PC Jeweller Ltd
NSE:PCJEWELLER
| 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
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
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 |
28.1
186.02
|
| 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.
PC Jeweller Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the PC Jeweller Limited Q2 and H1 FY '19 Earnings Conference Call.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 date of this call. These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Sanjeev Bhatia. Thank you, and over to you, sir.
Good evening, ladies and gentlemen, and a very warm welcome to this Q2 earning call of PC Jeweller Limited. I am Sanjeev Bhatia, CFO of the company; and I have with me, Mr. Balram Garg, MD of the company; and Mr. R. K. Sharma, who is ED and COO; as well as Mr. Nikhilesh Govil, who is President online and e-commerce vertical of the company.I'll start now. This Q2 FY '19 was a period of consolidation for the company amidst a subdued market environment in the jewelry sector. PCJ utilized this quarter to rationalize its inventory as well as export business and reduce overall bank exposure on the balance sheet. Our overall sales in Q2 witnessed a degrowth of 38%. The PAT during this period declined by similar amount, nearly 38%. However, the gross margins have improved from 12.9% to 16.7% on the back of higher contribution of Domestic business to overall sales as well as improvement in Domestic gross margins.Coming to Domestic sales. The company did not offer any promotional schemes during this quarter and instead concentrated on margins. Our Domestic gross margins have improved from 14.7% to 17.2%. During this quarter, the Domestic sales have contributed 95% of overall business. At the same time, they have witnessed a degrowth of 16% over the previous quarter.I would also like to advise that as a part of the continuing process of rationalization, our Bangalore and Kolkata stores were closed during this quarter.Coming to Export sales. Export business is a credit-based business and the company wants to rationalize the same. As the credit availability is getting squeezed in the markets, so consequently, Exports have contributed to only 5% of our overall sales during this quarter, and we have been able to bring down the same by 89% in Q2 FY '19. The company's -- in the long run, forwarding -- targeting the limit of Export sales to INR 2,000 crores in FY '19 as against INR 2,690 crores in FY '18.Bank exposure and cash position. As committed, the company has reduced its overall banking exposure, which includes MGL as well, by INR 805 crores in the first 6 months of FY '19. This figure was INR 4,490 crores as on 31 March, '18, and is INR 3,685 crores as on 30 September, 2018. The total cash on books as on 30 September was INR 804 crores, and the company proposes to utilize approximately INR 500 crores out of the same as well as internal accruals for further deduction of bank exposure in H2 FY '19.The company has also carried out some other initiatives like augmented reality and online, off-line integration, for which we have given detail in our presentation.I now leave the session open for Q&A. Thank you.
[Operator Instructions] The first question is from the line of our [ Ayush Shri ] from AZB.
Yes, my question is for Mr. Balram Garg. So I want to understand what's led to the drastic step of almost winding down the entire Export segment, one whole segment of your business? And can you elaborate on that? And you didn't give any such guidance in the previous quarter, so what specifically happened in this quarter that you took such a drastic step?
No. Earlier also, we were telling that we want to reduce the Export business, and we want to focus on more on the Domestic business. But definitely, because right now, you know that this is a credit-based business, and we have to adjust -- we have to -- because now the time is that the credited business don't run in the long term. So that's why we have decided that more focus on the Domestic business. And they're not winding up the Export business. Definitely, this quarter is -- sales are very less, but we have set the target for the -- long-term target for the Export business for this year. And definitely in future also, we will keep reducing the Export business. And this year, we have set the target of INR 2,000 crore, last year we did around INR 2,700 crore sale. And we want to reduce the receivables also. That's why we have taken this step.
The next question is from the line of [ Rajiv Basani ] from DLL.
My only question is why this inventory level as well as the Export EBITDA as you mentioned in the presentation that are quite high when compared with the sales? Just want to know the reason. The EBIT can be reduced. But because the inventory we can get it down by a little bit per my opinion, and at the same time, Export EBITDA also, it is still an issue, quoting very high way around INR 1,700 crore, INR 1,900 crore that you say. Can it come down going forward? That is one question from my side. And then another thing is like, how the situation would be going forward in the next 1 year per se? How are you looking for the future growth? Because in the last con call that I attended, you were talking about the new store additions as well as even the debt reduction. And that you mentioned by September, we would be coming by INR 1,000 crore debt reduction. But still, it has not happened yet. Yes, this is...
