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Gitanjali Gems Limited
Gitanjali Gems Limited
Disclaimer
•This presentation and the accompanying slides (the “Presentation”), which have been prepared by Gitanjali Gems Limited (the“Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding p f y , f y gcommitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering documentcontaining detailed information about the Company.•This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but theCompany makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy,completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may notcontain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, thisPresentation is expressly excluded.•Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and businessprospects that are individually and collectively forward‐looking statements. Such forward‐looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include but are not limited to the performance of the Indian economy and of the economies of various internationaland uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the wind power industry in India and world‐wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward‐looking information contained in this p y p y g p y f g fPresentation. Any forward‐looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections.•The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this presentationcomes should inform themselves about and observe any such restrictions.
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Gitanjali Gems LimitedGitanjali Gems Limited – An overview
Gitanjali Gems –an overviewan overview
Established Presence• Over two decades of experience in diamonds and studded jewelleryp j y• DTC Sight holder status through a promoter group company • Focused on Jewellery marketing and retailing to drive growth and margin
Integrated Business ModelIntegrated Business Model• Integrated Jewellery manufacturing & retailing model provides significant competitive advantage • India’s largest branded diamond jewellery retailer • Strategic presence in leading global diamond jewellery markets L l t il i ith 2400 P i t f S l (P S) i I di• Large scale retail expansion with over 2400 Points of Sale (PoS) in India
Strong Manufacturing Base• State of the art facilities at nine locations for diamond processing & jewellery manufacturing• State of the art facilities at nine locations for diamond processing & jewellery manufacturing• Advanced product development and design capabilities
Well Defined Diversification Strategygy• Retail expansion through organic, inorganic and partnership routes • Foray into lifestyle products to leverage customer base and domain knowledge• Infrastructure development to unlock value from fixed assets
Gitanjali Gems –Key subsidiariesKey subsidiaries
Gitanjali GroupGitanjali GroupDiamond & B d d I t ti l
1 2 3 4 5
JewelleryMfg & Wholesale
Branded Jewellery Indian Retail International
Retail Infratech
Gitanjali Gems Ltd. Gili(Gili I di Ltd )
Gitanjali InfratechLtd
Gitanjali Lifestyle Ltd
Samuels Jewelers Inc (USA)
Gitanjali Exports Corp. Ltd.
Nakshatra (Brightest Circle Jewellery)
(Gili India Ltd.) Ltd.Ltd.
Gitanjali JewelleryRetail Pvt. Ltd.
Shuddhi
(USA)
Rogers Ltd. Inc (USA)
D’Damas
Hyderabad Gems SEZ Ltd.
Asmi(Asmi JewelleryIndia Pvt Ltd )
Maya Lifestyle(Salasar Retail Pvt.
Ltd )
ShuddhiMMTC Gitanjali Pvt.
Ltd.
Tristar Worldwide LLC (USA)
D DamasD’damas Jewellery(India) Pvt. Ltd
Diamlink Inc (USA)
India Pvt. Ltd.)Maya Gold & Diya(Fantasy Jewellery
Pvt. Ltd.)
Sangini
Ltd. )
Diamlink JewelleryInc (USA)
Jewellery Mkting Co. C ( S )
Sa g(Spectrum Jewellery) LLC (USA)
Note: Key subsidiaries listed – Not exhaustive
Capitalizing on Value Chain AdvantageValue Chain Advantage
Maximum Value Creation in downstream
Exports Exports International Retail
Manufacturing Gold Jewellery Diamond Jewellery
Sourcing rough & uncut diamonds
Diamond Processing
Jewellery Branding
Domestic Retail
Sourcing Processing Branding & RetailingManufacturing
Diamond Jewelleryuncut diamonds Processing Branding
Sourcing Processing Branding & Retailing
o DTC sight‐holder position through promoter concern
o Enables quality
o Three modern diamond processing facilities
Additi l f ilit
o Six state–of‐the‐art facilities for JewelleryManufacturing
o Pioneers of branded jewellery in India
o Excellent set of
Manufacturing
o Enables quality supply at efficient prices
o Additional facilites commenced in SEZ
o Excellent set of brands
o Exhaustive sales & distribution networks
Market Trends andMarket Trends and Outlook
Changing preferences of Indian Customer
Yesterday Today
U b d d F INDIAMarket PotentialIndia has the 2nd largest
Branded
Gold Jewellery
Unbranded, From Family Jeweller
Diamond Studded Jewellery
INDIA India has the 2 largest population and the largest youth populationin the world
Jewellery for Investment
Traditional Ethnic
y
Jewellery for Fashion
Fashionable, and Chunky designs
Marriage and Festival Season as
light weight and innovative designs
“Wearability” and GiftsFestival Season as
peak seasons
Jewellery sold on commodity basis
and Gifts demand through
the year
Jewellery being sold on a per
Growing economyOne of the fastest growing economies in the world
Emerging marketWorld’s third largest diamond jewelry market, growing swiftlyy
with labourcharges
ppiece basis with 6% growth over the
last decade
growing swiftly ($5bn by 2013)
Source: Published Information
Understanding Indian Jewellery MarketIndian Jewellery Market
• One of fastest growing jewelry markets globallywith an annual growth rate of ~16%.
