Continue to maintain revenue growth target at 30%: PC Jeweller

PC Jeweller has revised its revenue growth only because of the uptick which they are seeing in same-store-sales-growth (SSSG) rates.

“We are pretty confident of maintaining our growth both in the topline as well as bottomline,” he further mentioned.

SSSG was 17 percent in H1, he said.

Below is the verbatim transcript of the interview.

Anuj: I am sure you would have read the report of what the minister was talking about. If a package comes, would it help your company as well?

A: We have to see the nuances of the package, what exactly are they proposing for the sector. So we are keeping our fingers crossed and hoping for the best.

Latha: What exactly are you expecting? What we heard was that the tax structure for imports will change when you are importing for exports. So exactly are you expecting procedural changes?

A: I think it has to be too premature to guess, but if we had to guess, it would be more simplicity of the procedural aspect which are still quite complicated if I can put it and specially for smaller units, there are a lot of complexity. So if they can be simplified, they can be very good and you are all aware that industry has also been asking for reduction of import duty and we are still keeping our fingers crossed. That remains one of the long outstanding demands.

Latha: Do you have too much of GST returns that are due to you? Is money stuck with the government?

A: No, frankly no. not for us because we have been managing our GST well. All GST require related comparisons well. So for us, GST has not been of an issue.

Surabhi: A word on the business as well. You told us earlier this year that you were expecting 30 percent revenue growth for FY18, but since then tectonic shifts happened because of demonetisation, GST, etc. We keep hearing about a lot of market share gain for organised jewellers like yourselves. How much of that has happened if you could quantify this market share shift for PC Jeweller and would you look at upping your full year target, that 30 percent revenue growth target?

A: We continue to maintain that 30 percent revenue growth target. And actually the market shift is represented in our same store sales growth. So the growth from the new store was always there. That is more or less constant, but when we saw the increase in market share or the shift from unorganised to organised, that is also reflected in our SSG. So the very fact that we have revised our revenue growth only because of the uptick which we are watching, SSG rates.

Surabhi: How are you likely to look at SSG in the second half? How much SSG do you think you can do?

A: Given by the past trend, we had the same store growth of mainly 17 percent which was an improvement over the previous quarter. And in any case, if you look from quarter to quarter, this quarter was a demonetisation quarter of the previous year, so the base was low in any case. So we are hoping a much better growth rate in this quarter at least.

Latha: How are margins panning out now for the second half?

A: It is too early to talk anything about the margins.

Latha: But you are two months into the second half, so at least for this quarter, were the margins better than last quarter?

A: I would say so, yes.

Latha: They are better?

A: Yes.

Latha: You did 10.6 in the second quarter. Since you are already 60 days into the third quarter, what should we expect?

A: You are very right, but it would be frankly too premature to speak on the percentage of margins. But we are pretty confident of maintaining our growth both on the topline as well as the bottomline.

Latha: What about the export share and how has that sector been doing?

A: We are, as a company, very much an old player in exports. So it is a steady state business and the growth obviously is not as much as compared as to domestic. But steady state business, we have got established buyers.

Latha: What percentage comes from exports and what is that growing at? Clearly it is not growing at 30 percent as you say, but what is it growing at?

A: Our exports should grow at about 10 percent vis-à-vis the 30 percent for domestic.

Surabhi: I take your point, we cannot do a year-on-year comparison because November-December were outlier months. So give us a sense first half same store sales growth and then second half. How will the second half look compared to the first half and maybe a number for the full year, if you could give us a rough band?

A: In the first half, sales growth was nearly 17 percent which was a pretty substantial jump over whatever the previous year we had seen. So, personally I would be very happy that we are able to retain this SSG even in the second half because with the mature stores and with practically flattish gold prices and we are not having any benefit of any price increase, you must appreciate, so this is a pure volume increase. So, even if we are able to maintain the same growth which we had in the first half, I personally feel that it will be a very good achievement. So anything if we are able to even maintain a growth, we would be pretty satisfied with the same because on a higher base, maintaining the same thing is much more difficult.

Latha: Are you expecting that the gold that you import for export will attract a lower tax? Is that one of the demands?

A: Currently, I am not very sure why this question should arise but because the gold which we import for export purposes, we do not pay any taxes.