Kalyan Jewellers India Ltd
NSE:KALYANKJIL
US |
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
|
US |
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Mastercard Inc
NYSE:MA
|
Technology
|
|
US |
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
|
US |
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
|
US |
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
|
US |
Visa Inc
NYSE:V
|
Technology
|
|
CN |
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
|
US |
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
|
US |
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
|
US |
Coca-Cola Co
NYSE:KO
|
Beverages
|
|
US |
Walmart Inc
NYSE:WMT
|
Retail
|
|
US |
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
330
775.45
|
Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
Johnson & Johnson
NYSE:JNJ
|
US | |
Berkshire Hathaway Inc
NYSE:BRK.A
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Mastercard Inc
NYSE:MA
|
US | |
UnitedHealth Group Inc
NYSE:UNH
|
US | |
Exxon Mobil Corp
NYSE:XOM
|
US | |
Pfizer Inc
NYSE:PFE
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
Nike Inc
NYSE:NKE
|
US | |
Visa Inc
NYSE:V
|
US | |
Alibaba Group Holding Ltd
NYSE:BABA
|
CN | |
3M Co
NYSE:MMM
|
US | |
JPMorgan Chase & Co
NYSE:JPM
|
US | |
Coca-Cola Co
NYSE:KO
|
US | |
Walmart Inc
NYSE:WMT
|
US | |
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Ladies and gentlemen, good day, and welcome to the Q1 FY '24 Earnings Conference Call of Kalyan Jewellers India Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Agarwal. Thank you, and over to you, sir.
Good evening, everyone, and thank you for joining us on the Kalyan Jewellers India Limited Q1 FY '41 Earnings Conference Call. Today on the call, we have with us Mr. Ramesh Kalyanaraman, Executive Director; Mr. Sanjay Raghuraman, CEO; Mr. Swami Nathan, our CFO; Mr. Sanjay Mehrottra, Head of Strategy and Corporate Affairs; and Mr. Abraham George, Head of Investor Relations and Treasury. I hope everyone got an opportunity to go through our financial results and presentation which just got uploaded on the company's website and stock exchanges. We will begin the call with opening remarks from management, following which we will have the forum open for a question-and-answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr. Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers India Limited, to give his opening remarks. Thank you, and over to you, sir.
Hi, all. Good evening. The quarter was a fantastic quarter, and we witnessed continued robust momentum in footfalls across all our markets in India and Middle East over the last several quarters now. While our consolidated revenue growth was approximately 31%. The consolidated PAT grew by around 33%, up from INR 108 crores to INR 144 crores. Revenue from India operations grew by approximately 34%. Strong operating momentum has been consistent and sustained throughout the entire quarter, including during Akshaya Tritiya, underpinning the resilience of our category within the overall consumption basket and demonstrating strong execution in the market by our operating team on Group. We continue to see encouraging trends around the share of new customers, which was in excess of 36%. Also, our share of revenue from the non-South market is now at 44%, up from 35% in the prior year. This year, so, far, we have opened 16 new showrooms, and we are on track to open 10 more showrooms during the current month. It's in line with our already announced plan to launch 52 showrooms across the onshore market. The month of August will also witness the launch of our 200th showroom within Jammu, a milestone in our showroom expansion journey. In the Middle East, we continue to see August momentum driven largely by the strong economic activity in the region. Revenue growth was around 22%. EID holidays driven sales, which was not part on the base year -- in the prior year also contributed to the same-store sales growth. We expect to launch the first franchise showroom in the region before the end of the current quarter. Talking about our online platform, Candere, in line with our already announced Omni channel expansion strategy. We plan to launch 20 plus physical showrooms of Candere during the next six months, starting from August. We have had -- we've made meaningful progress towards the divestment of the non-core assets, which has been previously announced. And we expect to conclude the transaction around the end of the current quarter. As I look at the current quarter, we continue to be encouraged by the underlying momentum in footfalls across all our major markets, even though there has been a slowdown in the wedding demand post 18th of July, primarily due to the ongoing Adhik Maas, which is once in a three-year phenomenon. We are bit about the upcoming new showroom launches and are gearing up with first corrections and campaigns for the upcoming festive and leading season across the country. I now hand over to Sanjay. He will walk -- he will take you through the highlights of the numbers. Thank you, all.
