Gitanjali Gems sees 50:50 mix for jewellery, diamond biz

G K Nair , CFO, Gitanjali Gems , said the jewellery business has grown by 160%. Jewellery currently contributes 35% to topline and 50% to bottomline, he said, adding that the company is looking at a 50:50 mix for jewellery and diamond business.

A 200 acre SEZ land in Hyderabad has been acquired, the CFO said.

Excerpts from CNBC-TV18's exclusive interview with G K Nair:

Q: Walk us through this quarter in terms of the revenue splits and EBITDA margins?

A: Sales have gone up from Rs 672.37 crore to Rs 959.68 crore, which is a 43% jump. Diamond constitutes Rs 626 crore and jewelry constitutes Rs 333 crore. While the growth in the diamond segment is 15%, the jewelry segment growth is 160%. Our topline is getting skewed more and more towards jewellery.

In the first quarter, the composition of diamond and jewellery has been 65:35, as against 80:20 in the quarter of last year. There is a jump in sales of 43% and a tilt in jewelry composition to 35% from last year's 20%.

EBIT margins are quite good. It is at 5.05% in diamond and 6.13% in jewellery. EBIT has gone up from 34.83% to 54.26%, which is a 56% rise. PAT has gone up from 20.91% to 31.05%, which is a 72% rise.

Q: When do we see the uptick in operating margins corresponding with the contribution going up with the jewellery division also?

A: The contribution in the jewellery segment will go up. The first quarter is only 20% of the total year's business and it is a low season. The jewellery margins will see an upward movement, as the year progresses, towards the third and fourth quarter.

Q: With the jewellery segment going up, do you expect a significant uptick in your overall blended operating margins for the year?

A: Yes, the topline is skewed 35% to jewellery. As the jewelry margins are much higher than the diamond margins, the overall margins are an increased figure as compared to last year.

Q: You got the approval for a second SEZ at Panwale. Give us a quick update on the Hyderabad SEZ as well as on your second SEZ.

A: As far as Hyderabad is concerned, the notification in the market had come about nine months back. Work is on in full swing for the last seven to eight months. In the processing sector, nearly three to four factories are nearing completion. The entire infrastructure required is almost complete and we see some of the factories up and running in the next three to four months time.

As far as the second SEZ at Panwale is concerned, we are yet to receive any notification. All the approvals are in place and the necessary paper work for getting the notification is happening. This will be taken to the next stage when the notification comes through.