PC Jeweller Limited
Corporate Presentation
1st August 2013
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Disclaimer
Certain statements are included in this release which contain words or phrases such as “will,” “aim,” “will likely result,” “believe,” “expect,” “will continue,” “anticipate,” “estimate,” “intend,” “plan,” “contemplate,” “seek to,” “future,” “objective,” “goal,” “project,” “should,” “will pursue” and similar expressions or variations of these expressions that are “forward-looking statements.” Actual results may differ materially from those suggested by the forward-looking statements due to certain risks or uncertainties associated with our expectations with respect to, but not limited to, our ability to implement our strategy successfully, the market acceptance of and demand for our products, our growth and expansion, the adequacy of our allowance for credit to franchisees, dealers and distributors, technological changes, volatility in income, cash flow projections and our exposure to market and operational risks. By their nature, certain of the market risk disclosures are only estimates and could be materially different from what may actually occur in the future. As a result, actual future gains, losses or impact on net income could materially differ from those that have been estimated. In addition, other factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this document include, but are not limited to: general economic and political conditions in India and the other countries which have an impact on our business activities; inflation, unanticipated turbulence in interest rates, foreign exchange rates, the prices of raw material including gold and diamonds, or other rates or prices; changes in Indian and foreign laws and regulations, including tax and accounting regulations; and changes in competition and the pricing environment in India. The Company may, from time to time make additional written and oral forward-looking statements, including statements contained in the Company’s filings with SEBI and the Stock Exchanges and our reports to shareholders. The Company does not undertake to update any statements made in this presentation. The facts and figures mentioned in this presentation is for informational purposes only and does not constitute or form part of, and should not be construed as, an offer or invitation to sell securities of the Company, or the solicitation of any bid from you or any investor or an offer to subscribe for or purchase securities of the Company, and nothing contained herein shall form the basis of or be relied on in connection with any contract or commitment whatsoever. Nothing in the foregoing shall constitute and/or deem to constitute an offer or an invitation to an offer, to be made to the Indian public or any section thereof or any other jurisdiction through this presentation, and this presentation and its contents should not be construed to be a prospectus in India or elsewhere. This document has not been and will not be reviewed or approved by any statutory or regulatory authority in India or any other jurisdiction or by any stock exchanges in India or elsewhere. This document and the contents hereof are restricted for only the intended recipient(s). This document and the contents hereof should not be (i) forwarded or delivered or transmitted in any manner whatsoever, to any other person other than the intended recipient(s); or (ii) reproduced in any manner whatsoever. Any forwarding, distribution or reproduction of this document in whole or in part is unauthorized. The information in this document is being provided by the Company and is subject to change without notice. No representation or warranty, express or implied, is made to the accuracy, completeness or fairness of the presentation and the information contained herein and no reliance should be placed on such information. The Company shall not have any liability to any person who uses the information presented here.
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Our Vision
One of the Fastest and Profitably Growing Jewellery Retail Company in India with 36 Showrooms across 28
Cities, across 10 states
Strong reputation and Brand Recall in Northern and Central India
Focus on Wedding jewellery with increasing contribution from High Margin Diamond Jewellery
Gold Hedging to ensure No Commodity Risk
Strong Manufacturing set-up with complete Back-end integration and Robust Internal Processes
Professional Management
PC Jeweller today
To be amongst the top 2 Jewellery Retail Companies of India, in terms of Market Share and Brand Recall
with a Pan India presence
Maintain Focus on Wedding Jewellery customers
Continue thrust on growing Diamond and other high-margin jewellery
Our Vision for PC Jeweller
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Journey of ‘Jeweller for Generations’ began here ….