Thank you, Ramesh. Good afternoon, everybody. I'm really happy to be talking to you all after a very satisfying quarter. I will just highlight the major points now, so, we can have enough time for questions. We reported a consolidated revenue of INR 4,376 crores, a growth of over 31% year-on-year. Consolidated profit after tax was INR 144 crores versus INR 108 crores during the corresponding quarter of the previous year, a growth of 33%. Talking about India numbers. Revenue came in at INR 3,641 crores, a growth of 34% over the corresponding quarter in the previous year. And India profit after tax came in at INR 129 crores, a growth of 35%. Our Middle East revenue for the quarter was approximately INR 700 crores, growth in excess of 21%. And the Middle East business posted a profit of INR 17 crores, a growth also in excess of 21%. Our e-commerce initiative Candere posted a revenue of INR 34 crores, de-growth of 23%. Understandably so, as we are transitioning into the next phase of growth via an Omni channel strategy. The offline store rollout will accelerate from this month onwards. During this recent quarter, we opened 12 outlets all across the non-South markets. With this, I'm now done with the summary of the financials, and we now open the floor for questions. Thank you.
Thank you very much. We will now begin the question-and-answer session. Ladies and gentlemen, we will wait for a moment -- the first question comes from the line of Gaurav Jogani from Axis Capital. Please go ahead.
Thank you for the opportunity and congratulations on good set of results. Sir, my first question is with regards to the Candere in the Middle East, the franchise store openings. So, I missed the earlier part, how much physical stores are you expecting to open in Candere this particular year? And how much would there be on the franchisees in the Middle East?
On Candere, we expect to do about 25 stores by the time we end this financial year, most of which would be on the franchise model. On the Middle East, the first of the franchise outlets will open this quarter by the end of September. And then we will see how many more we can do this year. We have a few in the pipeline.
But apart from this one store in the Middle East on the franchise, are you also looking to open more stores only in the Middle East part?
Yes, I may share -- so, here, yes, Middle East as a market, the first franchise showroom, we will open before the end of this quarter. And we'll wait that to get settled down. We might open one more as a pilot, but we are not chopping any expansion there. We might go and open 2 or 3 own showrooms and then convert it later. So, we don't want to lose the opportunity. But once the first franchise settles down, only we will do the next reset or maybe one more, we will try, but not more than that because we want it to get settled down before we go and expand more on franchise in Middle East.
Thanks for that. Also, sir, if you can highlight in the press release, you've mentioned that the new stores or franchise would now be coming in the eastern part of India, as largely in Jharkhand, Bihar and in mid-regions. If you can give us some background of how your own stores are opening, how the brand is performing in these regions? And what gives the additional confidence to open these stores on the franchise basis in these region?
Yes, we are already there in those markets for the past couple of years or more than that. And we are -- we have a very strong brand and what we call revenue share in the market where we are in Bihar and Jharkhand or so, we are just expanding again, wherein we will be opening more showrooms in that region. So, Patna already has been one of our large footfalls or larger showrooms there, and we are well settled in those regions.
And sir, the demographic wise, I mean, is it more gold-oriented market? Or is it more studied oriented? And because we are also hearing many other competitors entering these markets and planning to take a larger pie there. so, how will be the competitive scenario there? How is the demographic -- any color on that..
No. In every market, depends upon the brand wherein certain brands are target only staple plain gold jewelry. For example, in Tamilnadu, Tamilnadu, there are large players who target only plain gold. But as a brand, Kalyan there, we target on statutory issue as well. The brand is placed that way. Same is the case of Bihar or in the Jharkhand, wherein our brand will surely be not only targeting plain gold. Of course, it's a good market for plain gold, but we will target plain gold as well as standard. This is a way you place your brand there.
Sure. And sir, just one last question from my end is on the debt part. So, if you can highlight what would be the debt -- the net debt at the end of Q1? And what would be the breakup between gold on lease and the actual or any other debt?
Yes, for gold old on lease almost the same, wherein -- we are in the 1,000 - 8,850 range. And that you are talking about the end of the financial year, right?
No, no, sorry, end of the Q1. Yes.
so, it's almost the same. So, gross debt are almost in the same region.
Okay. Okay. Sure sir, thank you.
Thank you. The next question comes from the line of Ashish Kanodia from Citi. Please go ahead.
