GITANJALI GEMS LIMITED 
By November 14th, 2013
· Net Sales in H1FY2014 were Rs. 6,922.9 cr as against Rs. 7,313.0 cr. In the corresponding period last year.
· PAT for the first half was Rs. 72.9 cr as against Rs. 300.6 cr last year
· EPS for H1FY14 was Rs. 7.92
· Jewellery Sales in H1 were at Rs. 3,381.8 cr
· EBIT in H1 was Rs. 406.2 cr as against Rs. 532.2 cr in the corresponding period last year.
· Impact on gold jewellery sales and working capital due to regulatory changes
· Re-aligning the business model to focus on diamond and gemstone jewellery
· Brand extensions to include lifestyle categories
· The next phase of growth to come from expansion in the international geographies of US, Middle East, Japan and China
Sales Turnover EBIT EBIT Margin (%) Net Profit PAT Margin (%) EPS | 3 Months ended Sept 30th 6 Months ended Sept 30th |
Sales Turnover EBIT EBIT Margin (%) Net Profit PAT Margin (%) EPS | Q2FY'14 Q2FY'13 H1FY'14 H1FY'13 |
Sales Turnover EBIT EBIT Margin (%) Net Profit PAT Margin (%) EPS | 3,003.7 3,928.3 6,922.9 7,313.0 |
Sales Turnover EBIT EBIT Margin (%) Net Profit PAT Margin (%) EPS | 231.2 263.0 406.2 532.2 |
Sales Turnover EBIT EBIT Margin (%) Net Profit PAT Margin (%) EPS | 8% 7% 6% 7% |
Sales Turnover EBIT EBIT Margin (%) Net Profit PAT Margin (%) EPS | 37.8 151.7 72.9 300.6 |
Sales Turnover EBIT EBIT Margin (%) Net Profit PAT Margin (%) EPS | 1.3% 3.9% 1.1% 4.1% |
Sales Turnover EBIT EBIT Margin (%) Net Profit PAT Margin (%) EPS | 4.11 16.59 7.92 32.88 |
7,313.0 cr in the corresponding period last year. The company's net profit was at Rs. 72.9 cr, as against Rs. 300.6 cr last year. The EBIT for H1FY'14 was Rs. 406.2 cr. Earnings per Share for H1FY'14 stood at Rs. 7.92 as compared to Rs. 32.88 for the corresponding period last year.
For 3 months ended Sept 30, 2013 the company achieved Net Sales of Rs. 3,003.7 Cr. EBIT for
Q2FY14 was Rs. 231.2 cr, Net profit was at 37.8 Cr and the Earnings per Share stood at Rs. 4.11.
Commenting on the quarterly performance, Mr. Mehul Choksi, Chairman and Managing Director, Gitanjali Gems Ltd. said, "Due to non-availability of gold Gitanjali continues to realign its business towards diamond and gemstone jewellery. The company plans to capitalize on the tremendous recall its brands enjoy and extend the brands to include a small portion of lifestyle categories in its portfolio."
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 6 Months ended Sept 30th 3 Months ended Sept 30th | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | H1FY'14 H1FY'13 Q2FY'14 Q2FY'13 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 4,561.9 3,346.9 2,330.8 1,679.1 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 3,351.5 4,276.5 1,281.1 2,450.4 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 1,020.9 318.8 625.1 198.3 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 30.4 8.4 16.9 (2.9) | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 6,922.9 7,313.0 3,003.7 3,928.3 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 204.7 150.6 147.1 56.4 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 207.4 385.8 87.7 208.9 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | (5.9) (4.2) (3.6) (2.3) | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 406.2 532.2 231.2 263.0 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 4.5% 4.5% 6.3% 3.4% | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 6.2% 9% 6.8% 8.5% | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 3,006.2 4,222.2 769.0 2,446.3 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 3,916.7 3,090.8 2,234.7 1,482 | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | ||
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 43.4% 57.7 25.6% 62.3% | |
Revenues by Category Diamond Segment Jewellery Segment Inter Segment Others Total EBIT by Category Diamond Segment Jewellery Segment Others Total EBIT Margins by Category Diamond Segment Jewellery Segment Revenues by Geography India International % Share by Geography India International | 56.6% 42.3% 74.4% 37.7% |
The RBI policies announced in June had prohibited any form of credit on gold imports for domestic consumption. Earlier (prior to June-4, 2013) the gems and jewellery companies were able to get gold from banks with an upfront payment of 20% margin and also had a window of 6 months to finalize/fix the gold commodity price.
