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Editor’s Synopsis
- Net Sales for Q3 FY12 rose by 33% to Rs. 3,526.3 Cr. Vs Rs. 2,654.2 Crore for Q3FY11
- EPS for Q3 FY12 stood at Rs. 14.9 per share Vs Rs. 11.9 per share during the corresponding period a year ago
- PAT for Q3 FY12 stood at Rs. 128.9 Crore Vs Rs. 100.6 Crore for Q3FY11 (28% up Y-O-Y)
- 9M FY 12 Net Sales rose to Rs. 9,289.2 Cr Vs Rs. 7,029.8 Crore of 9M FY 11 (32% up Y-o-Y)
- PAT for the 9M FY12 stood at Rs. 384.3 Crore Vs Rs. 259.3 Crore of 9M FY11 (48% up Y-o-Y)
- Jewellery Sales grew by 35% to Rs. 2,029.4 Cr in Q3 and 37% to Rs. 5,011.6 Cr for the 9M FY12
- Turnaround in US business - Net profit up by 15%
- Successful conversion and redemption of FCCBs in November 2011
- Incremental Sales from key Indian Brands converting into chain stores and penetrating through Tier 3 and Tier 4 towns via the Franchisee route.
- Restructured the business into three focused verticals :
- Diamond and jewellery manufacturing business
- India Branded jewellery and retailing business
- International Branded jewellery and Retailing Business
Gitanjali Gems Limited, one of the leading players in the Indian jewellery space, today reported its financial results for the third quarter and nine months period ended December 31, 2011.
INR Cr |
|
Consolidated |
|
Quarter Ended Dec 11 |
Quarter Ended Dec 10 |
% Change |
9M Ended Dec 11 |
9M Ended Dec 10 |
% Change |
| Turnover |
3,526.3 |
2,654.2 |
33% |
9,289.2 |
7029.8 |
32% |
| EBIT |
193.2 |
167.2 |
16% |
604.9 |
446.2 |
36% |
| PBT |
127.5 |
111 |
15% |
411.8 |
291.5 |
41% |
| Net Profit |
128.9 |
100.6 |
28% |
384.3 |
259.3 |
48% |
| Basic EPS - Rs. (Not Annualized) |
14.9 |
11.9 |
25% |
44.3 |
30.8 |
44% |
|
|
|
|
|
|
|
For the nine month period (9M FY12), ended December 31, 2011, the company’s net profit increased to Rs. 384.3 Crore, as against Rs. 259.3 Crore of the corresponding period a year ago. The company clocked Net Sales of Rs. 9,289.2 Crore for the 9MFY12 Vs Rs. 7,029.8 Crore in the same period of last year.
Net Profit for the three months ended December 31, 2011 stood at Rs. 128.9 Crore compared to Rs. 100.6 Crore in the same period last year. Net Sales for Q3FY12 stood at Rs. 3,526.3 Crore, up 33% over Rs. 2,654.2 Crore in the corresponding period last year.
Despite incremental sales from gold jewellery, Gitanjali could sustain the EBIT Margin at 5.5% for Q3FY12. The Net Profit Margin stood at 4% for Q3 FY12.
Earnings per Share for the third quarter FY12 stood at Rs. 14.9 as compared to Rs. 11.9 per share for the corresponding period of the last fiscal
Commenting on the quarterly results, Mr. Mehul Choksi, Chairman and Managing Director, Gitanjali Gems Limited, said
“The group has performed strongly across its various segments. Gitanjali’s high growth in sales can be mainly attributed to rapid expansion in Tier 3 and Tier 4 towns via the franchising route. Profits have grown faster than sales on account of economies of scale achieved in operations and a strategic shift towards jewellery retailing. The quarter has been significant for our US business primarily due to profitability stemming from supply chain synergies.
The Indian retail business took a giant stride forward this year with our major product brands converting to national retail chains through a combination of franchisee and own stores. Our retail operations will continue to propel our growth in India.”
Consolidated Financial Highlights
|
|
|
|
|
|
|
INR Cr |
|
Q3 |
9M |
|
DEC-11
|
DEC-10
|
% Change
|
DEC-11
|
DEC-10
|
% Change
|
| Sales
|
3,526.3
|
2,654.2
|
33%
|
9,289.2
|
7029.8
|
32%
|
| EBIT
|
193.2
|
167.2
|
16%
|
604.9
|
446.2
|
36%
|
| EBIT Margin (%)
|
5.5%
|
6.3%
|
|
6.5%
|
6.3%
|
|
| Net Profit
|
128.9
|
100.6
|
28%
|
384.3
|
259.3
|
48%
|
| Net profit Margin (%)
|
3.6%
|
3.8%
|
|
4.1%
|
3.7%
|
|
Segment Wise EBIT breakup:
INR Cr |
| Particulars
|
Q3FY12
|
Q3FY11
|
| Diamond
|
71.2
|
50.9
|
| Jewellery
|
142.4
|
114.4
|
| Others
|
(20.40)
|
0.9
|
Business Highlights
1. India Branded & Retail Business
1.1.Indian Branded Jewellery
Gitanjali pioneered the Indian branded jewellery business. It has since, converted its bouquet of product brands to retail chains. Gitanjali owns 8 out of the top 10 brands in India today. These brands have become national retail chains spearheading the Indian Branded jewellery concept. The business continues to offer trust and aspiration to its consumers.
