Thangamayil Jewellery sees Rs 1,500-1,600 cr sales in FY14

South-based jeweller Thangamayil Jewellery is expecting sales of Rs 1,500-1,600 crore in the current financial year, with growth, especially seen strong around Navratri, Diwali and the local festival Aadi Peruku, a top company official told moneycontrol.com in an interaction.

Thangamayil's net profit in the April-June quarter declined 9 percent year-on-year to Rs 14 crore, despite a 19 percent rise in net sales at Rs 425 crore.

The profits were impacted by one-time loss in inventory due to a fall in gold price. Also, its expenses rose due to higher fuel and power costs, in the wake of the power cuts in Tamil Nadu, LGY Kumar, GM - Finance, said.

 Thangamayil's total expenses were up 22 percent to Rs 398 crore in the first quarter.

Below is the edited transcript of Kumar's interview with moneycontrol.com.

Q: Your Q1 net profit was lower despite a 19 percent rise in net sales. What were the key reasons for this?

A: Gold price reduction pushed the sales up. However, the company had to take a single time hit for the loss in Inventory due to the said price reduction and power and fuel cost was on higher side due to power cuts.

 

Q: The Reserve Bank of India has announced several steps over the last couple of months related to gold imports. What are your views on it? Is there any impact on your business?

A: We are yet to receive the blueprint for the action plan. Instant demand enabling export is not possible. We are yet to learn about treatment of wastage, value addition and concessions to be extended to the industry to compete in the international market.

 

Q: Now that the wedding season is over, how do you see the demand scenario panning out in Q2 and Q3 at least?

A: On August 3rd is “Aadi Peruku” a regional festival. We feel we will perform better than “Akshaya Trithiya." Offers are already on the anvil, which will continue till the end of August or so. Q3 is expected to perform with Navaratri and Diwali sales.

 

Q: What is your outlook as far as net sales and profits are concerned for FY14?

A: We have planned to sell around 6 tonne gold apart from silver, diamond and other precious articles. We have targeted sales of Rs 1,500-1,600 crore, with 5 percent profit before tax growth.
 
Q: What are your retail expansion plans for the year?

A: For this year we have already launched 5 branches in Tier 2 and Tier 3 cities. We plan to launch 5 more branches in the second half of 2013-14 depending on the Government policies and regulations.
 
Q: Gold prices fell sharply earlier this year. What is your outlook for the rest of the year?

A: It has witnessed the bottom of the curve and now will gradually climb up with higher volatility due to the circulars from time to time on a sudden note.

 

Q: Do you think a fall in gold prices will dampen investment demand for the yellow metal?

A: No, rather it will augment the sales. Buying power of the individual has gone up and one keeps portion of savings as gold reserve.