On July 22, 2013, RBI issued guidelines asking nominated banks and agencies, involved in gold imports, to keep aside 20% of all gold imports for export purpose. Fresh imports would be permitted only after 75% of this reserved gold is exported.
Gitanjali is now undergoing a significant change in its business model by increasing its diamond jewellery business which has better margins than gold. Further, the group is also focusing on increasing its international business with complementary categories like platinum, precious stones and silver jewellery. The strong brand portfolio of the group has the potential to extend to lifestyle categories.
The group has a very well diversified international portfolio in the US, Japan and the Middle- East, China and Europe. The Group is focusing to expand in the geographies, both organically and inorganically. This will provide for geographical de-risking of its portfolio which is required in the wake of recent regulations.
In order to hedge the price risk, which was available through the gold loan, the company is considering buying physical gold and simultaneously selling ready forward contracts, thereby completely negating any risk due to price fluctuation/volatility.
· Manufacturing
o Gitanjali is one of the world's largest precious jewellery manufacturing companies. The company has a proven track record and success in manufacturing jewellery for its distribution and retail network globally. This integrated business model with a strong manufacturing base offers immense opportunities for downstream expansion. Gitanjali is looking to further strengthen its manufacturing capabilities through organic and inorganic routes.
· Retail expansion
o At the end of the first half of financial year 2014, Gitanjali increased its retail network by adding 26 franchisees, 10 own stores. Besides, it also opened 25 SIS and added 50 retailers through its distribution channel.
o Gitanjali Jewels opened its 101st store to make a mark in the company's retail foray.
· Brand Extension
o Gitanjali has also been actively introducing other lifestyle categories such as apparels, which have been reasonably successful ventures.
· International Developments
o Gitanjali's US business has witnessed a strong YOY growth of around 12%. It is expected that the US business will continue to grow at similar levels.
o Gitanjali intends to further strengthen and consolidate its international portfolio.
o The focus is on capitalizing on the high margin mature markets such as USA and Japan and also on the rapidly growing market of the Middle East.
Gitanjali's international presence allows it to balance its portfolio across geographies.
· Due to reduction in the gold jewellery business, the company is shifting from a shorter working capital cycle to a longer working capital cycle, increasing the borrowing and the interest cost. To mitigate this, the company is focusing on expanding its international business to reduce the finance costs and achieve better profitability
· Further strengthening our diamond and gemstone jewellery portfolio and extending the brands to include a small portion of lifestyle products
· Developing channels such as e-commerce to establish strong, sustainable connect with customers looking for novelty and convenience in jewellery purchases.
Gitanjali Group is the world's largest integrated branded jewellery manufacturer-retailer with an annual turnover of over $3billion. Established in 1966, today its activities are spread across the entire value chain from rough diamond sourcing, cutting, polishing and distribution, jewellery manufacturing to branding and retailing gold and diamond jewellery in India and abroad.
The Group pioneered jewellery retail revolution in India by launching 'Gili' way back in 1994. It today owns and distributes eight out of the top ten jewellery brands in the country including Gili, Nakshatra, Asmi, D'Damas, Sangini, Diya and Maya Gold. Gitanjali's extensive network of own stores, shop-in-shops and franchise outlets span across 300 cities and 4,000 points of sale.
It has 3 world-class diamond polishing facilities in India located at Surat, Mumbai and Hyderabad possessing production capacity of 4,00,000 stones a month. Domestic jewellery manufacturing facilities are located at Mumbai, Hyderabad, Surat and Jaipur that produce
160,000 pieces of finished jewellery each month, while international manufacturing set up is in China and Thailand with a capacity of almost 125,000 pieces per month. The Group's international design hub is located in Italy.
Over the last two decades, the Group has expanded operations in USA, UK, Belgium, Italy and the Middle East to China, Singapore and Japan.
Today the group owns a large retail chain in the US, Samuels Jewelers Inc; and has acquired a number of brands such as Stefan Hafner, Valente, Io Si, Poratti and others in Italy, and has a fast developing presence in China, the Middle East and other new markets.
Shweta Velkar Gitanjali Gems Ltd. Tel: +91 22 4010 2000
E-mail:shwetav@gitanjaligroup.com
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