Shreyas Doshi, chairman, Shrenuj and Co says, in an interview to CNBC-TV18, the RBI's norms to curb gold imports will have no impact as 85 percent of the company’s imports constitute of diamond jewellery. The new plant at Patna will manufacture 3 lakh diamonds and employ 1,500 employees, he added.
Below is the edited transcript of the interview on CNBC-TV18
Q: Can you tell us about the new facility you are setting up as part of your expansion plans and how much will it contribute to revenues?
A: The new facility in Bihar will be inaugurated on May 16. This facility will make diamonds of smaller sizes. We chose to situate the facility in Patna due to the advantages offered by economies of scale and we are sure it will turn out to be a very viable proposition in the long-term. The facility will manufacture about 3 lakh diamonds when it is completely operational and we plan to employ 1,500 people when the whole project is established.
Q: What will be the impact of this facility on your revenues which are increasing at Rs 6,000 crore a year? By how much will sales increase?
A: By 2015-16, we estimate revenue to be more than Rs 5000 crore.
Q: Diamond jewellery comprises close to 80 percent of your business. Has the recent fall in gold prices impacted the demand for diamond jewellery?
A: Any fall in gold prices is favourable for diamond jewellery because the entire price advantage is passed on to the consumers.
Q: How much of your products are exported and if you have to pay completely for gold before you get it from a bank, will that mean more expenses or more expensive working capital arrangements?
A: Not at all. Diamond-studded jewellery comprises close to 85 percent of our total jewellery exports. So, the curbs on gold will not affect us.
Q: Is the jewellery studded in gold? Are you therefore a big consumer of gold as well?
A: Yes. They are studded in gold and a bit of platinum.
Q: Can you tell us how your margins will perform after the creation of additional capacity? Will margins continue to remain at 5 percent?
A: It will definitely increase in the coming years. Every quarter, the company has posted stable growth and continues to perform well for this reason.