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This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of Shree Ganesh Jewellery House Limited (the “Company” or “Shree Ganesh”) or its officers with respect to the results of operations and financial condition of the Company and its subsidiaries. These statements can be recognized by the use of words such as “expects”, “plans”, “will”, “estimates”, “projects” or words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors and assumptions. The Company does not undertake to revise forward-looking statements to reflect future events or circumstances.
No representation, warranty, guarantee or undertaking, express or implied, is made as to, and no reliance should be placed on, the accuracy, completeness or fairness of the information, estimates and opinions contained in this presentation. The potential investor must make its own assessment of the relevance, accuracy and adequacy of the information contained in this corporate presentation and make such independent investigation as it may consider necessary or appropriate for such purpose. Any opinions expressed in this presentation are subject to change without
notice.
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INDUSTRY COMPANY OPERATIONS FINANCIALS OUTLOOK
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SIZE OF INDIA’S JEWELLERY INDUSTRY ~ INR 700 BN (USD 15 BN)
THE UNORGANISED INDUSTRY HAS 100,000 MANUFACTURING UNITS, 6,000 PLAYERS IN DIAMOND PROCESSING & 450,000 GOLDSMITHS
WITH INCREASING DISPOSABLE INCOME, BUYING PATTERN IS SHIFTING TO PURCHASE OF BRANDED JEWELLERY FROM ORGANIZED & REPUTED OUTLETS
• Diamonds and Coloured stones (precious, semi-precious, synthetic) Gemstones
• Plain gold jewellery, Studded jewellery, Silver jewellery and Costume jewellery Jewellery
Pearls
280 40%420
60%
Urban jewellery market
Rural & semi-rural market
Rs. Bn.
560 80%
140 20%
Gold Jewellery
Studded jewellery (diamond and gemstone studded)
Rs. Bn.
6
4
5 6
9
9
Gold Jewellery
17 17
21 24
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Gems & Jewellery Export
SGJHL is witnessing a rising trend in market share
The market share is expected to strengthen with increase in capacities
1% 1%
68% 62%
1% 1% Others
Cut & Polished Diamonds
Coloured Gemstones
Gold Jewellery
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BACKGROUND
MANUFACTURING
• One of the largest manufacturer exporters of ‘Handcrafted Gold Jewellery’
• Promoted in August 2002 by Nilesh Parekh & Umesh Parekh, belonging to a jeweller family having more than 7 decades of experience in jewellery making
• Investment by Credit Suisse PE aggregating Rs. 80 Crs for 10.99% equity stake at a price of Rs. 300/- per equity share (Pre Bonus of 1:1) in March 2008
• Manufacturing facilities located at Manikanchan, Kolkata, a Gems & Jewellery dedicated SEZ promoted by West Bengal Government
– Employs over 500 ‘gold karigars’ (craftsmen) from West Bengal
– Manufacturing capacity of over 30,000 Kgs of gold jewellery p.a.