First question is on the inventory level. Because we have -- we look at the inventory level in March. So definitely, the level of inventory is a little bit less if you compare to the March. Even though this September is a high inventory level period because our season start in the October. So -- and our season start in October so this -- in September, the high inventory level period is there. Even then, we have reduced some inventory if you compare to the March. So company is more focusing on how to reduce the inventory. And now the debtor level, if you look at the debtor level also, because there is a -- because dollar rate have increased from INR 65 to INR 73, so there is a readjustment of both creditor side and the debtor side. There is no impact on the plan level of that, but definitely there is a M2M. So that's why the debtor level has increased. But we have now -- in October, we have given -- in October also, we have received INR 200 crore of payment, and we have set a target of INR 1,000 crore debtor level in the March. And definitely, company is most focused right now is to reduce the inventory, to reduce the debtor level. So this -- the company's definitely going on that path only. And secondly is, if you look at the debt level, so we are definitely -- if you look at from the March to September, we have already reduced almost INR 800 crore, and we have -- still we have cash around INR 800 crore. And we have given a target that in -- another INR 500 crore we will reduce in next 2 quarters. So we are -- whatever we are saying, we are doing that only. And out of the INR 1,000 crore, we have already reduced INR 800 crore. So going forward, the growth -- look at first quarter we opened 2 stores, second quarter, we opened 2 stores. This quarter, in -- we have this month, we have already opened last month 1 store. So we are opening stores regular basis. And definitely -- but company right now is not more focusing on opening aggressively stores. And we are opening right now mainly the franchise stores, which is less capital-incentive business. And so company have -- and definitely, we'll keep opening the stores on regular basis, but not very aggressively, definitely. And once we control this -- everything, the debtor level and the -- this inventory level in the next quarters, definitely from the next year onwards, we will open very aggressively, the store openings also.
Okay. Great. Can I ask just one more question. Sir, we don't find any strength in the debtor level, right? Because considering the huge debtor, we don't find any strength in that, right? We can confident of sitting on the receivables, right?
Actually, now the thing is -- well, everyone will have a cycle because we have our cycle and our buyers have also the cycle. When you change your business model, definitely it will take some time to adjust in that regime. So everybody's changing the cycle and our buyer is also changing the cycle. I told you that we have received INR 200 crore in October also. So they are also adjusting in the new regime, and definitely it will take some time. And that's why we have given the target in next 2 quarters, March end, we will reduce this from -- to the INR 1,000 crores.
Okay. But one more question, sir, it's like a little question. When we compare with the competitors, I mean, I'm sorry to say, but is there quite a -- we are getting good kind of revenue growth or profit growth whether we talk about our frontline competitors, whether it is [ Pipan ] they are showing good...
I give you answer. Because if you look at the -- I can't talk about any company, but definitely, if you look at the industry, whole industry, since it's -- in this last quarter, the whole industry, the atmosphere was not very good and sales were down. If you look at the import also, imports were also down. So if you look at the first quarter, we were -- we did very good growth in that quarter. But this quarter, because we -- our margins have improved by 2%, 3%. And we -- our -- we focus on not to focus on the top line, we focus on the bottom line this quarter. Definitely, if you look at the industry, there is a degrowth in the industry. And according to degrowth, our -- in our company also -- in the domestic sale 15% degrowth is there, but our margins improved a lot. And we -- in this quarter, we focused on debt reduction, other -- to change the business model and not to focus on more on top line but in the bottom line also.
The next question is from the line of [ Pradesh Chertoff ] from Lucky Investment Managers.
So I was looking at your press release, I had a couple of questions. You have reduced the -- or let's say, you have reduced the bank borrowings. But when I look at the net debt number, the net debt number is still the same. So what has happened in the process is, you have utilized your cash -- the cash in the balance sheet to repay the debt. Ideally, it should also be a case where you should have shrunk your receivables, right? Because your exports have come down by half, but your receivables goes up. And you do not release the capital from receivable to repay the debt. So just wanted to understand this whole math as to what I am...
Yes, it's a very good question. Yes. So -- this is a very good question. Actually look at -- we have now whatever cash we have, definitely, there is a free cash flow also, and we are reducing that debt out of cash also, then free cash flow also. Definitely, now the next target of the company, when we say we will reduce more than INR 500 crore from our -- definitely we are totally focusing on the debtor's level. And in -- when we say that we will target the debtor level INR 1,000 crore, definitely the additional cash which we receive in the company, definitely we'll reduce the -- another -- in debt levels.