Congratulations on a good set of numbers. So, the first question was on the growth trend, right? Because I mean, if I go through your PPT and maybe even your opening commentary, so, I think in the Middle East, there will be some impact in the current quarter because EID. And then again, there is some impact of Adhik Maas in India as well. So, just trying to get some sense if you look at the last 40 days, how has been the growth both for India and Middle East separately?
Yes. So, as I told you in the opening remarks where in July, the first 2 weeks, the revenue was very good, okay? It was almost as good as Q1. And post Adhik Mass, the wedding part of the revenue has been muted, especially in the non-South markets. And -- but weekends are very strong. Momentum was very strong. So, yes, there might be some -- it's not a lost sale. You know that, okay? It can move -- partially it can come in Q2 itself, partially it can go to Q3. It might have absorbed in Q1 itself, which we don't know. So, that is the person scenario, but we are extremely bullish on Q2 as well because momentum is really strong and weekends are strong. And first 2.5 weeks were extremely good and that's it about Q1. And you know the wedding season start from August 17th.
Sure, sure. That's helpful. And secondly, on the gross margin side, right? I mean, definitely a very sharp improvement in the studied mix. So, you have provided that the showroom gross margins are up Y-o-Y, and we understand that because of the franchise model, there will be a dilution in gross margin and EBITDA margin. So, I mean, if you can provide some broad numbers in terms of what the gross margin was for your own store as well as for the franchise store to during the current quarter that would be very helpful.
The owned stores are in the range of, say, about 16%. And franchise store you know that our margin is in the range of 8%, because we take our margin and only then sell to them.
Okay. Sure. And thirdly, on the Middle East side, there are some volatility in the margins. So, on a sustainable basis, on a normalized basis, what should be the gross margin and EBITDA margin for the Middle East business?
The Middle East, this time, you -- because we got that EID sale and that was a EID weekend wherein it was a long weekend, and that sale was absorbed in Q1. And that mostly comes with plain gold because a lot of footfalls happened during that time. So, it should be settling in the range of what 15% to 15.5% as usual. And EBITDA at the range of 8%.
Sure. That's helpful. And just last bit on the divestment on the non-core assets, you said units, so, maybe conclude by end of current quarter. So, do you expect the cash to come in by end of current quarter? Is that understanding correct?
Yes. Perfect.
Okay, done. Thank you so, much and all the best.
Thank you.
Thank you. The next question comes from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Hi, Ramesh and team, thanks for the opportunity and congratulations.
Thank you.
I think I'm reading a little deeper from the P&L numbers. so, our revenue has increased close to about 34% -- but when I look at other expenses, which has grown in pandemic at 33.6%, while employee expenses have gone a little higher, at 45% -- so, is there any one-off? Or how one should look at it? And is this the base? I mean, one part is that, yes, we have opened more number of franchise stores, and we are since actively controlling that. But is there any one-off? Or is there how we should look at it for the rest of quarters this number?
Yes. So, two things. One, of course, all of us know that there is a huge expansion plan wherein we will have to absorb employees much before the store gets opened, okay? So, employee costs will go up because of that because they stay in our books and it will be non-operational also. We are -- it will be in the training stage where they will have to go to the new showrooms, okay? We added approximately 600-plus employees only in Q1. That is one. Second is that there is, of course, one -- a small portion of INR 1.5 to INR 2 crores. That is an ESOP, which is not a one-off, but we just started the financial year. We have given this up ESOP to 400 employees, which started from Q1.
Just a little more clarity. You said that you have added 600 people in the month of June.
Quarter, quarter.
In the quarter -- and this sort what you have said is given to how many people?
so, there are 2 assets. One, it's up to only the senior management, which was issued Re-IPO, just after IPO, okay? And now we have issued up to more than 400 employees.
400 employees . So, till what level? I mean you've gone up to the store manager or --
Store manager level.
Okay. And this -- obviously, I would believe that will be recurring or this is going to be once in a year or -- I mean, as and when you will declare this. So, I just want you to understand, is there any policy we have around ESOP?
Yes. So, policy around the ESOP means -- what do you mean?
No. Is it going to be once in an annual phenomena in quarter one, you will deliver the ESOP or --
As of now, we plan to do this for this year and next year.
Okay.
