity to do partial, do some other type of usage, mixed usage is possible. So that's the way. As far as construction costs and -- is considered, see, we are -- the beauty of Raymond Realty is it has progressed and worked so efficiently that they are in a position to complete within 7 days, they can cast 1 slab. So that reflects about the efficiency of the company and the work by which we do. As far as the realization is concerned, you know very well in the real estate market, the location and the timeliness of completion of the project. So we are significantly ahead in terms of completion of the project. You see the first 3 cover, we are supposed to deliver, let's say, still 3 years to go, but we believe that we will have a possibility to deliver sooner than later. So therefore, we see that our ability to construct faster at an economical cost. And giving the right quality of amenities is critical because this is a showcase project for us also, that we are giving the best quality amenities, so that we make a clear understanding to the customers that we provide a great life when people buy the homes at Raymond Realty.

Yes. I appreciate your answer, sir, but I was looking at a number for the construction cost per square feet and the realization per square feet?

Yes. So that, as I said -- look, these are some of the things which we are not disclosing because the realization, you can know very well what is the Thane market. Every project has their own certain print. And as far as construction cost is concerned, we are quite competitive. And that is reflected over the next 4 years, and we have already given our guidance that about this project, this 16-acre aspirational projects will deliver what kind of free cash flow from the project, which is a...

And my last question is, out of this net debt of INR 1,600 crores, so post merger, how much of this debt will go to the new entity? And how much of it will remain in this listed entity?

So look, this is that today, the treasury is common. We work through a common treasury. But at the time of demerger, we will be able to see that -- how much that goes into the Lifestyle entity, and how much is the non-lifestyle entity? So that is something...

We don't have a clarity of the number right now?

So as I said, when the demerger happens, then we will take the debt into the Lifestyle, whatever is the debt related to Lifestyle business. It's not -- basically, it is a working capital debt, which is relating to the Lifestyle business. And other businesses, practically, we have no debt in our...

Large part of the debt will go to the Lifestyle business, am I right?

Yes, yes, yes. And Pokharna, if you want to add something on the apparel, the way to do the businesses?

Yes. I think there was one -- you have answered everything, Amit, thank you for that. But I think that one in question there was one more part, that all fabrics manufactured, all fabrics -- all garments manufactured are being sourced from our in-house. My answer to this is yes, whatever is being produced is being taken from our in-house facilities. But however, there are many special kind of fabrics like knits and like [ filter ] , so many other kind of fabrics are there, those are being outsourced. Also, conversion of these garments happens into our factories, but at the same time, we have facilities which we need higher capacity and we go outside conversion also. So that is one. And secondly, I would like to add, the demand is recovering in the marketplace, and we are seeing good footfalls into our channels. So we are expecting good results in moving forward.

[Operator Instructions] The next question is from the line of Amit (sic) [ Anil ] Jain from LKP Securities.

My first question is on the online sales part. So in this quarter, what was the percentage of our online e-commerce sales of total revenue? Hello? Hello?

So it seems we have lost line for Amit Agarwal, sir. We are reconnecting him. Yes, Amit, sir. Please go ahead. And Amit (sic) [ Anil ], please repeat the question.

Yes, yes. So my question was on the online sales or e-commerce business, I mean, what percentage of our revenue came from this online channel?

Hello, can you reconnect again, Amit?

Yes. We have just lost the line for him. We'll reconnect them. [Operator Instructions] Ladies and gentlemen, thank you for patiently waiting. We have the line for Mr. Amit Agarwal connected. Sir, over to you. And Amit?

Yes?

Sorry, please go with the question.

I'm extremely sorry for this disruption in the line. So sorry for this.

Can you hear me?

Yes, I can hear you very well.

Yes. Sir, my first question is on online sales. What percentage of our revenue came from online sales or e-commerce business?

