Export Revenues will grow 15% YoY: Goldiam Int'l

Export Revenue will grow 15% YoY in addition to revenues coming in from retail. Export Net margin will be at 12% and retail at 15% (from FY 08), Rashesh Bhansali, managing director, Goldiam International told Moneycontrol.com in an exclusive interview.

The company has put prudent credit checks in place – there is a 12% cap on revenues from a single client – that has resulted in speedier recovery for Goldiam in a business where exports are sent on credit terms to customers across the globe.

“The cap of 12% enables speedier recovery of receivables and puts a check on credit per customer,” Bhansali said with emphasis on ‘speedier recovery’.

The company has big-ticket expansion plans that will see Goldiam enter newer markets like Russia, Indonesia, South Korea and Taiwan.” The company has launched OLA, which will be retailed from June 2006. Within three years, we expect 500 outlets and a sale of Rs  200 crores.”

Interestingly, and this will hearten the company’s shareholders, the company has a cash reserve of Rs 85 crore in its coffers, a part of which is invested in the financial markets generating additional revenues for its shareholders.

“The company enjoys a safe 15-18% return on investments as most of the money is invested in mutual funds and debt products,” Bhansali told Moneycontrol. The company will soon spent the rest of this cash to fund its retail expansion and to make “strategic investments in our field of operation,” informed he.

Excerpts from an exclusive interview with Moneycontrol.com 

Q: Why this 12% revenue restriction on a single client? Doesn’t this impede Goldiam’s growth prospects?

A: The gem and jewellery industry’s exports are sent on credit terms to customers all across the globe. Goldiam does prudent credit checks and looking at past history and market report, credit limits are assigned on every customer. Since Goldiam’s exports are also made on credit, such credit checks help the company to monitor unforeseen credit risk. The cap of 12% enables speedier recovery of receivables and puts a check on credit per customer.

Goldiam does not have any bad debts as a result of such caps. Goldiam will focus to grow in revenue by adding newer customers / new markets and also looks to increase business with large retailers like Wal-Mart, JC Penny etc.

Q: How soon do you plan to overtake your nearest competitors in terms of revenues? (The other two Intergold and Goldstar Bru have revenues of Rs 400 crore)?

A: Intergold and Goldstar both are DTC sightholders whose topline includes both cut and polished diamond exports and finished jewellery. Goldiam is solely a design house that manufactures and exports finished jewellery and does not export loose diamonds.  Hence, you see a difference in turnover between Goldiam and Intergold/Goldstar.

For the last 10 years, Goldiam has been in the list of top 5 jewellery exporters from India.  In the jewellery export market, Goldiam will increase revenues at a rate of 15% y-o-y. Additional growth will come from the retail arm – OLA – that will be launched in retail stores in June 2006.

In 3 years, Goldiam expects OLA to be in 500 point-of-sales and looks to generate additional retail revenue of approximately Rs 200 crores.

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