And post that, we will evaluate whether it ESOP or some other product, which we should introduce. But for the next 2-years, it ESOP.
so, this INR 2 crore you showed at what price?
This issue will be at 140 and 150.
140 and 150.
Yes.
Okay. Second, when I look at the add spend, we said that from the time of IPO, we will be able to manage between 1.5% to 1.8%. But this quarter, it has gone up. So, could you give us some on ground, what is happening, why this has gone up? Or is it primarily because of something else?
No, add expenses will be always around 2% to 2.2%, which is, again, still continuing. And of course, store openings are coming and we opened 12 new showrooms in Q1, we will have to at least spend for micro marketing in that area for you to go and open the stores. You were talking about 1.8% to 2% over a period and for our existing showrooms now because the store expansion is much more than what we had estimated a year before. We will have to do campaigns when we launch the stores, right? So, we opened 12 showrooms and campaigns were around that as well as our usual campaigns of around 1% to 2%.
Okay. My second last question on the top line growth. Though we have a visibility on the franchise operation. Would you give a final number? Is the revisit on the plan, what you have targeted 52 stores under Fok [indiscernible] this year or we will expand more than that? Or you stay with the number which you have told us before.
so, as we speak, what we are planning is that we will -- we want to open a maximum number of showrooms before Diwali, the 52 plant. And there will be openings in Q4 as well. We are increasing our bandwidth to do more than 52. So, that is what we can tell you right now, but we are trying to do most of the 52 before Diwali.
I understand. But just curious to know that what will come in second half.
Yes. So, second half cannot go -- it will be anyway not lesser than last Q4.
Okay. Okay. And my last question on the Middle East, though you have given some explanation. But I mean, qualitatively, Middle East, last 4-5 quarters, we have given a very strong commentary, tourist footfall is also improving. How I should look at the entire business in full-year FY '24? Will it grow beyond 25%, Will it go beyond 30%? Or will it go between 2025?
so, there, we are only looking at same-store sales growth basically because the number of showrooms which we are opening are not like India, we are not adding too many showrooms there, okay? So, last year, also, you see we have added hardly 1 or 2 showrooms in that space. So, 21% growth in this Q1 itself is actually huge, it is better than our usual. That is because of this EID, revenue which came in, okay? So, -- and it has been growing over the past 1, 1.5, in two years, it has been growing. So, as -- we should not estimate more than double-digit is what I feel on the [indiscernible] .
so, you said -- just one follow-up or to get a little deeper explanation. You said it is driven by SSG. So, against 22%, what is the SSG growth?
Almost everything in maybe 1% lesser. Yes.
Okay. So, 21% is SSG growth.
Yes, yes.
And what is that number for India?
India, South SSG was in the range of 15% and very single level non-South as well.
Okay. That's helpful. Thank you, and all the best.
Thank you.
The next question comes from the line of Nihal Mahesh Sam from Noam. Please go ahead.
Hi, good evening, and thank you so, much.
Thank you.
Sir, I had two questions. First was you did give a sense of the gross margins for the store business also franchise. Just if I compare versus last year, I'm talking about the business ballpark, our gross margins are similar, whereas the non-South share, even if I exclude the transfer that may happen to the franchisees and the started there significantly increase. So, is it a case, as you had highlighted a few quarters by that maybe the incremental margins on the started are not as highest as what is generally understood to be because these are low value started items?
No. so, non-South share has been largely from franchisees, okay? That comes with most bid. So, that's why you see that the stated ratio or the stated share has increased too much, Okay? Because that stated also come with a lesser margin because it's a franchise revenue?
I understood. Okay. Is primarily because of all the incremental growth in non-South and even the stated share is coming in from the franchisees, so, that then would reflect on the gross margin side, is what is happening...
Yes. Of course, there is growth in our own store also, okay? But mostly, it is coming from the new showrooms now, which is again from franchise.
Sure, sir. That is helpful. The second question was that you have highlighted in detail about the plan on non-core assets and then on debt plans going forward. Assuming that you get the pay-out, as you said, by the end of Q2, is there a plan to use those proceeds to then pay down debt and let go the lean those aspects? So, that [indiscernible]
Yes. Of course, all the money reviewed from aircraft will go directly to production of debt. And that's it, net of tax. Right.
And maybe that's a target that maybe by Q2 or somewhere in Q3, you do plan to reduce your debt immediately.