PCJ showroom at Karol Bagh (New Delhi) – First showroom in 2005
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2009-10
Commenced operations in Apr 2005
Single showroom – Karol Bagh (ND)
2 New Showrooms
Noida
Panchkula
Export operations commenced from manufacturing unit at Noida, SEZ
5 New Showrooms
Pitampura (ND)
Chandigarh
Preet Vihar (ND)
Ghaziabad
Gurgaon
Additional manufacturing unit at Selaqui (Dehradun)
2 New Showrooms
Faridabad
Dehradun
Manufacturing unit at Selaqui (Dehradun)
7 New Showrooms
Lucknow
Indore
Bhopal
Raipur
Jodhpur
Bhilwara
Ludhiana
Export operations commenced from second manufacturing unit at Noida SEZ
7 New Showrooms
Haridwar
Bilaspur
Pali
South Ext. (ND)
Amritsar
Beawar
Ajmer
34,000 sq ft manufacturing facility at Noida
2005-06
2007-08
2008-09 2010-11
2011-12
Right Business Plan + Execution Speed + Careful Optimism over the years
6 New Showrooms
Kanpur
Rohtak
Rajouri Garden (ND)
Greater Kailash I (ND)
Indirapuram
Kingsway Camp (ND)
2012-13
*ND - New Delhi
6 New Showrooms
Jabalpur
Shri Ganganagar
Ahmedabad
Vadodara
Hisar
Paschim Vihar
2013 till date
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Opened 6 showrooms post IPO (in Dec 2012)
Vadodara, Gujarat
Today, PCJ has 36 Showrooms across 28 Cities, across 10 States
Hisar, Harayana Paschim Vihar, New Delhi
Jabalpur, Madhya Pradesh Shri Ganganagar, Rajasthan Ahmedabad, Gujarat
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PC Jeweller Business Model
Company exports Gold and Diamond jewellery on a wholesale basis to international distributors in Dubai and Hong Kong
Focus on Domestic Retail Business – High margins Diamond jewellery and Wedding jewellery
PC Jeweller Limited
Gold Jewellery Diamond Jewellery
FY 13 Revenue – Rs. 40,184 mn
Exports Sales Domestic Sales
Other Jewellery
FY13 Revenue – Rs. 10,307 mn Gross Margins – 9.00% - 10.00%
FY13 Revenue – Rs. 29,876 mn Gross Margins – 15.00% – 16.00%
FY13 Revenue – Rs.20,459 mn Gross Margins ~10%
FY13 Revenue – Rs. 9,202 mn Gross Margins ~30% - 35%
FY13 Revenue – Rs. 216 mn
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Key Pegs of PCJ Business Model
Large Format Stores
Intelligent Pricing
Extensive Research before opening any
Store
Large Variety – Best as compared to any other
Jeweller in that Location
Best in class Customer Policies
Key is to Develop Customer Trust and Confidence in PCJ Brand, Quality, Variety and Pricing
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Growing Retail Footprint
*As on 1 July 2013; All showrooms, except Chandigarh showroom, are directly managed
New Delhi
Bhopal
ChandigarhDehradun
FaridabadGhaziabad
Gurgaon
Indore
JodhpurLucknow
Noida
Panchkula
Raipur
Bhilwara
LudhianaHardiwar
Bilaspur
Pali
Amritsar
AjmerBeawar
Rohtak
Kanpur
Hisar
Vadodara
Ahmedabad
Shri Ganganagar
Jabalpur
13 1
3
27
35
65
101
138
165
198
1 1 3
5
10
17
24 30
36
-
5
10
15
20
25
30
35
40
-
50
100
150
200
250
FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 till date
# o
f S
how
room
s
Sq. F
t. in thousands
Total Area No. of Stores
36 Showrooms across 28 Cities, across 10
States
~1,98,000 Sq. Ft. of Retail Area
Large Format Showrooms at High street
locations
Not a Single Store closed till now
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Retail Sales Analysis
10
FY 13 FY 12
Operational stores in FY 30 24
Total Retail Sales (Rs. mn) 29,876 20,395
Stores with Annual Revenue > Rs. 1,000 mn 8 4
Stores with Annual Revenue btw Rs. 500 – 1,000 mn 15 8
Stores with Annual Revenue < Rs. 500 mn 7 12
Store-level Cash Breakeven Analysis
For a store in the same city as an existing store, cash breakeven is between
4-5 months
For a store in the same region/ state as an existing store, cash breakeven is
between 6-7 months
For a store in a completely new region, cash breakeven is around 1 year
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Typical Store Level Economics
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Indicative workings for a Store with an area of 5,000 sq. ft.
