Harit Zaveri, Joint MD, RBZ Jewellers, says “as a company, we always imagine that in whichever segment we are in, let us first, you know, at least we have a headroom of 3X. You know, let us say the retail store is right now doing 135 to 140 crore, this year it might be doing, I would not want to give you the numbers but the percentage of retail versus wholesale will remain the same. In that case, if wholesale demand is moving to, let us say 2X in terms of volume, retail should actually grow at the same pace.”
RBZ Jeweller stock is locked on the upper circuit today as well. The way it has been since it got listed about a month and a half back. I am assuming that the people are understanding how much value you left on the table since your IPO. And that is why the kind of movement which you are seeing. First it was a 5% circuit, now 20% circuit. Talk to us in volume terms. How much volume are you aiming at for FY25?
Harit Zaveri: In volume terms, the company last year did around 1,059 kgs and this year we are on our set targets to do about 1,200 kgs. And in the subsequent two years, because the company has raised Rs 100 crore of equity and we are going to raise again, the debt equity ratio will be maintained as 1 is to 1. So again, there will be a raise of debt of Rs 100 crore plus.
We are aiming to double our volumes in the subsequent two years. The company should touch at around 222.4 tonnes in the subsequent two years. Here the case is quite different. We are an organized manufacturer and an organized retailer has always been wanting to procure goods from organized manufacturers. Organized retailers are having the resources and they are expanding very strongly. Now, given the task that in a year they are opening 50 showrooms, 100 showrooms, demand is bound to come to us. Wedding demand is robust. India has a great population.
According to the carriage report, there are 11 to 13 million weddings happening in a year. So as a company we are concerned, I do not think so there is a clear demand drive. Organized retailers are 100% aggressive and because there is a delink, there are 40% organized retailers and only 15% of organized manufacturers, our company is growing by volumes. We are in a fundamentally strong position compared to any other. The industry grows at 2.5% volumes, we are growing at around 10 to 15% volumes. We are supposed to grow by much more volumes in the subsequent two years because of the funds coming in.
I was just looking at the list of your clients. They are marquee names at the top of the line. You are doing more volumes with Malabar, Joyalukkas, Senco and Titans of the World. The other part is that more and more unorganized jewelers also want to do quality work with you. These are the companies deploying technology and precision manufacturing. Are you seeing that shift happen and are you being approached by new clients beyond these marquee names?
Harit Zaveri: Correct, we have already got a good pool of independent retailers across India. Those are shifting from one store to a multi chain of stores. So two things are happening. One, an organized retailer who is already expanding there. Another one is the segment which is also transforming into organized. So with both the shifts happening simultaneously, we have got good names on the basket and the demand is there to fulfill. Generally, in the jewellery industry, the season starts from the first or the last week of July and then the whole rolling happens in an aggressive way. But there are names already there and the demand is there. With the funds coming in, we will be able to fulfill them much better.
On the B2C model that you have, right now you only have one showroom in Ahmedabad. Do you have plans to expand your B2C kind of profile as well and open more showrooms or would you like to stick to the B2B model?
Harit Zaveri: Right now, as a company, we always imagine that in whichever segment we are in, let us first, you know, at least we have a headroom of 3X. You know, let us say the retail store is right now doing 135 to 140 crore, this year it might be doing, I would not want to give you the numbers but the percentage of retail versus wholesale will remain the same.
In that case, if wholesale demand is moving to, let us say 2X in terms of volume, retail should actually grow at the same pace. Right now, we are not looking to clearly answer. Let us first optimize the retail store that we have. Our outlook is 100% more focused into being an organized manufacturer and serving those retailers which are having their resources and who are compliant and planning for heavy expansion, that will drive the demand on our side. And it is a low-hanging fruit, so let us catch them.
You said margins are stable, so between 13 to 15% going forward?
Harit Zaveri: You must understand the business model in terms of margins. We are into servicing and retail. And then we are into the wholesale side. So servicing will have much more margins if we take it from the top line segment.
On the volume side, if you calculate the margins, it will be lower side and the retail and then carried forward by the wholesale. So in that case, I think one has to look to my business model more accurately to actually judge my margins. But yes, on the ROCE part and the ROE part, we will remain stable.