Yes. So, the money will come and directly reduce the debts on the aircraft. Over and above that, also, you know that we are planning to reduce around 15% of our debt in India.
That is it from our side. Thank you so, much and congratulations.
Thank you. The next question comes from the line of Anurag Dayal from HSBC. Please go ahead.
Thank you for taking my questions, sir. Sorry, I missed the comment on same-store sales growth for India. Could you please repeat that once?
Yes. So, same store has been in the range of 15%, 15% in South as well as non-South.
Okay. Thanks. And second question is that there was some comment that demand [indiscernible] you also mentioned that. So, I mean, what states are as our team some securest steps to improve that. For example, is there any more focus on exchange gold or something like that?
On demand, as I told you, usually for the 1 to 1.5 of weeks, it's not that we have a panic on demand, okay? Demand on the wedding segment has taken a pause. That is because of the Adhik Maas and whatever you do, those customers will not come before the Adhik Maas is over. So, we are sure that they are going to come back after August 17th. And the only thing is that all the revenue might not come in Q2, it can go to Q3 as well. And a few would have been absorbed in Q1. That's it. Otherwise, old gold as an instrument. Our old gold policy, old-world exchange program has always been very customer friendly. And it is effective customer acquisition tool as well.
Okay.
In the past, we have done old gold activation only during periods where there is a slack in demand, especially due to volatility in gold prices. Okay. And in the recent past, including Q1, fortunately, we had not -- meaning we did not do anything of that sort because momentum was extremely strong. Even now, as we speak, momentum is strong during weekends and the first 2 to 2.5 weeks were good, very good as comparable to Q1. And we think that this demand is not going to go away. It's an Adhik Maas related wedding demand revenue loss, which is not a loss, it is only a timing issue.
Got it, sir. Very clear. So, particularly, this old gold will be around 1/3 of total sales.
Yes. It's almost 1/3. Yes, it's in the range of what -- 30%.
Okay, sir. And sir, one little bit question I have is on the gold import, which is being done from UA under that comprehensive economic partnership agreement, are you guys also looking at that or has already started doing?
Yes. So, we have done work on that, and we will do this and we plan to do it in the next financial year.
Okay. Thank you so, much, sir and congratulations for the [indiscernible].
Thank you.
The next question comes from the line of Manoj Menon from ICICI Securities. Please go ahead.
Hi team, congratulations on a very good performance. I'm wishing you good luck into the medium term.
Yes.
Ramesh sir, the first is on some qualitative region color on the same-store growth trends region-wise broadly? Because while I heard you commenting a couple of times about out 15 and non-South 15, are there any further color you'll be able to provide on non-South?
Yes. So, South is there 15. And non-South also, it is almost in that range. so, it's not exactly 15 non-South. And it's in the range of slightly higher than what you call south, maybe in the range of 15 in non-South.
so, what I'm trying to understand is there is no standard deviation -- high standard division on the rest of non-South, West and North and.
No, no, no, no. It's almost -- the regionwise it's almost the same.
Interesting. Interesting. Secondly, the comment on Adhik Maas. Just help me understand this, please. I mean, so, this happens every year, right? It's not this year phenomena. So, this must be there in the base also, right?
No, no, no. Adhik Maas once in 3-years. So, you are confused with Adhik Maas or what Karakar Mandal...
Yes.
That's not this. ... Adhik Maas is coming only once in 3-years.
Okay. Understood. Understood. And understood, thanks you're calling it out. And then a couple of clarifications. FY '25, let's say, what is the thought process, maybe the early thought process on the franchise expansion because you would have added these 52 stores in FY '24, you would have got those primary revenues in FY '24 itself, right? What is the broad thought process? Is there a -- what is the -- let's say, probably be again another 52 in FY '24 - sorry, FY '25 or are a different number, which you are thinking currently?
Yes, whatever we do in this financial year, we will better it for the next financial year.
Okay. Fair enough. And lastly, the 52 stores number is excluding Candere, right?
Yes. It is excluding Candere. It is excluding Middle East, it is excluding any conversion from South India.
Super. Thank you and good luck.
Thank you. The next question comes from the line of Naresh from Samiksha Capital. Please go ahead.
Yes. Am I audible, sir?
Yes, yes. Very clear.
Yes. Firstly, congratulations on a very good set of numbers.