Target Annual Store Sales Rs. 600 mn
Gold: Diamond Jewellery Mix 70% : 30%
Gross Margins – Gold 9% – 10%
Gross Margins – Diamond 30% - 35%
Blended Gross Margins Rs.93.0 mn (15.50%)
Store Costs (as % of Store Sales)
Rentals 0.80%
Employee Costs 1.00%
Advertisement Expenses 1.00%
Other Expenses/ Overheads 0.80%
EBITDA Margins Rs. 71.4 mn (11.90%)
Finance Cost Rs. 18.0 mn (3.00%)
PBT Rs. 53.4 mn (8.90%)
Tax Rs. 11.7 mn (22% on PBT)
PAT Rs. 41.7 mn (6.94%)
Indicative Capital Employed at the Store
Total Inventory Rs. 250 mn
Store Inventory Rs. 187.5 mn
Back-end Inventory Rs. 62.5 mn
Store Set-up Cost Rs. 22.5 mn (Rs. 4,500/ sft)
Total Capital Employed (TCE) Rs. 272.5 mn
Typical Store Level Funding Pattern
Equity/ Internal Accruals Rs. 89.9 mn (~ 33% of TCE)
Creditors (Gold Lease scheme) Rs. 136.3 mn (~ 50% of TCE)
Debt (Bank Loan) Rs. 46.3 mn (~ 20% of TCE)
Total Capital Rs. 272.5 mn
Target Store-level Return on Equity
PAT Rs. 41.7 mn
Equity Rs. 89.9 mn
ROE for the Store ~46.3%
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Gross Margins in Diamond Jewellery (~30%-35%) significantly higher as compared to margins in Gold
Jewellery (~9%-10%)
Target to reach 35% Diamond Jewellery by FY 2015 (from 30.8% in FY 13)
High Focus on Diamond Jewellery
81.2% 76.4%
72.6% 68.5%
17.9%
22.9% 26.7%
30.8%
0.90% 0.70% 0.70% 0.723%
0%
20%
40%
60%
80%
100%
FY 2010 FY 2011 FY 2012 FY 2013
% b
reakup
Gold Jewellery Diamond Jewellery Other Jewellery
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Business De-risked from Gold Price Fluctuations
Gold Purchase Arrangement
Domestic Exports
RBI Nominated Agency/ Nominated Banks Upto 180 Days from date of procurement Stand By Letter of Credit
Direct Import for SEZs / RBI Nominated Agency/ Nominated Banks Upto 270 Days from date of procurement Stand By Letter of Credit
Mode of Purchase Credit Days Type of Security
Price of the gold procured by us is fixed on the basis of then prevailing gold rates on sale to
customers
No risk relating to gold price fluctuations between the time of raw material procurement and sale of
finished product to customers
We hedge our gold and do not seek to profit from gold price movements
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Recent Regulatory Updates
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All nominated banks/ nominated agencies will have to ensure that at least one fifth (20%) of every lot of import of gold
(in any form/ purity) is exclusively made available for the purpose of export
They will be required to retain 20 per cent of the imported quantity in the customs bonded warehouses
Fresh imports of gold is permitted only after the exports have taken place to the extent of at least 75 per cent of gold
remaining in the customs bonded warehouse
Any import of gold under any type of scheme, shall follow the 20/80 principle
Restrictions on import of gold on Consignment Basis, Letter of Credit Restrictions etc. stands withdrawn
New Import Policy RBI Circular dated July 22, 2013
While we continue to maintain our focus on Domestic Retail operations, ~25% of our revenues come from Jewellery
Exports (expected ~20% in next 3-4 years)
As a result, 20/80 principle suits us perfectly well in gold procurement and ensures a steady availability of raw material
for our Domestic Retail as well as Jewellery Export business
Positive for PC Jeweller
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Expansion Plans
Ahmedabad
Bangalore
Nagpur
Patna
Chennai
Hyderabad
Jammu
Lucknow
Agra
Rajkot Kolkata
Mumbai Bhubaneswar
Guwahati
Mangalore
Total showrooms to be opened
14
Sites finalised ( )
11
Sites under Consideration ( )
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Chairman – Padam Chand Gupta
Managing Director – Balram Garg
President (Gold
Manufacturing) (Sachin Gupta)
President (Diamond
Manufacturing) (Nitin Gupta)
Chief Operating
Officer (R. K. Sharma)
Chief Financial Officer
(Sanjeev Bhatia)
President (HR & BD)
(T.M. Lakshmikantan)
Senior Vice-President
(Accounts & Taxation) (Raja Ram
Sugla)