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AWARDS
MARKETS
• Primarily focused on Export markets which contributes over 95% of Total Revenues with major export markets as UAE, Singapore and Hong Kong
• Expanding Retail Presence in Domestic Market
• “Outstanding Export Performance and Contribution in the Trade for Plain Precious Metal Jewellery Exports by Unit from EoU/EPZ” for 2008, 2009 & 2010
• Rating in December 2009 of SE 1A by Crisil indicating High performance capability and highest financial strength
• Promoters awarded SinGem Young Achiever Award, Eastern India in 2006
• Four Star Export Trading House
• Assigned a rating of ‘PR1+’ by CARE to its Short Term Debts
• Assigned a rating of ‘A+’ by CARE to its Long Term Debts
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MILESTONES
2002
2003
2004
2006
2007
2008
2009
2010
Promoters awarded “Young Achievers
Award” by SinGems
PE investment by Credit Suisse
“Outstanding Export Performance” award
by GJEPC
“Outstanding Export
Performance” award by
GJEPC
Took over partnership firm “Shree Ganesh
Jewellers” engaged in jewellery business
Year of Incorporation
Set up manufacturing unit at Manikanchan
SEZ
Opened first branded Retail Jewellery store
Amalgamation of 6 group Companies
Initial Public Offering of Rs. 3,150 million
Turnover of Rs. 2,000 Crs
Received “Four Star Export House”
status
Further expansion to meet growing demand
and backward integration
Strengthening presence in
retail market
Promoters engaged in family business of gold jewellery manufacturing
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• Handcrafted hallmarked gold jewellery and gold enameled jewellery
• Gold jewellery studded with precious stones like rubies, emeralds, sapphires, pearls and diamonds
• Portfolio includes rings, earrings, pendants, bracelets, necklaces, bangles, medallions, gold coins
• Product catalogue includes Plain Gold sets, Gold Bengal Antique sets, Jadau - Kundan sets, Gold Mumbai Rajkot Antique sets, Gold and studded Bangles, Polki – Chakri sets
• 15 member strong in-house design development team
• Tie up with Sabyasachi Mukherji, renowned Indian Fashion Designer for high end exclusive jewellery
PRODUCT PORTFOLIO
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USI
NES
S R
EAC
H
• Amongst the largest player in the industry
• Capacity to produce 30,000 Kgs of Gold Jewellery p.a.
• Products primarily include Handcrafted Gold Jewellery
• Major markets - UAE, Singapore & Hong Kong
• Contributes to more than 95% of turnover
• Some of the International customers such as Ibrahim Al Sayegh Jewellery, Sparkle Jewellery FZE (UAE), Denzong (Hong Kong), Wondercut Pte Ltd, Abhusan (S) Private Limited, Excellency Pte Limited, (Singapore) have been company’s long standing customers
• Wholesale of Handcrafted Gold Jewellery (Deemed Exports)
• Expanding retailing of branded jewellery under GAJA brand through 14 outlets
• Focus on Tier II & III cities through exclusive shops & franchisees in
- Kolkata, Ahmedabad, Bangalore, Chandigarh, Patiala, Bhatinda, Jalandar, Palanpur & Anand
• Owned brands with distinct themes targeting young men and women
• Leading fashion designer Sabyasachi Mukherjee is an empanelled designer
- Recently launched a collection targeted at high end clientele
• Recently launched an exclusive collection of antique jewellery designs under the brand ‘GAJA Heritage’
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OB
UST
BU
SIN
ESS
MO
DEL
REVENUES Rs. 35,284 million
EBIDTA Rs. 2,610 million
Strong Designing Capabilities
• Intricate handcrafted design; high demand
• Tie up with Sabyasachi Mukherji • Technological innovations
Large Size - Lower Costs
• Nominated Agency • Canalising Agent • Four Star Export House
Experienced Management
• Professional management • Promoters individually have 2 decades of experience • Jeweller from generations
Insulation from price volatility
• Back to back gold volume/price hedging • Hedged foreign exchange position • High protection to operating margin