Thank you.
The first question on the other expenses. So, it has remained around 4.5% of the revenue. Now as your -- this focused store scale up, while you explained that gross and EBITDA margin will go down slightly. These other expenses should also as a percentage coming down, right? Because these expenses will be borne by the partner. So, if you can throw some color on that? And going ahead, what should be the range, which one should -- which we should expect?
Yes. So, you're right as a percentage the OpEx percentage on our revenue will surely come down. But on an amount, it's not going to come down because our own stores remaining as our own store only?
Right, right. No, I'm asking as a percentage only. So, this quarter, while we have seen some compression in margins due to this higher revenue from focused growth. But in OpEx, we have not seen that. So, I just wanted to understand that better.
Yes. So, that impact is fully taken by the salary costs.
so, can you guide this 4.5% should go down to what percentage of sales in the next 2, 3, 4 quarters?
so, here, the same-store sales growth is coming more majorly in our own store only. And I always conservatively tell everyone that even though there was a 15% same-store sales growth in Q1, but we cannot estimate the 15% throughout the year, right? So, the percentage growth of SSG, usually, we keep in the range of, what, 5% to 7%. And operating leverage will come only to that extent on your expenses as well.
Okay. And what was the contribution.
I am Here. On the franchisee showroom just to explain it. See, we will get -- we only a portion of the overall gross margin as our share of that. And that is the impact that we have taken at the gross margin level for the current quarter. If you compare Y-o-Y from 15.46%, it has come down to 15.07 in India. And that impact is because we have shared a part of our gross margin with the franchise owners and the expenses, most of the expenses are shared with the franchise partner. We take care of all the employee expenses at the showroom.
Right. So, in that context, only, your growth in other expenses going ahead, it should be lower than your top line growth, right?
Yes. That is where he -- Ramesh mentioned that as a percentage, it will come down.
Okay, sure. And what was the contribution of these franchisee stores to your revenue, if you can give that number for Q1?
Yes. So, it'll be in the range of what I do not want to give an exact number there, but you can usually keep it at 15% one site.
Okay. And sir, last question, any update on the pay-out policy. Last quarter, you had said that you'll come out with a policy. So, any update on that?
Our dividend policy, we are yet to we will surely come back to you.
Okay, sure. Okay. Thank you and all the best.
Thank you.
Thank you. The next question comes from the line of Manish Poddar from Motilal Oswal Asset Management. Please go ahead.
Hi, thanks for giving the opportunity. So, just if you can call out how many stores we opened from last quarter? And how many of them were franchise?
so, last quarter, we opened 12 out of which 11 was franchise,
] 11 was franchise.
Yes.
And if you can explain with the number, how much was the cash flow from operations during this quarter?
Yes. So, the total cash flow from operation is INR 426 crores.
INR 426 crores. And how much is the CapEx done in this quarter?
INR 78 crores.
so, then you would have got on, let's say, this INR 350-odd crores release, right? So, where is this -- so, this is just cash on books right now? Because earlier you mentioned there has been no change in debt or let's say, in terms of gold on these limits. So, I'm just trying to understand, let's say, the incremental cash flow generated after CapEx was roughly INR 350 crores, right?
Just a minute.
Incremental cash flow will not be INR 350 million because it's the total cash flow, which Swaminathanwas telling. So, the cash flow is now sitting as cash in hand, which I told you about gross debt, net debt is, of course, lesser than March 31st.
so, how much is the number?
Maybe around INR 150 crores lesser than March 31st.
so, you've already paid INR 150 crores of the INR 300 crores --
That's a difference. So, we will not pay back because.
You did not paid it but you have the ability to --
We are only kept it there because we don't know all this expansion is coming. We are planning to do it before Diwali, out of CapEx is required. There can be some contingency. So, we don't want to go and pay back right now, but we will go as per the plan and the intention is to go and reduce the CC limit with INR 300 crores before the end of the year.
And so, just one more later point, if you can help me, let's say, so, INR 150 crores is the additional cash which is generated which is gross and net debt. Where is the remaining INR 200-odd crores? Is it an inventory right now?
so, also, the total cash flow is what Swaminathan was telling. So, out of which interest would have been paid and rent would have been paid. so, the net cash in hand surplus is only in the range of INR 150 crores.
