Gautam Singhania, chairman and managing director of Raymond Ltd, has been in the news for his legal battle with father Vijaypat Singhania over the family home JK House. In an interview, he said his only interest is to protect shareholders of Raymond that owns JK House. Singhania also lays out Raymond’s plans in the packaged consumer goods segment. Edited excerpts:
You’ve just completed buying out JK Ansell (maker of KamaSutra condoms). Are you looking to stay in the sexual wellness business? Do you see yourself moving into other areas?
It took 20 years to build the KamaSutra brand into, say, a Rs50 crore brand. It took another three years to build a larger FMCG (fast-moving consumer goods) brand for deodorants under KamaSutra. On the back of the KamaSutra brand, KamaSutra deodorants are doing very well. One of the limitations when we had a partner whose primary business was sexual wellness (was that) he could not understand making KamaSutra deodorants. Having now bought him out, I have the opportunity to leverage the KamaSutra brand, which is very strong in non-prophylactic products. That’s part of the reason we bought it, because (of the) potential of the KamaSutra brand. It’s almost a 30-year-old brand, it is a very strong brand, there are so many products that can be launched under that brand.
How are you going to leverage it?
We have just done the deal, no?
How does it fit into the overall strategy of the group?
FMCG is a separate vertical. Today FMCG has become very large for the apparel business because we are doing a Rs300 crore deodorant business in Park Avenue. Whilst you might not think it significant, when I put a Park Avenue deodorant can at Rs100 on your table, it’s my advertising for every day. It’s a competitive advantage vis-à-vis any apparel manufacturer. Can I build a Rs5,000 crore business for (the FMCG brand)? If Hugo Boss can have a Rs25,000 crore FMCG business, why can’t Raymond have a Rs5,000 crore business? It’s a vision.
Will this be about products that are related to the segment you are in?
FMCG is a very open space. Look at lifestyle brands, what they can do in FMCG. Whether it is soaps to detergents to towels to anything. Someone once told me, the head of an international brand, my ties are my visiting card. First my ties go into your wardrobe, then my suits go into your wardrobe. Today if I sell you a Rs100 soap, the next time I’ll sell you a Rs200 shirt. I have to get into your room first. We have several products in the pipeline which I’m not at liberty to discuss.
You had come out and advised that shareholders should vote against the proposal to sell JK House flats (to erstwhile tenants). When the agreement was first signed in 2007, wasn’t it put to shareholder approval at that time?
No, it was an understanding to reach an agreement. It was an understanding that at this time, an agreement will be reached. So the whole thing in the media—I can’t comment too much—is a completely wrong factual representation.
So what are the facts?
When there was a specific performance for a so-called agreement, I was obliged to take it to the audit committee. The significant thing that happened between 2007 and 2017 is the new Companies Act in 2013 which has a related-party transaction clause. Under this clause, to maintain the highest levels of governance, I am obliged to take it to the committee. I have not attended the audit committee meetings. Please understand, I had a huge financial gain in this. I did not attend the audit committee because I did not want to influence anybody. They have proposed it to the board. Then the board said—I did not attend the meeting for this specific agenda—take it to the shareholders. It is on the record. I have put it in a statement. Whilst I will not vote as a principal shareholder and an interested party in the right spirit of governance, but if I were to vote, I would vote against the resolution. I think that’s the fairest thing I could say. I did what was the right thing to do.
It is unfortunate that such a big song and dance has been made about it. What have we done? We have held the highest standards of corporate governance. Am I repenting? No! Because I have not done the wrong thing.
But now that the high court has asked the firm and Vijaypat Singhania to reach some kind of a deal, what deal can be done once shareholders have voted against this?
If the high court has asked to do something, I will do what the high court says. But I don’t know what the answer is. And I can’t even comment, the matter is sub judice. We must respect the high court in this country. If something is in court, we must respect it.
So what is the way forward in this case?
It is in the court, what do you want me to say?
The elder Mr Singhania had said that you’re running the company like a fiefdom..
That’s his view. I don’t think my share price would have doubled in the last one year if that’s what the perception was. That’s his view, good for him. Do you think an advisory board of this calibre would have stuck around for nine quarters if I ran it as a personal fiefdom? Would Ravi Venkatesan, chairman of the advisory board, (have stayed) if I was running it as a personal fiefdom?
Why would quality investors, foreign investors invest in a company if they thought it was being run in the way you so described just now? When you’re in this position, people will criticize. The right thing is always the most difficult thing. You guys should be able to figure out the motive of comments like these.
There have been other litigations in your family, that have been resolved. What are key takeaways for someone running a large business like yours in terms of succession planning?
I wear two hats. One is a family hat, and one is chairman and managing director of Raymond. I cannot mix them. Your family obligations are very different from your business obligations. (In) my role as managing director, I have 35,000 people who work for me. I have tens of lakhs of people indirectly whose future is dependent on the Raymond group. I have a responsibility to them as chairman and managing director of my company. As a son to my father, as a husband to my wife, as a parent to my kids, I have a different responsibility. These should never get mixed up. I have to keep Raymond firewalled from my internal family politics. I will do everything in the world to keep them separate.
Has the elder Mr Singhania demanded back the shares that he gifted to you?
I have worked here for over 35 years. You all are turning this into a media circus. It is an agreement with him for 30 years and that these shares are coming to me. Nobody talks about that. I have put 35 years of my working life in this company. These are rightfully mine. What are you making such a big naatak about? And who will he give these shares to? And if he did give these shares to somebody else, what would it do to the hundreds and thousands of people working at Raymond? Because Raymond would collapse. Have you ever thought about it this way?
Why don’t you go and research, what the state of the company was in 1999 when I became managing director? Your esteemed business was making (Rs)130 crore a year. You had (Rs)1,600 crore of debt, you had 16% shareholding. So what are you talking about? Who sold steel, who sold cement, who paid that Rs1,600 crore of debt back in one year and (saved) this company? Let’s come to the brass tacks and facts.