Excellent client relatioship
• Super Distributors - Bulk orders • Repeat Order due to confidence • Long standing association with buyers
Strategic Location
• Easy access to skilled Bengali artisans • SEZ units - tax & custom benefits • Proximity to Airport
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• Tie up with more domestic and international designers
• Targeting international foray with overseas subsidiaries
• Targeting Europe, Australia, Africa & Middle East • Set up Singapore & Dubai subsidiaries to market
products as well as procure gold • Cater hitherto untapped domestic markets
CUSTOMER DIVERSIFICATION
• Moving from handcrafted jewellery to machinemade light, Italian and fusion jewellery
• Tie-up with more designers both India & Overseas • Launch international quality & design in India
PRODUCT PORTFOLIO ENHANCEMENT
• Capacity expansion from around 30 tonnes to 46
tonnes to enhance revenues • Newer products range - higher market penetration • Latest Technology for wastage reduction • Better technology for margin enhancement
CAPACITY ENHANCEMENT
• Strengthening GAJA brand • Expand from existing 14 retail outlets to 49 • Franchisee Outlets Model to penetrate at low
capex • Overseas retail outlets for high end customers • More Focus on Tier II & III cities
STRENGTHENING RETAIL FORAY
• Setting up a Gold refinery to add to feedstock • Retail stores to assist in procuring gold for refinery • Canalising Agency status to allow direct gold
import • Domestic expansion to allow reach to final
customer
INTEGRATION PURSUE ALLIANCES
GR
OW
TH S
TRA
TEG
Y
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Mr. Nilesh Parekh Chairman, Promoter
- Experience of over 20 years in the jewellery industry - Responsible for overall strategic long term plans and product development - Awarded “Young Achievers Award” by Sin Gems in 2006
Mr. Umesh Parekh Managing Director, Promoter
- Experience of over 19 years in the jewellery industry - Heads global marketing operations and overseas business development - Awarded “Young Achievers Award” by Sin Gems in 2006
Mr. Sharad Mohata Non Executive Director, CA, ICWA
- Practicing Chartered Accountant & qualified Cost Accountant - Professional experience of over 17 years in the field of Accounting,
Taxation, Project Finance etc.
Mr. P. S. Ingty Independent Director – Ex IAS
- Masters degree in Arts and MBA from Leeds University, United Kingdom - Principle secretary to the Government of West Bengal (1997 – 2002)
Mr. S. C. Chaturvedi Independent Director, CA
- Practicing Chartered Accountant with professional experience of over 38 years in the field of accounting, taxation, project finance, etc.
- Associated with several public and private sector companies as Auditors
Mr. D. P. Mathur Independent Director
- Masters in Economics from University of Rajasthan - Had been associated with Planning Commission, Center for Management
in Agriculture, IIM-Ahmedabad, UN-FAO, Ministry of Commerce
PR
OFE
SSIO
NA
L &
EX
PER
IEN
CED
MA
NA
GEM
ENT
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OLU
MES
• Production expansion executed in phases • CAGR of 24% from FY 2007 to FY 2010
• Prime reasons for marked volume enhancement
• Strong exports demand • Presence in ‘Handcrafted Gold Jewellery
Segment’ • Diverse product portfolio caters to all segments
across high-end, mid-market, and value market segments
• Cost advantages along with strong in-house designing capabilities provide an edge over competitors
• Sustained sales volume growth
• Key future growth drivers • Diversification into new geographical territories • Expansion of product portfolio to include
machine made/Italian gold jewellery • Strengthening presence in retail branded
jewellery both domestically (through branded stores ‘GAJA’) and internationally
FY 2007FY 2008
FY 2009FY 2010
16 A
NN
UA
L P
ERFO
RM
AN
CE
14,730
29,425 35,284
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
FY 2008 FY 2009 FY 2010
REVENUES Rs. Million
1,178
2,118 2,610
0
500
1,000
1,500
2,000
2,500
3,000
FY 2008 FY 2009 FY 2010
