Revenue Breakup For Senco Gold's Categories | NDTV Profit
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00:00Hello and welcome. You are watching NDTV Profit. Well, one company that is in focus
00:13today is Senco Gold and to talk about the company's future outlook, we are joined
00:17by Mr. Suvankar Sen, the MD and CEO of Senco Gold. Sir, welcome to the show. My first question
00:24to you is that, you know, gold is seeing a lot of volatility when it comes to pricing.
00:29Now, recent week also the gold prices did see a lot of plunging. So I want to understand
00:35that, you know, how has volatility in gold prices affected your overall business? So
00:41Mahima, we are now seeing the end of Q1, which is April, May, June that is ending and the
00:47prices have been, you know, comparatively the way it was in the month of April. And
00:53if you look at June, the prices have been on a kind of a downward trend. But this volatility
00:59and this increase in prices that we have seen over the last, I would say, four, five months
01:05is driven by the uncertainties and the gold buying that is happening by the central banks.
01:12So as a, you know, as a strategy for de-dollarization, as a strategy to reduce the dependency on
01:20the US and the dollars, countries such as China, Russia, they have been buying a lot
01:26of gold. You have also seen that our country, India, has brought in gold back from the vaults
01:33that were lying in the Western countries. So it's basically a whole process of buying
01:38gold by the central banks to make their assets stronger. So that is the reason we have seen
01:43this increase in gold prices. If we look at the consumer demand perspective, there has
01:48not been much of consumer demand because consumers' budget is only growing to that
01:54extent, not to the extent that the gold prices have increased by 20 to 25 percent. The budget
01:57can increase by 5, 10 percent. So therefore, we are seeing more from the uncertainty, the
02:03war situation, the Israel-Hamas war, Ukraine-Russia war. And it is impacting business. Volumes
02:11are going to get hit because of the price rise. Value-wise, you might not be able to
02:15understand because people end up buying as per the budget or more consumers are shifting
02:21from the unorganized to organized sector. And that is where you might not understand
02:25in value terms, but volume terms, yes, there will be a dip.
02:29Right. Okay. That's about how the prices have been so far. But going forward, do you also
02:35expect similar kind of volatility in gold prices or do you expect some kind of relief
02:40in FY25?
02:41If you look at, you know, so we had our Indian election. We are seeing that there is elections
02:48happening in many, many countries of the world. In November, you have the U.S. election. You
02:54have elections happening in the UK, in France. So there is this change. There is this, you
03:01know, so many ways in terms of policies, in terms of thinking that is happening across
03:07the world. And this volatility will continue to remain. We were all very hopeful that,
03:12you know, the war that is happening in many places of the world will, you know, kind of
03:18slow down and, you know, we will move more towards peace. But seeing the current situation,
03:23it is not looking like that. And rather there is, you know, there's a risk of escalation
03:28and increase. So as a result, I do not see the volatility going down till we end up with
03:34that, you know, by the end of the year. So, you know, we have weddings coming in Q2. There
03:41are a few weddings because most of the weddings are in Q3. And already, if we look at our
03:46purchases that are happening right now, consumers are worried and they are starting to start
03:52their purchases for the weddings that are there in Q3 and Q4. So that is how we are
03:57seeing at the market.
03:59Right. My next question to you, Mr. Sen is that, you know, the B2C market overall in
04:04India is quite nascent when it comes to, you know, focus on exclusivity of natural
04:09diamonds. I mean, the big players are not at all focusing on the lab-grown diamonds,
04:14but you have three stores now when it comes to the lab-grown diamonds. So I want to understand
04:18what is the progress there and what kind of markets are you tapping because lab-grown
04:23diamonds is a big market to tap into.
04:26Correct. So we have started off with three stores in the lab-grown diamond under the
04:31brand name of Cines. And we need to understand that, you know, the other branded players,
04:37I'm quite confident that over a period of time, this category shall be considered by
04:44them, not because of any other reason. While diamond, precious diamonds are very critical.
04:50It is like an asset. It is like a gold. It is natural. It is, you know, a lot of effort
04:55and investments are going on to extract those diamonds from the Mother Earth. But at the same
05:02time, there will be this, you know, five years down the line, seven years down the line. We
05:06need to look into the future. And we need to see that there could be one which is in
05:11terms of affordability. It could be one which is in terms of adding stones to your jewelry
05:18to make it look more beautiful. It could be one that, you know, you cannot, with a much
05:23lower budget, you can fulfill your desire to own a bigger size diamond. It could be one that,
05:29you know, the large middle class, aspirational young generation, middle class consumers that
05:35might want to own any form of diamond. And lastly, five years, seven years down the line,
05:41you know, this is a substitute in terms of how you can take care of your ESG needs when the
05:46environment is damaged lesser comparatively. So therefore, you know, I think that it is important
05:53that you start somewhere. It is not that, you know, you are a part of the jewelry industry.
05:58You are selling diamond, gold, platinum, silver, fashion jewelry. So why not also have a sub brand
06:05and start off for fulfilling the need of the customer? So I think this is how we're looking
06:11at it and we are trying to, you know, build on that plan. Right. You know, you talked about the
06:18organized and the unorganized sector. We're seeing that the jewelry industry as a whole is
06:22seeing a shift from the unorganized to the organized sector. As we speak, the organized
06:27sector accounts for almost 40 percent of the total jewelry segment. But going forward in,
06:33you know, from a longer term perspective, where do you see these trends going from this 40 percent?