Okay, got it. Great, thanks.
Thank you. The next question comes from the line of Shantanu Kanta from IWorld. Please go ahead.
Good evening sir. Congratulations on good set of numbers. I had two questions. One of them being regarding the ROE, in the PPT, we had given that we have done around 13.5% for FY '23. So, say by FY '25 as would be our ROE percentage? And the second question would be -- so, I miss heard on the ESOP. So, how many ESOP are we planning to give out on a yearly basis?
Yes. So, regarding return on equity, it will shortly go up because all the franchisee stores, which we are opening, the over fees are in the range of 75% Okay. And -- that's how we are also -- meaning the expansion is completely taken care by them. And you want to give more color on the --
Yes. But -- Yes, I agree with Ramesh. Return on equity will definitely go up because -- but the part 200 we would not want to give a target for FY '25...
Okay, sir. And regarding the ESOP, how many ESOP so, we plan on giving...
See, we have already created pool of about 30 lakh shares. We -- right now, we are giving out of that pool to the employees..
Okay, sir. Thank you so, much.
The next question comes from the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead.
Thank you for the opportunity and congrats on a great set of numbers. First question is on the franchisee model itself. Obviously, this is the first full quarter of the impact. Just if you could give some comments as to how have the experience been whether the assumptions that you made initially are playing out? Is it working out better or some areas you might have to go back, that would be a great start to that...
Sanjay, you want to take it?
Sure. So, I think after we started, we did the pilot, and we got some learnings from them and get some calibration to kind of make sure us as well as the franchisees got what we wanted out of this rollout. So, broadly speaking, our expectations have been met franchise expertise have been met. And I think we are in a good place as far as being confident about being able to roll the South and schedule.
Understood. And you believe that this can be much more scalable now? Or would you take -- I think it will take some time to restructure include?
No, no, absolutely not. We are very confident of the scalability and I think this is on the role...
Okay. And secondly, in terms of the margins, the PBT margins are at around 4.3% at the company level. And I presume that is what one should focus on now with the newer model. Two questions out there. Firstly, it's franchisee broadly tracking similar numbers or are below or above? And secondly, I thought that with the growth we would have seen some -expensive, some kind of leverage on a Y-o-Y basis on this PBT margin. So, any comments on that?
Yes. So, Pulkit, hi. So, the PBT, now if you split that between India, Middle East and Candere. That's how one can look at it. So, India PBT was about 4.7% Y-o-Y, which has gone to about INR 4.7 crores to 4.8% now. So, it proved and for the franchisee showroom, the PBTs are in the region of close to 5%, that's why it's showing an improvement at the PBT level. And there is some amount of loss in Candere. We've done about INR 2.2 crores of loss in Candere. And that has also affected the consolidated PBT.
I understood. The last question, I thought from a return on capital perspective, I mean, what is really the capital employed in the franchisee model? Has that changed? I thought it was just 2 weeks of inventory or something like that.
Yes, it's about 15, 20 days of inventory, correct? -- And the CapEx for the showrooms in the current financial year, we are taking care of our CapEx.
Understood. Thank you and all the best.
The next question comes from the line of Ashish Kanodia from Citi. Please go ahead.
Yes. Thank you for the opportunity. So, first is on the wedding share, what would be the rough mix of fading in the overall India revenue? And if you can split that between South and North.
so, usually the within share for the brand is around 55% to 60%, and it's very singular South and non-South, meaning South can be 60 and non-South can be in the range of what -- 55%.
Sure. And secondly, in terms of employee cost and the number of employees, right? So, when I look at 122 versus 124, we have added around 2,500 employees and even the employee cost has gone up by almost say, from INR 100 crores to almost INR 140 crores. So, -- and when you're talking about maybe similar or higher store expansion in FY '25 as well. So, is it fair to say that the momentum in terms of new employee addition as well as the employee cost will be very similar to what we have seen in the last 1 year?
Yes, it should -- meaning the employee cost is going to grow at the same pace for the next year as well.
Okay. And lastly, I understand there has been some conversion of stores maybe from company on to franchisees. So, just at the end of 1 to 24, can you just give the number of franchisee stores and COCO stores in India?