Okay. So if you see in our business, what happens is fabric does not sell online. It is only the Apparel segment which sells online. So what we have been able to do, and especially in this quarter, the challenge was that many states did not enable the online sales, the e-commerce deliveries for the nonessential products. So therefore, the sales were impacted. However, as I earlier explained that on a normalized business, from the apparel side, we do around the 22% to 24% as an online sales on a normalized basis. So that is the share which we have been able to do. However, what we are, today, more encouraged to look at is the omnichannel sales because we believe that the omnichannel sales is a very, very important factor, which translates into a physical experience. When you talk about a physical experience that you can buy online, go to the nearest store, the Raymond Shop or an EBO, and there you have the flexibility to change your clothes, you can do a return, you can get a new product, you can also do various kinds of things, alterations. So what we have been able to focus is that we move into the online channel, omnichannel presence so that because we are present in more than 600 cities. So we have that unique advantage that even if you buy an online, we can service you online as well as the ability for you to have a conversation with the store and get minor alterations, returns, changes or different designs. That is all feasible.

Got it. So 22% to 24%, is that on a normalized basis? Like, okay.

For the fabric side of the sale -- sorry, for the apparel side.

Apparel, apparel, right.

Yes.

And next question is on fashion collection pieces. Like earlier, you used to do around 2 seasons annually. And in previous calls, we were discussing that. It will be increased to around 4 or 6 fashion collection season. So have we started implementing that?

Yes. So I'll ask Ganesh Kumar to respond on the fabric side, and Mr. Pokharna will respond on the apparel side.

Yes. On the fabric side, we are still operating on the autumn/winter and the spring/summer as a model. But as we are moving into, we have started introducing flash collections, depending on the requirement of the market and the trends that we are seeing as changing. So that is the way we're trying to fill in the gaps on the fabric side. For apparel, I will request Pokharna to respond.

Thank you. For apparel, from 2 (sic) [ second ] season we moved on to the fourth season. So we have separated autumn and winter, then we have separated spring and summer. So we are approaching customers on average every quarter with a new collection. And that is also helping us in optimizing the inventory and also helping customer to optimize the inventory. Thank you.

Next question is from the line of [ Govind Lal Gilada ] as an individual investor.

Hello?

Yes, we can hear you.

Yes, yes. So see I want to understand broader -- big picture of Raymond. I am shareholders since last 3 years. So Singhania, our chairman are already more impressing on shareholders [ strategic ] creation. He has walked the talk, and we have bought it all levels of stock, from market and preferential allotment in last 3 years at various prices, about 1,000 also, 675. So recently a month-to-month like we've got it 350 also. So promoter is seeing revenue? And then the value of the -- Raymond is a household brand, stake is there, real estate is there. So I want to understand, sir, in spite of all that, the story is known to everybody because in the last 3 months, Raymond team has take a lot of efforts, conducted a lot of needs like influence private investors [ in Chennai ] a number of times. So where we are selling in our job to view commission to market now all necessitates new high. Raymond [ peaked ] 1,100 2 years back or 1.5 years back, and it is now quoting at [ 440 ] after even that I know the real estate was not unlocked. This was not sold even. So the merger was announced -- not much with key positive things happening that was 1,100. After that, we are developing land, also sold land, demerger, we have announced it. So it -- so I want to understand, sir, what is the -- at all our textile cases, these are almost at their peak -- they are doing good. They are almost at their height. So where market is not delivering a story, that's a bigger picture, I want to understand.

Okay. So look, fundamentally, if you see the Raymond as a brand, is not a brand -- younger brand. It is a very strong brand recall. And practically, you would have recalled in the entire country with all the Indians, as we have completed more than 96 years. So therefore, from a brand recall point of view, we are, absolutely -- in terms of the product quality, we are absolutely on the top end. As far as the network is concerned, we are on the top end. So what is happening? If we have achieved these successes? Obviously, the COVID impacts this business because when you don't have the brick-and-mortar store open, you will not be able to go and shop. However, if you look at it, that the efforts which the company needs to put in, have gone and put substantial amount of effort. If I look at it in terms of the OpEx cost reduction, there has been a substantial reduction in the OpEx cost, which when the sales get back, will get restored, a significant portion, as we have alluded in a number of times, that a certain cost savings will be permanent in nature and which will improve the bottom line. As far as the other unlocking is concerned in terms of value unlocking, we said we are monetizing the Thane land. We sold -- as you rightly pointed out, we have sold over 20-acre of land. We are constructing this real estate 3 million square foot project. And as I also mentioned on the other question that we also intend to do, when we get the right price and right opportunity in terms of selling additional pieces of land as well as constructing multiple use of products. For example, be it a commercial, be it residential, be it any other alternate use. So we are very clear that we want to unlock the value. Thirdly, if you see the third key component is also the deleveraging. If you see over the last 6 quarters, 7 quarters, the company has philosophically reduced the debt almost by INR 1,000 crores in March, and maybe there is a small increase in the debt right now, which is more temporary in nature because of the increase in the working capital, which I explained in my opening remarks. So -- as well as the demerger has been announced. So I think we have done all the right things, which is required for a true value unlock, and we are on the path of that value unlock. Once many of these things get accomplished and the results are seen, some results have been already seen, some will be seen in the near future, which will enable the unlock in the value.