So -- but this half year's cash flow, you would have about INR 200 crore, INR 250 crore of cash flow, has actually not translated to cash flow because despite shrinking exports, your receivables have gone up.
Gradually only...
Actually look at...
Gradually only.
You look at the -- because our debtor level's not increased because only this is the adjustment of M2M because the dollar price in the market is INR 65, now it is INR 73. So at that the one side, the debtors have increased, one side the creditors have increased. So it is not the...
This is Nikhilesh. So your analysis is right. So see, we are going through a phased sort of rationalization in the business, okay? So when we go through the phased rationalization, the first thing is to first dip into our cash reserves which are...
Sir, sir, sir, so if you have shrunk your top line by half, there has to be some money which the receivables should reduce? You're telling me that your revenue can shrunk half overnight but your receivables cannot shrunk -- shrink?
No, no. So it's not an overnight thing. And that's what I'm coming to, just bear with me for 2 minutes and I'll explain the whole thing to you. So the first thing we have done is, whatever FDs we had, we dipped into them and reduced our debt first. Secondly, to bring down our debtor levels, we first have to sort of bring down our sales to these exporters, right? So we have -- in this quarter, if you see the sales have come down by almost 90%, right? Now -- so we only did roughly INR 80 crores of export sales. Now what is happening is the previous bills, which are getting due, are getting settled now. So even if I talk for the month of October, we have realized INR 200 crores of those outstanding debtors already, right? So you will see this play out in the next 1 to 2 quarters. That is one thing. The other thing is, even on the inventory level, you will see a same thing play out because H2 is always 1.5x of H1 in terms of sales, right? So rather than drastically reduce our inventory overnight, we just want to reduce our inventory through actual sales to the customers. And therefore, by the end of March, we will reach levels where you will see both, on an annualized basis, the sales and the debtor and inventory levels in line. The initial -- these intermediate quarters are period of readjustment for us, right? So -- and you will see these things move not in tandem, but by the end of March, you will see everything get realigned and you will be able to make sense of both the reduction in sales and the reduction in debtors and inventory levels.
So again, going back to your press release, somewhere in press release, you mentioned that my comfortable sale of exports will be INR 2,000 crores, right?
Correct.
Versus INR 2,700 crores, last year?
Correct.
It was INR 2,700 crore last year.
Perfect. I'm just taking the numbers from the press release, sir. So what does it mean? Does it mean that you'll release INR 700 crores from receivables?
Yes.
Yes. That's the target.
We are already at INR 1,750 cr levels. So over the next 2 quarters, INR 750 crores will get released into the system and we will be at INR 1,000 crore levels. That's the maths.
That's where you want to put it? That's how you want to put it?
Yes. Absolutely.
Yes. Yes.
Okay. Now you mentioned that this INR 200 crore increase is because of FX. That's what you want to put it, the INR 1,976 crores to INR 1,761 crores?
Yes. Yes. Yes.
Yes.
So again coming back to a question, that if you shrink your sale by half in H1, so it's a 6-month period from where did I shrunk from INR 1,500 crore to INR 900 crore, right? And in this 3-month period, did I shrunk from INR 770 crore to INR 85 crore, right? There would be some release of cash flow in the system or it doesn't mean that'll be any release of cash flow in the system?
You think, going forward?
No. Even now, at this juncture?
No, no. So at this juncture, our debtor levels are already in the balance sheet that we've put out. There has been no major sort of reduction that we can sort of speak of as of now. But starting October, as I told you, we've already seen INR 200 crores come -- of that come out already, right? So our cash flow and the cash position as of October has gone up, right? And that will play out.
And have you done this all on the September last week?
In terms of?
In terms of reducing the debt, reducing the borrowing limits. Is it done all on the last week of September? Or it was throughout the quarter?
No. No. Throughout the quarter.
Then why did the interest expense rise from INR 100 crore versus INR 80 crores?
Yes. So I'll come to that. So you have to understand our business. Our business, on the liability side, we get bank limits, okay? Now that bank limit can be fund-based or it can be a SBLC, which you use for gold loan. Now what is happening in the market is, the banks are not giving too much gold on gold loan. So our limit utilization, SBLC limit utilization is going down. Our fund-based utilization is going up.