06:37Where will the organized sector go and how will this benefit your company?
06:42So see, you know, if you look at the trend that has happened over the last say 10 to 15 years,
06:48at that point of time, organized was about 20-25 percent and unorganized was about 70-75 percent.
06:55So from 20-25 percent currently organized is about 40 and the unorganized is 60. Now with the onset
07:03of GST, with the onset of the various initiatives taken by the government, the digitalization,
07:09it is helping even the unorganized players to become organized. So it is not only that the
07:14larger players, the organized players who are capturing the market share, but it is also
07:20the unorganized smaller players across the country, even in the smaller towns and
07:26cities of the country, they are also getting more formalized. They are also adopting systems
07:31processes. So this 40 percent, I think in the coming five years should move towards 60 percent
07:38and unorganized will be 30-40 percent. It is changing in a very fast manner and this 20 percent
07:45is not only going to be the larger organized players who will be growing, but it will also
07:50be the smaller unorganized coming and becoming more organized. Right. You know, my next question
07:56is from the business side of things. You know, you have guided for a number of stores of expansion
08:01around 20-22 and I want to understand how much of these will be owned by you and how much of
08:07these will be franchises? So we would, you know, as a strategy want to ideally have a 50-50 kind
08:13of a ratio where, you know, we have about plans of 18-20 stores out of which about 8-10 will be
08:21company owned, company operated and 8-10 will be franchises. But, you know, franchises are something
08:26that, you know, is not really where you have to invest your capital. We're looking for, you know,
08:32franchisee partners who can invest their capital and that can always increase. But I think that
08:37out of the 18-20 that we intend to open this financial year, we want to do it in a 50-50 ratio.
08:43Right. You know, in your corn call, you have guided for margin improvement back to 8 percent.
08:49Now, I want to understand that what will be the levers for the same and do you think that
08:54there is an upside more than 8 percent margins going forward in FY25 or maybe FY26?
09:01So see, the EBITDA margins that we're talking about where we're saying that currently we are
09:05about 7.123 and we know the endeavor will be to take it towards 8. The simple lever of increasing
09:13it to the 8 percent margin is the stud ratio that you try to increase, which is through
09:18lab-grown diamonds, through natural diamonds, through gemstones. And currently our stud ratio
09:23is only at about 11 percent. So with the increase in gold price, consumers are also, you know,
09:29for their daily wear and everyday wear use is looking to buy small diamond jewelry, which is
09:35in 14 carat or 18 carat. So there is a high possibility of increasing stud ratio from 11
09:40percent, which we want to gradually take it towards 15 percent. That will be a major lever.
09:45Plus, the store that we are opening, you know, we have opened in the last two years and also the
09:50ones which we are going to open over a period of time, once they move towards the maturity level
09:56and achieve their full potential, you know, that way the cost will not increase to the extent that
10:01the stores will grow. And that will be another lever for which we hope to move towards the
10:078 percent levels that we have. Right. So as you rightly mentioned that,
10:12you know, you are focusing on your studded jewelry segment. I just want to understand
10:16what is the kind of revenue breakup at present when it comes to studded jewelry, diamonds,
10:20gold, silver, platinum, and going forward, how do you see the change in that mix?
10:25So diamond jewelry is 11 percent. Your gold is about 85 percent and your platinum is about
10:332.5 percent and silver is about 5.5 percent. So this is the, you know,
10:38broad breakup of the categories we are seeing. Okay. Mr. Sen, lastly, one quick question on
10:43the international expansion. You know, you are tapping into the global markets and,
10:48you know, over the five to six years, international market expansion is what you're aiming at.
10:54So I want to understand that how will this aid your top line and bottom line going forward?
10:59So if you look at it, many of our, you know, jewelry players from our industry have already
11:06started the journey of taking, you know, Indian brands and Indian products in the jewelry category
11:12to all over the world, you know, either catering to the Indian diaspora or the other population.
11:18So India is a hub for jewelry manufacturing. India, you know, if you look at their exports,
11:23jewelry plays a very important role. Most of the diamonds are cut and polished in India,
11:28even the large chunk, they are the top two or top three jewelry exporters in the world.
11:32So it is time for making India products to go global. And, you know, while we're sitting from
11:38our manufacturing hub of Calcutta, which is famous for its gold and graphite jewelry,
11:43and also diamond jewelry manufacturing, we want to cater to, you know, markets in the Middle East,
11:48the Indian, the subcontinental diaspora, where culturally there's a lot more alignment.
11:53And diamond jewelry is more global, but there are already so many players taking to the diamond
11:57jewelry segment. You know, you can see the jewelry fashion designers of India, they are also making
12:01names all across the world. So I think that, you know, it is time that with the growth of the
12:05country and the respect that the country is getting across the global world, you know, it is
12:10many, many such brands from India that should take certain steps to make their presence felt
12:15across the world and cater to the market with their products of good quality. So that is how
12:19we want to move forward. Okay, well, Mr. Sen, lovely chatting with you. Thank you for giving
12:24us those wonderful insights on the jewelry sector as a whole.