EBIDTA Rs. Million
21 27 36
51
82
111
0
20
40
60
80
100
120
FY 2008 FY 2009 FY 2010
EPS & BV Rs./ share
907
1,334
1,673
0
200
400
600
800
1000
1200
1400
1600
1800
FY 2008 FY 2009 FY 2010
PAT (after minority interest) Rs. Million
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(Rs. Million)
Particulars FY 2008 FY 2009 FY 2010
Net Revenues 14,730.4 29,425.3 35,283.9
Cost of raw materials and stones 13,359.0 21,362.2 28,346.8
Purchase of traded goods 307.1 5,756.4 4,701.2
Increase in closing stock of work-in-progress and finished goods (363.1) (103.2) (906.9)
NET SERVICE REVENUES 1,427.4 2,409.9 3,142.8
FY 2008FY 2009
FY 2010
1,427
2,410
3,143
NET SERVICE REVENUES
INR Million
• Net service revenues have been derived as revenues net of cost of gold and related raw material including precious stones, gems and traded goods and adjusted for changes in closing stock • Net service revenues provide an insight into the company’s gross contribution • Net revenue traction remains strong
ANNUAL PERFORMANCE BASED ON NET SERVICE REVENUES
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907
1,334 1,673
64%
55% 53%
30%
40%
50%
60%
70%
0.0
500.0
1,000.0
1,500.0
2,000.0
FY 2008 FY 2009 FY 2010
PAT (after minority interest)
PAT after minority interest PAT margins
Rs. Million %
1,178 2,118
2,610
83%
88%
83%
60%
70%
80%
90%
100%
0.0
500.0
1,000.0
1,500.0
2,000.0
2,500.0
3,000.0
FY 2008 FY 2009 FY 2010
EBIDTA
EBIDTA EBIDTA margins
Rs. Million %
902 1,352
1,735
63%
56% 55%
30%
40%
50%
60%
70%
0
500
1000
1500
2000
FY 2008 FY 2009 FY 2010
PBT
PBT PBT margins
Rs. Million %
ANNUAL PERFORMANCE BASED ON NET SERVICE REVENUES
• EBIDTA margins remain strong – marginal moderation keeping in view expanded operations/capacities
• Net margins remain strong reflecting robust operating cash flows
• Margin performance to remain range bound going forward – earnings growth to be dominated by strong growth in net service revenues
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(Rs. Million)
31-3-10 31-3-09
Shareholders' Funds:
Share Capital 485.5 1,014.4
Reserves & Surplus 5226.2 3,284.8
Net Worth 5711.7 4,299.2
Loan Funds 3705.6 3,721.9
Total 9417.3 8021.1
Net Block + Capital work-in-progress 195.4 158.2
Investments 1.6 2.5
Deferred Tax Asset 76.7 16.6
Current Assets, Loans & Advances
Inventories 2029.3 785.7
Sundry debtors 6,288.2 2,082.3
Cash on Hand & in Banks 7,156.4 5,984.3
Other Current Assets 39.6 14.3
Loans and Advances 502.6 983.9
Less: Current Liabilities and Provisions 6,872.6 2,006.7
Net Current Assets 9,143.5 7,843.9
Total 9,417.3 8021.1
• Average working capital cycle of 120 days • The average debtors’ cycle of 94 days • Exports form a bulk of the revenues and the credit
period extended to international clients ranges between 60 and 90 days
• Excellent record of negligible bad debts
• High cash/bank balance on account of an increased need to park resources in fixed deposits as collateral, to procure a higher volume of raw material. This is a natural process inherent to the gems and jewellery business.
FY 2010 FY 2009
ROCE 16.0% 20.0%
Return on Net Worth 35.5% 31.0% Debt - Equity Ratio – Times 2.2 2.2
BALANCE SHEET
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• Cost leadership and presence in high-margin ‘Handcrafted Gold Jewellery’ segment aids SGJHL in maintaining healthy and visible cash flow from operations
• Cash flow from operations has reduced marginally despite an improvement in profitability as receivables have increased owing to higher recorded sales
• High level of cash accrual at the net level despite expanding business
CASH FLOW STATEMENT (Rs. Million)
Particulars FY 2010 FY 2009
A Cash Flow From Operating Activities 1,005.0 1,183.2
B Cash Flow From Investing Activities (38.7) (32.8)
C Cash From Financing Activities 210.1 1,757.3
Increase in Cash or Cash Equivalents 1176.4 2,907.6
Opening cash or cash equivalents 5980.0 3,072.4
Closing cash or cash equivalents 7156.4 5,980.0
CASH FLOWS