• Domestic market size estimated at ~US$22bn with gold jewellery accounting for nearly
80% of total
D i t d b i d t l ti f l 90% f k t• Dominated by unorganized sector players, accounting for nearly 90% of market
• Organized retailing of branded jewelry increasingly gaining share
– Growing at double the pace of the overall jewellery market.Growing at double the pace of the overall jewellery market.
• Traditional and emerging demand drivers:
– Festivals & Special occasions – half of market volume comprises wedding jewellery
dominated by the unorganized segment and local designs
– Changing buyer perception of jewellery now seen as a fashion accessory & not just
an investment option
Focus on Branded JewelleryFocus on Branded Jewellery Retail
Retail business – driving aggressive growth
Jewellery
aggressive growth
India InternationalOver all 50%+ of total Jewellery revenues of Gitanjali come from domestic market
Branded jewellery sales through channel partners.
Own stores and franchise stores
Wholesale and private label jewellery sales
USA130 stores through acquisition of Samuels and
Middle EastStores in partnership with leading jewellerychains like Joy
Exports to other international markets
Samuels and Rogers.
chains like Joy Alukkas
Brands across all market segments. Multiple distribution l tf d
Expansion of single and multi brand store network across th t
Increasing supply to family jewellers. Launching
i
Growth to continue through
To grow further through partnership
Distribution of jewellery in Europe Russiaplatforms and
presence in malls and shop‐in‐shop formats
the country. various aggregation initiatives.
through inorganic route and margins through Indian manufacturing support
partnership route and owned stores.
Europe, Russia, Far East, Australia, Other Asian Countries
• ~60% of the organized mall space in the country within jewellery category belongs to the Gitanjali Group
• 50‐60% of advertisement spend on jewellery PAN India is done by Gitanjali
Strong retail Expansion Plans in IndiaPlans in India
Continuous retail expansion plan intact for next 3 years
Number of Exclusive
Distributors2009 - 2010 2012 - 2013Actual Projected
CAGR 20%~230 ~ 400 25% of all Points of Sales (2400 in all) in India were
added in FY 2009‐10
Primar foc s of e pansion thro gh Franchise and
Number of Outlets
(SIS + Retailers) 2009 - 2010 2012 - 2013
CAGR 26%~2000 ~ 4000
Primary focus of expansion through Franchise and
Shop‐In‐Shop routes
Revenue Share with property owner preferred mode
Number of Exclusive
Actual Projected
CAGR 18%~ 185 ~300
of expansion for Exclusive stores
Flagship stores being set up to establish brand
presence as enablers for Franchise and SIS networksExclusive Stores
Number of Franchisee
2009 - 2010 2012 - 2013Actual Projected
CAGR 32%~215 ~ 500
p
Present retail network occupies about 1 mn sq feet
PAN India
Franchisee Stores 2009 - 2010 2012 - 2013
Actual Projected
Multiple Channels for Sales GrowthSales Growth
Sales through exclusive Distributor Network
Sales to Department Stores and Reputed Jewellery Retailers
Sales through Retail Stores owned/
managed by the Group
Sales through Franchise Partners
o Exclusive distributor network for each brand to sell to jewellery
o Large jewellery stores, h ll
o The retail operations of the group are classified
o Franchise network spread across India forto sell to jewellery
retailers across the country
o Once delivered, the distributor assumes the responsibility of selling
shopping malls and department stores
• Shoppers Stop
• Globus
W t id
the group are classified into three different formats
• Retail Stores owned by the group
spread across India for Exclusive Branded Outlets (EBO) as well as Multi Branded Outlets (MBO)
D di t d t fresponsibility of selling the product
o Commission paid depends on the brand and sale value of the final product
• Westside
• Gold Souk
o Directly serviced by the Gitanjali Group
• Shop in shop outlets in department stores
• Franchisee stores