Hello?

Hello, yes?

Yes, yes. Here again, sir, I got -- see, COVID is affected to your other [ spheres ] also. It is not that it is affected to Raymond only. And the stock market is forward-looking. So what you are telling, unlocking the averaging market why value they are not giving to this stock. That is my -- what we are talking, everything market knows, sir, what we are going to do, and what we are doing right now. So the thing is that other companies, people are giving valuation, they are giving to other companies in textile sector. while Raymond has not recognized the true potential of its interim to work. So that is my question, sir.

Look, as I said, we are on that path. We are on the journey, where we are doing the right things, and the market is going to recognize that. It is not that the markets are far more mature, they will recognize that nearly. And we are doing the right things in order to ensure that we create the shareholder value. And you look at the various steps, deleveraging, the return on invested capital, if you see that the kind of returns which we are going to get on the demerged business of the Lifestyle is going to be phenomenally higher. So this all translates that all the right things which you need to do, there is some things which are a work in progress. Once the work in progress gets completed, you will be able to see the results as well.

So great, sir. And last one, sir, is there any thought on FMCG unlocking value, selling our stake? Anything in that direction the Board is thinking?

Look, FMCG is a very important part of the business. And we have seen that it is very increasing, the results which we have seen. We have got a very high-quality management, and we expect that considering that the products which we have, both in the [ near ] and [ protection ] wellness space is top of the notch. In that same, we are getting a high market share. And it is a build case. As I see that the next few years is a build case for our FMCG business. And when we are building this FMCG business, then we will be able to see a significantly higher [ return ] with improved margins.

[Operator Instructions] The next question is from the line of Umang Shah from Edelweiss.

Again, the same question that I would be wondering on. So the demerger process is still stuck from our end, we have still not went to NCLT, is that actually right? Or is there some misunderstanding from my end?

No. So NCLT is done. Now the other processes, other -- some of the according regulatory clearances, which we are supposed to get. And as I explained in my opening script, that we will complete the demerger of this in this fiscal year.

Okay. All right, sir. Secondly, from overall the call impression that we are getting is that the complete man, Raymond, The Complete Man does whole brand, it's -- we are not expanding or we are not trying to advertise the way we were doing it. Obviously, for various reasons, that with the lockdown people cannot go and buy. So advertising is obviously something that we won't be looking at. But when you are trying to create an online presence, we started with our online ad spend, and we were increasing that. Now where are we standing on it? So we were looking to [ pave ] our own website and function it, which is for actually working very well, to be very honest. There are various products, even fabric combos or home textiles, everything is available over there. But now going forward, what is the online direction? Because suddenly, I feel that we would be now more -- focusing more on e-commerce versus our own proprietary kind of website. And secondly, whenever now we would be, again, focusing on retail. So what is the clear line of thought for selling Raymond, The Complete Man brand? Apart from Raymond Realty, I would like to focus on Raymond also -- Textiles also.

No, no absolutely, Raymond, is the main Lifestyle business. So it's a lifestyle brand. And if you see the advertisement, the sales promotion, I don't know did you watched the early, what you call, [ apparel ] matches. We were -- we brought our advertisement. But when, in April, we got hit by the COVID that pushed us back, and there was no point of continuing with the advertisement because there was a lockdown. In terms of all the digital experiences we have got, we are present in all the major marketplaces. We are present on our own myraymond.com. And in order to elaborate more, I will ask Ganesh to talk on the online and the digital the way we are moving forward.