1.2. India Jewellery Retailing
The transformation of Indian Retailing has also percolated through to the jewellery business. This has created opportunities for modern retail chains. Opportunities have also arisen on account of changing consumer preferences and improved lifestyles. In order to take advantage of these opportunities, Gitanjali expanded by opening various retail outlets this quarter. The quarter observed maximum retail sales during Diwali in the month of October followed by the wedding season over November and December. Growth primarily came from the expansion drive by opening new stores via franchise, own store and the shop-in-shop routes. During the nine month period ending December 31, 2011, Gitanjali opened 42 franchised stores, 24 own retail stores, 150 shop- in-shops through departmental stores and other retailers. These additional 200 points of sale contributed to increasing the retail footprint from 1.3 mn sq. ft to 1.7 mn sq. ft.
1.3. Expansion & Innovation in India
Gitanjali launched the concept of “Jewel Souk” with its first store offering the leading jewellery brands through a 7000 sq.ft store at the International Airport in Mumbai. Besides, the company also launched multi-format outlets under the brand “Shuddhi”, “Gitanjali Jewels”.
Gitanjali also launched the world’s first Jewellery ATM to offer convenience to and to provide an “automated jewellery buying” option to Indian consumers.
Gitanjali also released digital marketing campaigns targeting the youth via social networking sites and through the use of latest tools such as QR Codes and E-Commerce.
During the nine month period, Gitanjali launched many designs and collections to cater to diverse consumer needs.
2. Other International Retail & Distribution
2.1. US Retail
The US business of the group comprising of 111 stores, has turned around. November and December being the peak season in United States, the US business observed a growth of 8% in the top line and 14-15% in the bottom line. With supply chain synergies, the group achieved healthy profitability and returns from the US business.
2.2. Italian Brands
Gitanjali opened its first flagship store - Stefan Hafner in China. The bouquet of Italian brands is now available in other emerging markets like Russia, Saudi Arabia, the Far East and India.
2.3. Other International Retail & Distribution
In December 2011, the group acquired “Crown Aim”, a Chinese company engaged in jewellery manufacturing and distribution. This acquisition strengthened the company’s international manufacturing base and served as a gateway to the Chinese market. Crown Aim also has a subsidiary in the UK - “Alfred Terry”, which distributes jewellery across 2,000 points in the UK and in the rest of Europe.
3. Business Restructuring
Gitanjali completed its business restructuring with the objective of having three focused verticals. Its Indian vertical under the operating cum holding company Gitanjali Brands Limited (GBL)., on a consolidated basis, holds all the top Indian brands for distribution and retailing of jewellery in India. The group is also in the process of consolidating all its international operations under the holding company “Aston Luxury” in Hong Kong.
4. Successful Redemption and Conversion of FCCBs
Gitanjali Gems had issued 1% Foreign Currency Convertible Bonds (FCCB) worth USD 110 million, which matured on 25th November, 2011. These were successfully converted and redeemed. Gitanjali was one of the few Indian companies with share price trading at significantly higher than the conversion price. Many bondholders chose to convert during this period, resulting in 63% of the total issue being converted into equity shares & the balance 37% bonds being redeemed at a premium.
5. One-Time Exchange Loss
Due to a high dollar rate in November, a one-time exchange loss was incurred for the FCCB redemption. EBIT could have been even better had the exchange rates been favorable.
About Gitanjali Gems Ltd.
One of the world’s largest integrated players in the jewellery space, with operations in over 12 countries, Gitanjali group, is a corporate with interests in diamond jewellery, retail and lifestyle businesses. In core diamond jewellery segment, the group has strategically integrated across the value chain. It has a strong presence at every level of the business, right from sourcing diamonds to retailing its products through a vast network of over 4000 points of sale.
The Group also has a successful track record in internationally recognised branding and marketing campaigns as well as retail outlets that cater to the end consumer.
The Group has 3 worldclass diamond polishing facilities in India and 6 state of the art jewellery manufacturing facilities in India.
The Group is the pioneer of branded jewellery in India and has several well established brands in it's arsenal to tap the continuously growing branded jewellery market in India and the rest of the world.
The list includes well-know and well established brands such as ‘Nakshatra’, ‘Gili’, ‘Asmi’, ‘Sangini’, ‘D’Damas’.
The corporate has also diversified into the infrastructure space and is developing Special Economic Zones (SEZs) in India, primarily for the Gems and Jewellery industry.
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