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Added 8 retail outlets under the “GAJA” brand during H1 FY2011 in Gurgaon, Chandigarh, Mangalore, Amritsar, Siliguri, Rajkot and Pune which are expected to commence operations shorty
• Post commencement of these outlets the Company will have 13 “GAJA” retail stores under its umbrella
• Plan to take the total number closer to 20 by the end of FY2011
Received orders worth Rs. 5,000 million at an event organized by India International Jewellery Show (IIJS) in Mumbai. These orders are from both existing and new clients based in Singapore, Hong Kong and UAE and are expected to be executed over the next 12 months
During the quarter, the Gems and Jewellery Export Promotion Council awarded SGJHL for Outstanding Export Performance and contribution in trade for the year 2009-10 for:
• Studded Precious Metal Jewellery Export from EPZ / EOU Complexes • Plain Precious Metal Jewellery Exports by units from EOU / EPZ
Current order book size stands at Rs. 25,000 million; expected to be executed by the end of
FY2011 • The order book is augmenting on a continuous basis • The size of book denotes healthy order visibility and booking
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Particulars Q2 FY2011 Q2 FY2010 Shift(%) H1 FY2011 H1 FY2010 Shift(%)
Net Revenues 19,825.5 8,213.9 141.4% 33,422.8 14,227.5 134.9%
EBIDTA 1,078.0 602.5 78.9% 1,878.7 995.0 88.8%
Margins 5.4% 7.3% 5.6% 7.0%
Profit Before Tax 922.2 528.1 74.6% 1,582.5 823.5 92.2%
Margins 4.7% 6.4%
4.7% 5.8%
Profit After Tax 920.1 518.5 77.5% 1,562.4 806.6 93.7%
Margins 4.6% 6.3% 4.7% 5.7%
Note: • All Rupee figures in millions unless stated otherwise • All figures are consolidated unless stated otherwise
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Note: • Net service revenues have been derived as revenues net of cost of gold and related raw material including precious stones,
gems and traded goods and adjusted for changes in closing stock • This highlights the net jewellery making charges earned by the Company • All Rupee figures in millions unless stated otherwise • All figures are consolidated unless stated otherwise
Particulars Q2 FY2011 Q2 FY2010 Shift(%) H1 FY2011 H1 FY2010 Shift(%)
Net Service Revenues 1,189.5 686.2 73.3% 2,078.3 1191.9 74.4%
EBIDTA 1,078.0 602.5 78.9% 1,878.7 995.0 88.8%
Margins 90.6% 87.8% 90.4% 85.6%
Profit Before Tax 922.2 528.1 74.6% 1,582.5 823.5 92.2%
Margins 77.5% 77.0%
76.1% 70.8%
Profit After Tax 920.1 518.5 77.5% 1,562.4 806.6 93.7%
Margins 77.4% 75.6% 75.2% 69.4%
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Particulars 30-Sept-2010 30-Sept-2009
Liabilities
Capital 606.8 485.5
Reserves & Surplus 9,613.8 4,650.4
Loan 3,786.7 3,980.9
Total Liabilities 14,007.3 9116.8
Assets
Fixed Assets 662.7 197.0
Investments 580.1 2.4
Deferred tax 82.3 26.8
Net current assets 12,682.2 8,890.6
Total Assets 14,007.3 9,116.8
Note: • All Rupee figures in millions unless stated otherwise • All figures are consolidated unless stated otherwise
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Strong revenue, profit and EPS expansion likely in FY 2011 • Q2 & H1 FY 2011 indicate a consistent robust performance
Strong order book position for the current quarter; order book firming up continuously for H2 FY 2011
Strategic expansion of retail outlets from 13 to 20 by the end of FY 2011 in India will strengthen the distribution network. This consequently will facilitate enhanced penetration and expansion.
Plans to improve contribution from both high margin ‘handcrafted gold jewellery’ and cost advantaged machine made/Italian jewellery will enable the Company to add width to both, revenues and profitability
Foraying in new territories like Europe, Australia and Africa is expected to start yielding returns in the near future
The gold refinery facility for old and used gold is expected to be operational by the end of FY 2011.
This facility will assist in reduction of raw material cost, optimization of operations, further enhancing profit margins
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Thank You