Senior Vice-President
(Projects & Audit)
(Kuldeep Singh)
Promoters have over two decades of experience in Jewellery business. No other businesses and
100% time and effort invested in PC Jeweller
Ably supported by Professional management team with various divisional and functional heads
Professional Management
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Strong Manufacturing Set-up
S. No Location Area (sq ft.) Focus of Operations
1 Noida, Uttar Pradesh 34,000 Domestic market
2 Selaqui, Dehradun, Uttarakhand 8,611 Domestic market
3 Noida SEZ, Uttar Pradesh 34,247* Exports
4 Noida SEZ, Uttar Pradesh 3,938 Exports
Note: Area is covered area ; * Total area mentioned in the lease agreement, not the covered are of the manufacturing facility
Vertically integrated operations – Sourcing, Manufacturing, Retail and Exports
Large modern manufacturing set-up gives ability to capture margins across the jewellery value chain
Significant portion of jewellery manufactured in-house (~6,230 kg of gold processed in FY13)
Additionally, some jewellery also manufactured from independent contractors to take into account local
tastes and customer preferences across different markets
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Strong Manufacturing Set-up (Contd.)
State of art manufacturing facility (34,000 sq. ft.)
in Noida, Uttar Pradesh (India)
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Key Investment Highlights
PCJ – An
Established and
Trusted Brand
Trusted name - Ensures purity by selling only Hallmarked Gold jewellery and Certified diamonds
Consistent focus on Quality, Design and Unique Customer Policies - Helps gain customer loyalty and referrals
Exclusive brand image and top of mind recall amongst the customers
Strategically
located Large
Format
Showrooms
36 Showrooms across 28 Cities, across 10 States
Large Format showrooms at High street locations with high visibility and customer traffic
Additionally, Diamond jewellery is displayed on the ground floor of our multi– floor showrooms to ensure high
visibility for diamond jewellery
Unmatched
Product Range
Focus on High Margin and High Ticket wedding segment of the industry
Gold Jewellery accounts for ~68.5% of our domestic revenues (operates at ~9% - 10% gross margin)
Diamond Jewellery accounts for ~30.8% of domestic revenues (operates at ~30% - 35% gross margin)
• Contribution of diamond jewellery increased from 17.9% in FY10 to 30.8%in FY13, target 35% by FY 15
Business De-
risked from Gold
Price Fluctuations
Price of most of the gold purchased is hedged minimizes any risk relating to gold price fluctuations between the
time of raw material procurement and sale of finished product to customers
We do not seek to profit from gold price movement
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Key Investment Highlights (contd.)
Manufacturing
Set-up
Vertically integrated operations – Sourcing, Manufacturing, Retail and Exports
Large modern manufacturing set-up gives ability to capture margins across the jewellery value chain
Significant portion of jewellery manufactured in-house (~6,230 kg of gold processed in FY13)
Manufacturing units at Dehradun (Uttarakhand), Noida (Uttar Pradesh) and Noida SEZ (Uttar Pradesh)
• Over 42,600 sq. ft.* of manufacturing facility exclusively for Domestic operations
• Over 38,000 sq. ft.^ of manufacturing facility exclusively for Export operations
Product
Development and
Design
State of art Design Centre in our Noida manufacturing facility
In-house team that conducts customer surveys, market researches and based on feedback from various sources
including Indian and international trade shows and jewellery fairs, designs and develop new product lines
*Area is covered area ; ^Total area mentioned in the lease agreement, not the covered are of the manufacturing facility
Professional
Management
Promoters Mr. Balram Garg & Mr. Padam Chand Gupta have over two decades of experience in jewellery business
Supported by professional management team consisting of various divisional and functional heads including COO
