Renaissance Jewellery eyes FY10 revenue at Rs 25-27cr

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Renaissance Jewellery eyes FY10 revenue at Rs 25-27cr

In an interview with CNBC-TV18, Sumit Shah, Managing Director of Renaissance Jewellery, spoke about his outlook for the company.

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Excerpts from Bazaar on CNBC-TV18 Watch the full show » RELATED NEWS Buy Renaissance Jewellery; tgt of Rs 115: Sunidhi Sec Designing the future: Our very own Leonardo da Mistry ALSO READ See latest News about Renaissance Jewellery See previous management interviews See what other Experts & Brokerages are saying about Renaissance Jewellery Renaissance Jew BSE | NSE 28/05/12 Are Mutual Funds betting on Renaissance Jew?

In an interview with CNBC-TV18, Sumit Shah, Managing Director of Renaissance Jewellery , spoke about his outlook for the company.

Below is a verbatim transcript of an exclusive interview with Sumit Shah on CNBC-TV18. Also watch the accompanying video.

Q: You have done Rs 20 crore profit after tax (PAT) in first nine months of fiscal year 2010, which was your entire last year's profits. What do you think you will end this fiscal year 2010 with then?

A: We should end up FY10 between Rs 25 crore and Rs 27 crore PAT. That is currently our estimates because the first nine months figures are also standalone numbers. So we believe we should be somewhere between Rs 25 crore and Rs 27 crore PAT for the year.

Q: What will that translate into revenues that you do by the time you finish FY10?

A: For the current year we are probably going to end up between Rs 675 crore and Rs 700 crore in revenue. Given that the business is shifted, due to the price of gold more towards silver, we are seeing lower average realization per unit. However, we are still able to maintain profitability because inherently there is a higher scope of margin expansion with the silver jewellery business.

Q: Where is this primarily being driven from? Is it courtesy your export sales that you are seeing almost to 300 crore performance on your topline in the last quarter?

A: The sales for the last quarter are not going to be Rs 300 crore because the first nine months are standalone numbers and the year end figures will be consolidated. So I don't see the last quarter being Rs 300 crore. The last quarter will be lower than that. However, on a consolidated basis, we see the sales numbers between Rs 675 crore and Rs 700 crore. Our business is primarily US and it is 100% exports. We don't have any domestic business here in India. All of our businesses are either in the US, Europe or East Asian markets.

Q: Has the US business been sluggish over the last one year? Can you explain this shift from gold to silver and how fundamentally it is affecting your business stream as a company?

A: The US consumer is definitely coming back. We are seeing a lot more optimism when we talk to our retail customers in terms of the sales output that they are seeing. Going into this year, we are seeing a lot more positives coming out of the US economy. Fundamentally overall, there are certain price points at which we sell jewellery whether it is USD 99, USD 199, primarily most of our sales happen below USD 500 retail.

Given where gold has shifted over the last couple of years, a lot of the opening price points especially in diamond fashion jewellery are moving more towards silver because clearly it is a much more affordable metal. Hence, we are still selling diamond jewellery, but the consumer is choosing silver with diamonds much more over gold because at certain price points, gold is not affordable any more.