Shrenuj & Company will project 15% rev rise this yr

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

Q: We hear that you bagged 16 licenses from the Government of Botswana for procuring rough diamonds. It’s difficult for investors to be able to judge such news. What benefit will this bring to your company and by when?

A: What we secured in Botswana is a manufacturing license and not a mining license. Most of the African countries are now moving towards beneficiation. As this process goes through, they issue licenses to cut where Botswana is being the largest producer of rough diamonds in the world. This is the largest source in the world. So we have secured one of the 16 licenses issued by the government of Botswana. This should help us gain access to raw material direct from the source and therefore add significantly to our gross margins.

Q: What is significant? What have you been doing in terms or margins will your profit be a substantial jump and by when?

A: Looking at the topline, we are projecting a 15% rise this year. We have crossed our last year’s margins in the first six months of the year and have still reported significant margins in third quarter about 68% increase QoQ. This should continue as the margins in the last quarter.

Q: Who has got the licenses? Is it Shrenuj & Company the listed Indian companies or is it some of your subsidiary sitting in Botswana? Who owns that subsidiary? Is it completely owned by Shrenuj? What is the legal structure?

A: This is a step down subsidiary which is 100% owned by the parent company. The investment is done through Shrenuj Mauritius which is 100% owned by the listed company in India which in turns 100% of Shrenuj Botswana.

Q: Could you expalin to us the appointment by DeBeers and whether it is correlated per mine or per license? How much royalty do you have to pay? How much percentage do you make? How much diamond do you get there? Give some specific numbers that you get out of this.

A: The Government issues the license for manufacturing which is issued by the Government of Botswana. This allows us to set up factory there employing local people. DBC Botswana is the market arm of Debeers which is based out of Botswana. It is responsible for supplying diamonds directly to the 16 factories that have been issued licenses. Therefore, being appointed as a site holder means that we can get direct access from DTC Botswana which is a joint venture of Government of Botswana and Debeers, which is the largest mining company in the world. Hence, getting access to direct supply in turn definitely helps us increase gross margins because its one step closer to the source.