and CFO
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Key Financials
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Annual Performance Trends
Revenue from Operations Sales breakup - Consistently growing Domestic Sales
EBITDA and PAT Margins Steady PAT Growth
EBITDA margin computed as EBITDA / (Revenue from Operations), PAT margin computed as PAT / (Revenue from Operations)
9,84819,771
30,419
40,184
0
7,000
14,000
21,000
28,000
35,000
FY 2010 FY 2011 FY 2012 FY2013
Sale
s (I
NR
Mn
)
66.5% 65.6% 67.0%74.3%
33.5%
34.4% 33.0%25.7%
0%
20%
40%
60%
80%
100%
FY 2010 FY 2011 FY 2012 FY 2013
%
Domestic Sales Export Sales
10.00% 10.10% 11.50%
12.23%
8.00% 7.50% 7.60% 7.23%
0%
2%
4%
6%
8%
10%
12%
14%
FY 2010 FY 2011 FY 2012 FY 2013 EBITDA Margin PAT Margin
784 1,477
2,300
2,907
8.00% 7.50% 7.60% 7.23%
0%
2%
4%
6%
8%
10%
0
500
1,000
1,500
2,000
2,500
FY 2010 FY 2011 FY 2012 FY2013
PA
T (I
NR
Mn
)
PAT PAT Margin
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Margin Analysis
Particulars FY 13
(Annual) FY 12
(Annual)
Revenue from Operations (Rs. Mn.) 40,184 30,419
Domestic Operations 74.35% 67.05%
Export Operations 25.65% 32.95%
Gross Margins 15.57% 13.86%
Domestic Operations 15.95% 15.19%
Export Operations 14.48% 10.92%
(The export gross margins are 9.00% - 10.00% on a steady state basis. However, these keep on varying in line with the MTM position on the Balance Sheet date)
Expenses (% of total Revenue)
Employee Cost 0.88% 0.82%
Advertisements 0.82% 0.94%
Rentals 0.53% 0.47%
Other Costs 1.11% 0.13%
EBITDA Margins 12.23% 11.50%
Finance Costs 3.17% 2.57%
PAT Margins 7.24% 7.60%
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Balance Sheet
Particulars (INR Mn) As on 31 March 2013 As on 31 March 2012
1 Shareholders’ funds 13,888 5,558
(a) Share capital 1,791 1,340
(b) Reserves and surplus 12,097 4,218
2. Non current liabilities 24 28
3. Current liabilities 20,439 15,392
(a) Short term borrowings 2,309 5,751
(b) Trade payables 16,250 8,525
(c ) Other current liabilities 1,322 868
(d) Short term provisions 557 248
Total – Equity and Liabilities 34,352 20,978
B. Assets
1. Non-current assets 1,637 1,292
(a) Fixed assets 638 576
(b) Long term loans and advances 800 632
(c) Other non current assets (incl. deferred tax assets and non-current investments) 198 85
2 Current assets 32,715 19,686
(a) Current investments 4,429 0
(b) Inventories 17,137 11,724
(c) Trade receivables 6,748 6,866
(d) Cash and bank balances 2,649 748
(e) Short term loans and advances 1,700 325
(f) Other current assets 53 22
Total – Assets 34,352 20,978
A. Equity and Liabilities
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Management Discussion & Analysis
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Gold price, after remaining high for a long time, corrected in recent months. This correction has led to improvement
in gold jewellery volumes at the industry level
We hedge our Gold and hence we have been not been affected by any inventory losses due to gold fluctuation
Jewellery Retail has been a focus area for us. Our revenue from operations for FY13 have been Rs. 40,184 mn. Over
74% of this was contributed by our Domestic Retail business
We strongly follow our philosophy of setting up strategically located large format showrooms targeting wedding
jewellery customers
Our focussed expansion is continuing at a strong pace, have opened 6 showrooms after IPO taking count to 36
Diamond Jewellery share has consistently improved from 26.70% in FY 2012 to 30.80% in FY 2013
We are targeting share from Diamond jewellery to reach 35% by FY 15
Our Gross Margins have shown consistent improvement
Gross Margins at Company level have improved to 15.57% in FY13 from 13.86% in FY12
On the Domestic Retail front, our Gross Margins improved to 15.95% in FY13 from 15.19% in FY12
PAT margins have been steady at 7.23%
Crisil Ratings has reaffirmed our rating – Long term ratings as CRISIL A – STABLE and Short Term ratings as CRISIL A 1
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Thank You