Shrenuj & Co eyes 10-15% revenue growth YoY

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Shrenuj & Co eyes 10-15% revenue growth YoY

In an interview with CNBC-TV18, Vishal Doshi, Executive Director of Shrenuj & Company, spoke about his outlook for the company.

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In an interview with CNBC-TV18, Vishal Doshi, Executive Director of Shrenuj & Company , spoke about his outlook for the company.

Here is a verbatim transcript of an exclusive interview with Vishal Doshi on CNBC-TV18. Also watch the accompanying video.

Q: You recently bagged about 16 licenses from government of Botswana for procuring rough diamonds. What kind of appreciation are you looking at? How will this progress the procurement and the kind of cost savings that may incur in future?

A: The government of Botswana has granted 16 licenses to 16 manufacturing companies. So we have secured one of those licenses. This means it's a manufacturing license. We have set up a factory in Botswana which is the largest producer of rough diamonds in the world. So that factory will be supplied directly by a joint venture between De Beers and the government of Botswana. This obviously would significantly improve our gross margins because it's buying closer from the source.

Q: What is the cost incurred to set up that manufacturing unit? What do you hope to clock in terms of the year end turnover?

A: We are looking at a growth of overall group turnover. A consolidated turnover growth between 10-15% over last year, we have totally spent about USD 4-4.5 million on the factory already. We will look at significantly improving or tech transfer from our other manufacturing units into Botswana. This would incur a little more capex there.

Q: What kind of a margin are you looking at? It's currently at about 3%. Where do you see your margins from here?

A: Our business model is divided into three parts--one is diamond cutting and polishing which is the first part of the value chain, the second is jewellery manufacturing and third is retailing the jewellery which we manufacture and is the last part of the value chain. Hence, we see EBITA margins grow significantly because currently loose diamonds represent about 65% of our overall business and the remaining two represent 35%, we expect this ratio to change over the coming years to 40% loose diamonds and 60% jewellery and retail.

As you go up the value chain, you see margin improvement at the gross level. So it's purely because of this shift that you will see gross margins going up. This doesn't mean reduction in the diamond business but it's due to increase in captive consumption of the diamonds we produce.

Q: You had said that the business is looking good in terms of domestic appreciation that you are seeing as far as demand is concerned. Where do you see your revenues headed from here and can you just subscribe a number to it in the next couple of quarters?

A: YoY we are looking at 10-15% increase in consolidated revenues especially in India. South East Asia would be the main growth drivers for us.