o Dedicated teams for recruiting franchise and servicing the same for different retail formats e.g. Gitanjali Jewels, Gili
final product
Future Outlook: Emerging Retail StrategyEmerging Retail StrategyEmerging Retail Concept Extension of retail and marketing expertise to leverage successful Indian and international brands
to complement its product categories with other lifestyle products
Concept Overview Existing 1 million sq ft retail space scalable up to 2 million sf ft stores in next 3 yearsFlexibility through various store sizes ranging from 1000 sq ft to 20,000 sq ftLocated on high‐streets and in malls in upcoming towns and citiesProduct categories include jewelry, accessories, apparels, lifestyle products, cosmetics and perfumesperfumesTarget customer segment are sec A and BStore layout and interiors designed by leading Indian design house and architects Revenue sharing model for national and international brands
Opportunity of mid‐i d i d t il
Opportunity in midsized segment with premium branded categories Ti 2 d ti 3 iti ith i ifi t d hi h i di ti i
Critical Success Factors Pull to drive in footfallsAd ti i d k ti t
sized organized retail venture in tier 2 and tier 3 cities
Tier 2 and tier 3 cities with significant demographics having discretionary incomeOrganized retail as a whole expected to grow at 25‐30% in next 5 yearsLarge branded players are likely to dominate all categories and formats
Advertising and marketing supportCompetitive advantage for:
LocationLoyal customer segmentFormat (availability, accessibility, size, merchandising mix and layout)
Presence of prominent brandsPresence of prominent brandsExperienced management team and trained staff
Franchise Model
Franchise Model:Associated franchisees are from varied backgrounds and have different aspirations Gitanjali provides training and business know‐how tailored to industryFranchisee buys out stock along with partial creditFranchisee agreement typically for a period of 3‐6 years with performance guarantee clauseA number of services and support to franchisee partners pp p
Investment and ROI:Initial investment varies across brands and outlets starting from Rs. 30 mn upwards to Rs. 25 cr.25 cr. Multiple product lines with different ranges maintained to offer choice to customersROI for mature franchisee outlets can vary from 15% to 25% depending on format, location, investment and product categories
Network expansion through focused franchise portfolio
Rapid Expansion through Revenue Sharing ModelRevenue Sharing Model
• Revenue Sharing Model growing quickly in popularity
• Win – Win arrangement for both developers and retailers
• Benefits for Gitanjali Group
• Scalability through lower initial investments• Scalability through lower initial investments
• Lower cost of operations
• Expansion of retail network without proportionate fixed cost increase
• Shared Risk and Reward
• Performance based business model
• Long term contracts for reliability and continuity of operations
• Leveraging branding capability to secure assured footfalls
Strategy: Leveraging Branding StrengthBranding Strength
Strengths Opportunities
Branding
First mover advantageFully integrated supply chainDTC Sight holder status
Expansion into emerging marketsIncreased focus on branded jewellery in IndiaBranding
in Emerging Markets
providing reliable source of diamond supplyMarket access and brand support
jewellery in IndiaIncreased focus on non‐Metro marketExpansion through revenue h i d f hi d l
Unique design skills and TechnologyVast distribution and retail network
sharing and franchisee modelsForay into other luxury categories
network
ChallengesLarge presence of unorganized sectorEmergence of low cost and regional brands Sustaining high growth rate in supply and Increasing gold and diamond prices
Sustained Financial Performance
Strong Revenue Growth FY 2009 10
• Rapid expansionTotal revenue grew by 28% to
Revenue CAGR 16%
FY 2009‐10In Rs. Crores
– Total revenue grew by 28% to Rs.6,527 crores
• Jewelry and retailing lead with faster sales growth