No, it's not about conversion there. So, what will happen is that, for example, in this quarter itself, meaning the Q1, out of 12, 11 were franchise and one was owned, right? But that one own store, the intention is not to keep it as owned. Due to some technical issue, the franchisee could not take it there because of some GST related or something like that, okay? Now already as we speak, we have converted that. so, conversion is more related to that rather than converting own store. The original conversion of own store will happen only in South wherein we will specifically tell you about it.
Okay. Okay. This is very helpful. Thank you, guys. Thank you...
Thank you. The next question comes from the line of Harshil Shethia from AUM Fund Advisors LLP. Please go ahead. Harshil your line is unmuted. Please go ahead with your question. Harshil your line is unmuted. Please go ahead with your question. We shall move to the next question now. The next question comes from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Hi. Thanks for the follow-up opportunity. Sir, I just wanted to check, you said the aircraft sale will happen. I just understand -- I wanted to understand what is the ballpark number which we are getting. And you said there is a tax also. So, that's the first part. And second, you said that there is also a non-core asset. So, is those non-core will get divested in the financial FY '24? Or it will get next year?
Yes. So, the aircraft amount is around INR 134 crores, net of tax will be in the range of INR 100 crores. Again, real estate, we will not be able to commit anything for the financial year because we will have to go and repay the bank loans and then take out that asset when put it for sale, it's going to take time. So, the other non-core assets, we should look at -- look at this as a medium-term where in 2 to 3 years, mission, we should look at in that way, okay? We will start the process, of course, but not commit anything for the financial year.
Okay. My second question on how much spot buying we have done for gold in Q1? You said exchange is 30%.
Yes. Yes. Shirish, exchange is about 30%. -- and gold metal loan levels have remained at similar levels at about late 40s. The remaining we have bought from spot...
To say about 30%...
Right.
Okay. My last question, while hearing from the market leader. We have heard that there is a local competition, there's a regional competition and especially the competition took the route for dropping the price -- not dropping the prices, I mean, giving the similar value to the gold exchange and even DD market leaders can aggressively push these promotions. So, in your lens, have you seen this is specifically hitting any particular pockets or maybe at this time, what is the competition angle? Or do you recognize there is a competition...
Yes, Competition has been very strong always in the industry. And for the past 15 years, it has been even strong because of the excise duty increase. And now it is actually a part of life, meaning it's a new normal today for us, because we adapted to it than the margins are steady, which you can see.
The reason why Ramesh Anna asking -- if I look at the history, normally, the making charges is to have a standardized of about 25%, 30%. But now the incremental quantum has gone up. I don't want to name any particular player, but I see that the making charges, there's a lot of discounting where is happening. So, I just wanted to understand this quantum, which used to be a phenomena somewhere in the wedding season, but this has become a normalized. So, is it the industry is now normalizing and these expenses are given expenses? Or still the novelty is going to be there?
Yes. So, you have not been given -- meaning making charges are always according to the market and according to the product. And we have not given any extraordinary discount on making charge even for Q1. And old gold, as I told you before, our exchange policy is actually very customer-friendly. And we don't have to do any further promotion on old gold unless and until we have a very strong reason like very high volatility in gold prices, very low momentum at the store, et cetera. Fortunately, in Q1, the momentum has been extremely strong right from day one and Akshaya Tritiya was also strong. And we did not do any activation on old gold as well -- and competition, now it is like 1.5 and 2 years now, wherein we have adapted to the new normal today. The rate is also -- the gold rate is also the same across the country today. And making charges are almost stabilized to where we want. Margins are getting steady. Stated ratio is always there. So, we don't see any major deviation in the competition between what the last 2 or 3 quarters now.
Okay. And just last one question. In your market intelligence or from the procurement level, do you think during Diwali the gold prices will remain stable or we'll also see the volatility? Because if you look at the macroeconomic conditions are still very, very volatile.
Yes, that is very hard... Very hard to predict all that because it's a global, what you call environment, which again takes care of the gold price. so, extremely hard for us to predict that.
Okay. No, I was just asking whether we see in quarter three, some inventory gain because we are seeing the gold exchanges consisting at 30%.
But we would not get any now because we are -- we don't take any risk or gain in metal.
Okay. All right. Thank you and all the best.
Thank you...
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Ramesh Kalyanaraman for closing comments.
Thank you very much for attending the call. I hope to see you again in the next quarter. Thank you very much.
On behalf of Kalyan Jewellers India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.