Thank you so much, Amit. You're absolutely right. We had started off with the online spends. We had started off with the advertisement, as Amit said, in the month of April. And as the second wave slipped in, we also pulled back on some of the expenses because at the end of the day, it has to reach to the consumer where it matters. But having said that, as we are looking forward into the -- coming into the next season, we will be getting back into using our digital media and the other spends. Today, as we speak, we have on the digital media, communications on a garment exchange program, which is being run across all our stores. And we continue to work on -- we are the style partner for the Olympic squad, so there is a communication which is going on, that with also. Now coming back to our own website, myraymond.com, the end destination for this website is basically to be a house of fashion for Raymond, where consumers around the marketplace around that and reach there and look at what are the men's fashion trends that Raymond is bringing on to the market. And then there is also an option of a transaction that can take place. But the primary focus is to give consumers a great experience and visibility on how we drive this.

Okay.

Okay? I hope that gives one answer. Second is on the digitization. We are ourselves, as an organization, moving into a full journey on digitization in terms of how we collect consumer data, how we analyze data and drive database decision-making. There is a full-fledged plan that is being worked out and being implemented as we speak.

Okay. So -- but sir, if I'm not wrong, when we already had a good amount of data from our loyalty customers. I mean, is the reach that we had with that program or the data that we had, I mean, that was one big, I would say, affect that the company has. So are we still utilizing that to reach out to our customers? Or this is a new data set that we are now working on?

Of course, we are using our existing database, which is a very strong property of the brand, which has been collected over years. Our communication is now targeted using those data, so that we are doing very targeted communications rather than a short-term approach.

The next question is from the line of Rishikesh Oza from RoboCapital.

Sir, my question is related to this INR 2,800 crore revenue and INR 800 crore [ buyback ] we are expecting in Real Estate in the next 3 to 4 years. So here we are talking about a cumulative figure. Am I correct?

Yes, it is a revenue for the entire 3 million square feet and the profitability for the 3 million square foot project.

Okay. But it's a cumulative figure for 3, 4 years, correct?

Yes, yes, yes.

Okay. And most of it is likely going to be reported or recognized in later part of the year, maybe third or fourth?

No. Actually, if you see, it will be spread. You know the real estate project is 3,000-plus units, that doesn't sell only 1 year. It's sold over a 3-, 4-year period. And you see the demonstrated performance of the company. If we have sold 60% of the launch inventory, as I mentioned, that we have already sold the 60% of the launch inventory, we see very clearly that the profitability will be distributed over the entire 4-year period. So we have sold already 1,448, and the construction is at a phenomenal pace. So you will see the distribution of this profit over the next 3 years, more or less equally.

Our next question is from the line of Dixit Doshi from Whitestone Financial Advisors.

I'm Dixit Doshi, I would like to know in Raymond Realty, at this point of time, what is the booking rate -- average booking rate, which we are selling at on per square foot basis?

We have got Harmohan, the new CEO for the Realty business. Harmohan?

So INR 1 crore per unit that we are charging. On the carpet area, the current rate will be around INR 20,000, slightly upward of INR 20,000 per square foot.

INR 20,000 per square feet, right?

Of carpet area, that's right.

Okay, okay. And my second question was, what would be the tentative construction cost because you see -- just to estimate -- just to have some guesstimate about the future profitability, if you could share some benchmark construction cost. Is it INR 1,500 to INR 4,000?

As I mentioned that -- look, we are not disclosing the construction costs because we have certain unique construction cost methodology, and we have put a lot of efficiency. Therefore, we are not disclosing this construction cost. We have given the guidance that the project is going to deliver over INR 900 crores of cash flows and profitability in this business.

[Operator Instructions] Ladies and gentlemen, that would be our last question for today. I now hand the conference over to the management for their closing comments, thank you, and over to you.

Thank you very much. Thank you for participating in this call and having interest in Raymond Limited. Now we will talk to you once again in the next quarter. Stay safe, stay healthy. Thanks.

Thank you very much. Ladies and gentlemen, on behalf of Antique Stock Broking, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.