2,891.30
6,527.63
4,831.74 5,088.88
– Jewelry segment revenue grew by 35%, accounting for 56% of total revenue
– Diamond segment revenue grew by 3 628 44
2,668.09 2,394.98
– Diamond segment revenue grew by 21%
• Indian market gaining significance with growing retail footprint 2,163.64
2,692.76
3,628.44
– India revenues grew by 38% to Rs.2,605 crores
– Exports and overseas revenues grew by 22% to Rs.3,923 crores
‐ 1.13 7.90
FY 2007‐08 FY 2008‐09 FY 2009‐10by 22% to Rs.3,923 crores FY 2007 08 FY 2008 09 FY 2009 10
Others Jewelry Diamonds
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Quarterly performance Q4 FY 2009 10
• Growth impacted by market weakness in Q4 FY 2009‐10 1,601.501 467 55
Q4 FY 2009‐10In Rs. Crores
weakness in Q4 FY 2009‐10– Total revenue grew by 9.4% to
Rs.1,602 crores– Jewelry segment revenue grew by
1,467.55
16%, accounting for 58% of total revenue
– Diamond segment revenue grew by 1%, accounting for 42% of total
801.64929.13
revenue
• Volatility in gold prices had an impact on India demand for jewelry
I di b 2 6% 665 90 672 37– India revenues grew by 2.6% to Rs.623 crores, reflecting market weakness
– Exports and overseas revenues grew
665.90 672.37
Q4 FY09 Q4 FY10by 14% to Rs.982 crores
Q4 FY09 Q4 FY10
Diamonds Jewelry
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EBIT GrowthQ4 FY 2009 10
• EBIT grew by 55% to Rs.395.79 crores• EBIT / Sales ratio improved to 6 06% in FY
Healthy EBIT growth
Q4 FY 2009‐10In Rs. Crores
• EBIT / Sales ratio improved to 6.06% in FY 2009‐10 as compared to 4.94% in FY 2008‐09
– Return from Jewelry segment (before adjustment) reduced to 7 5% in FY 2009‐
28.45
251.60
395.79
adjustment) reduced to 7.5% in FY 200910 from 8.1% in FY 2008‐09 due to gold price volatility
– Return on Diamond segment (before adjustment) improved to 3.2% in FY 2009‐
219 40
272.45
10 from 2.6% in FY 2008‐09
• Control over manpower and operating costs contributed to improvement in operational 102 31
219.40
improvement in operational performance
71.55102.31
‐15.81 ‐7.41‐23.54
FY 2009 FY 2010
Diamonds Jewelry Others Unallocable
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Geographic performance
• Revenue contribution from India growing faster than that from international business
summary
international business– Growth of 38.3% in India vs 22.4% overseas– Will provide the bedrock of future growth
• Jewelry sales in India grew by 61 3% over FY 2008‐09 providing majorJewelry sales in India grew by 61.3% over FY 2008 09 providing major contribution to revenue growth
– Strong growth as a result of retail channel expansion and branding effortsIn Rs. Crores
Business FY 2009‐10 FY 2008‐09
India Overseas India Overseas
Diamonds 740.4 2,150.9 727.0 1,667.9
Growth over FY09 1.8% 28.9%
Jewelry 1,864.6 1,771.7 1,156.0 1,537.7
Growth over FY09 61.3% 15.2%
Total 2,605.0 3,922.6 1,883.0 3,205.6
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Profit & Loss accountFY 2009 10
Particulars FY 2009‐10 (Audited) FY 2008‐09 (Audited)
Total Total
FY 2009‐10In Rs. Crores
Total Total
Sales 6,527.6 5,088.9
Raw material cost 5,525.3 4,238.3
Gross Profit 1,002.4 850.6Gross Profit 1,002.4 850.6
Gross profit margin 15.4% 16.7%
Manpower costs 209.1 216.6
Other operating income 2.6 2.24
Operating expenses 354.1 346.4
EBITDA 441.7 289.9
EBITDA margin 6.8% 5.7%EBITDA margin 6.8% 5.7%
Depreciation 44.5 33.6
EBIT 397.17 256.3
EBIT margin 6 1% 5 0%EBIT margin 6.1% 5.0%
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Profit & Loss accountFY 2009 10 ( d )
Particulars FY 2009‐10 (Audited) FY 2008‐09 (Audited)
FY 2009‐10 (contd.)In Rs. Crores
Total Total
EBIT 397.17 256.3
EBIT margin 6.1% 5.0%
I t t 172 4 97 8Interest 172.4 97.8
Exceptional items ‐‐ ‐‐
PBT 224.7 158.5
Taxes (net of DTA) 23 2 3 18Taxes (net of DTA) 23.2 3.18
Share in Associates’ PAT ‐‐ ‐‐
Minority share in (Profit) / Losses 1.4 4.7
PAT 200 2 150 6PAT 200.2 150.6
EPS (Rs.10 FV) 23.7 17.7
Diluted EPS 20.4 15.3
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Gradual improvement in W ki it l
