Gitanjali Gems' June quarter revenues rose 30 percent, and net profit almost trebled. However, operating margins were under pressure.
In an interview to CNBC-TV18, Abhishek Gupta, Group Advisor of Gitanjali Gems spoke about the results and discussed the company's performance.Below is the verbatim transcript of Abhishek Gupta's interview to Reema Tendulkar & Prashant Nair.
Reema: Tell us about your operational performance where despite 30 percent growth in your revenues your EBITDA was only up 8-9 percent resulting in margins coming down to 3.8 percent at the EBITDA level. What was the reason for that and also give us your outlook on margins going ahead.
A: As far as EBITDA is concerned, we were down due to difference between purchase and sale price. We have a working capital cycle which is close to eight-nine months and that gap of falling prices or falling diamond prices gap is impacting gross margin and trickling down to the EBITDA level.However, going forward the strategy remains to achieve the growth, improve the EBITDA margin. We are also controlling the cost and all the new policies and new expansions we are doing, is going to have a positive impact on gross as well as EBITDA.Prashant: A sector specific question, we have seen gold import come off quite meaningfully over the last four-five months, actually its almost crashed. Could you talk to us as to what is happening there? Is that indicative of demand here locally or is there something else at play?
A: The demand is categorised into three or four parts - 1) the Indian jewellery consumption 2) gold as an investment product and 3) gold jewellery as export or gold studded jewellery as export. So the second point of gold as an investment is not getting too much of attraction from the consumers and that was the significant part of total imports and hence you see lower volume in the last four-five months.
Reema: I believe your board approved fund raising of Rs 110 crore. Is that true?
A: It's a debt component, so it is a regular process.
Reema: Not the equity?
A: No.
Reema: We are entering into the festive season now, how are sales expected to be, any guidance on the topline.
A: I will not give guidance but we have introduced a lot of products in the country, we have distribution of Lumineux Uno which is another interesting product for jewellery. We have innovative designs, modern selling as a concept and branding has been our forte for the last 25 years and we are going positive with the sector coming in. However, jewellery as an investment product is going down, so we are introducing a lot of fashion categories around it. The characteristic of jewellery itself is revolving around the branding, the fashion, the packaging, the after sales services, so we are focusing a lot on these things.
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