• Reduction in inventory holding i d ( % f )
Net operating working capital
31st March2010
31st March2009
Working capitalIn Rs. Crores
period (as % of cost)– Improvement in jewelry offtake from
newly established stores– Will improve steadily as retail brands
Inventories 2,079.4 1,975.8
Inventories / COGS 37.6% 46.6%
Inventory days 135 168Will improve steadily as retail brands gain mass
• Reduction in receivables holding period
Receivables 3,250.8 2,759.6
Receivables / Sales 49.8% 54.2%
Receivables days 179 195
– Improvement in global liquidity scenario
– Will improve steadily with increasing proportion of retail jewelry sales
Current liabilities (1,364.5) (1,671.9)
Payables / COGS (24.7%) (39.4%)
Payables days (89) (142)proportion of retail jewelry sales
• Payables holding period shortened
– Consequence of improved cash flows
Payables days (89) (142)
Consequence of improved cash flows
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Financial leverage
• Major part of leverage relates to working capital– Increase in proportion to sales growthIncrease in proportion to sales growth
• NCDs placed in May 2009 to finance core working capital• FCCBs (issued in 2006) maturing Nov 2011 for finance acquisitions and
capexcapex Debt facility As at 31st March 2010 As at 31st March 2009
Working capital loans 2,082.7 1,659.2
NCD 125.0 ‐‐
FCCB 331.6 374.7
Other loans 8.9 12.8
Gross debt (A) 2,548.1 2,046.6
Cash and cash equivalents (B) 238.6 297.2
Net debt (A‐B) 2,309.5 1,749.4
N t th 2 216 5 2 077 5Net worth 2,216.5 2,077.5
Net debt / Equity ratio 1.04 0.84
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Gitanjali Group: Key Management Team
Mr. Mehul ChoksiChairman and Managing Director
Key Management Team
o Founded Gitanjali Gems in 1986
o Has been a visionary in identifying and executing various initiatives including branding and retailing
I t t l i l hi l f lo Instrumental in launching several successful brands
o Pioneer in corporatising the jewellery industry in India
P iti M Ch k i Ni hit M ht S il VN h l M di D k G dhiPriti M. ChoksiMaunfacturing
Nishit MehtaInternational Business
Sunil VarmaGroup CFO
Kaushik ShahCFO: Jewellery Division
Shekhar WadkePankaj Shah Jaison S. Panakkal Sailesh Goyal
Nehal ModiInternational Business
Amrish MasaliaCEO: Nakshatra
Santosh SrivastavaCEO: Gitanjali Jewellery Retail
Rahul ViraCEO: Gili
Deepak GandhiSamuels & Rogers
Devashish Dutta
R.K. MenonCEO: D’Damas
Sudhir MehtaSourcing & Manufacturing
COO: Asmi – B2C
Nirav AdaljaPresident: Gitanjali Lifestyle
CEO: Asmi CEO – Fantasy
Aditya ShastriAdvertising & Marketing
President: Gitanjali Infratech
SharadMehtaDiamond Manufacturing
Vikram SinghJewellery Manufacturing
C. SubramaniamGr. President: HR
R. RaoHead: Legal
Sanjay BanarjeePresident: Luxury Business
Pankhuri WarangeCompany Secretary
Jaydeep BanarjeeCOO: MGPL
CEO: Gitanjali Lifestyle
Nishit DaveSr. VP: Investor Relations
P. K. DuttaGitanjali Ventures DMCC
Anand KumarSr. VP: Corp. Finance
Abhishek GuptaCorporate Strategy
Niyat ParekhCEO: Diya
Infratech and Real Estate
Unlocking hidden valuevalue
Hyderabad SEZ: World Class Manufacturing CapacityUpcoming Infratech ProjectsUpcoming Infratech Projects
Borivali, Mumbai ~330,000 sq ft of Residential P j t t b l h i FY 2010 11, Project to be launch in FY 2010‐11.
Hyderabad Gems SEZ Andhra Rental Facilities of ~200,000 sq ft SEZ, Andhra Pradesh
to be leased in FY 2010‐11.
Andheri MIDC, Commercial Premises ~100,000 sq ft to be developed in FY 2010‐11
Mumbaift to be developed in FY 2010 11 for rental and outright sale.
Gitanjali Infratech will unlock values from opportunistic investments in Infratech in the Financial YearGitanjali Infratech will unlock values from opportunistic investments in Infratech in the Financial Year 2010‐11 and continue to expand in the next 3 years.
THANK YOU
Corporate Office:6,B Wing, Laxmi Towers, 1st Floor,
Investor contact:[email protected]
Bandra Kurla Complex,Mumbai 400 051. www.gitanjaligroup.com