Because so many banks LCs are not acceptable in the foreign market where we import gold, so they have refused to accept some bank's LCs. That's we are using more fund-based versus nonfund-based. That -- and if you look at, we have given in the -- because you look at the presentation, we have given in the detail in the presentation also, this -- why the interest expense has gone up. But it's not gone up substantially because it's only INR 6 crore because INR 13 crore -- there is interest income also. So net interest -- finance cost increase only INR 6 crore. But definitely because in the -- because we have utilized more fund-based, that's why it has increased.
So -- but then there should be some benefit on not utilizing nonfund, right? Because if you shrink your revenue from INR 2,600 crore to INR 1,635 crore in which you have reduced exports, which is a nonfund-based limit, right? So you have reduced INR 700 crores to INR 800 crores of nonfund, still there -- how can the interest...
Yes, there is a lot of difference in fund-based versus non-, because nonfund-based the interest component is very less. And fund-based, the interest component is almost 3x of the -- all of that. So...
But sir, on the net basis also you have reduced your borrowing, right? So there should not -- so you've reduced INR 700 crore, INR 800 crores of borrowing from the balance sheet on net basis. And you've reduced INR 700 crores from Export, which is a nonfund. You have both those cases happening, yet your interest cost rises?
So what is there, is there only -- so basically -- yes. Thank you.
The next question is from the line of [ Nalesh Kalaria ] from DGFI.
Actually sir, I would like to know something about your -- yes, actually, I am more concerned about what you had said was earlier that borrowings would be reduced by INR 1,000 crores, now you are able to only do it by INR 800 crores. Going forward, you say that you'll again reduce it by INR 500 crores. But my question is, whether your sales are not growing. See you are opening new stores in this year, you've opened many stores, but your sales are not increasing by a similar, means you are also shutting down some stores. So there is no growth component what I'm able to see. Otherwise there should be a certain rise of -- certain rise we should see in our domestic market?
So look at the first quarter. Our growth is almost 15% -- more than 15%, while the industry growth has gone down. So we did 15% growth. Only this quarter, there is a decline in the 15%. It is not that in future there will be no growth. And if you look at the industry, there is a degrowth in the industry, in the 6 months. So -- and if you look at our sales, our sales are the same as we did last year. And last year, we did in second quarter, the 30% growth was there. So our base was very high because of the GST. So 2, 3 reasons in this quarter is our base was very high and this quarter, the sentiments are very low. So that's why there is a decline of 15%. But if you look at the first quarter, our growth was there in the 15%, not that we are -- our sales are not growing. And that level, if you commit INR 1,000 crores and we say, well, INR 800 crores, definitely [indiscernible]. Hence, what's in the future, we are -- again we are reducing the debt.
And sir, one more question. What we can take is receivables cycle is there. What we did -- now you must have given some period, right, to recovery or amount. So what period and what bifurcation, like INR 500 crores within the next 3 months or INR 1,000 crores within next half quarter, meaning half yearly. I want to know the detail of the breakup of receivables.
Actually, right now, we can only say that before March, our target is to reach the INR 1,000 crores. So definitely, it is not that only the -- in March and everything will -- definitely, every -- and this has already started from this month only. And definitely, before March, we will be able to achieve the receivable.
Okay, sir. And what about the new franchises that are opened every month? So the sales...
Yes. Actually, last quarter, we opened 2 stores.
Yes, I understand. I have seen that...
And this month, we have already opened 1 store. So definitely, franchise model -- franchise stores are not a very large format store, and it will take some time to convert into the good sales.
And one more question, sir...
This is the operator. Mr. [ Kalaria ], may we request you to come back in the queue for a follow-up, please? The next question is from the line of [ Rashiv Gulati ] from Jagsonpal Pharma.
Sir, my question is -- I have 2 questions, one with respect to revenue, and the second is with respect to the commitment which you have made in the conference call after this drastically erosion of your market cap. One, the revenue is gone by 17% in the domestic sales. But at the same time, your competitor, the Titan name to be specified, has reported of -- I think of around 23% growth. While on a basis, the Gitanjali Gems, I think it was also in the competition. As per my understanding, the Gitanjali Gems' market share should be acquired between the big players, but I don't see any sales taken by the PC Jeweller. I only see that most of the revenues are being -- opportunities being only collected by the Titan. And one thing -- one more question. After so much of erosion in the market cap, you have made a commitment that the debt will further reduce by INR 1,000 crores. And on a net basis, you have only, I think, INR 800 crores in 6 months, which you have already paid INR 475 crores in the first quarter. So effectively, on a net basis, there is around INR 375 crores or INR 400 crores you have paid in this quarter. Why is the management not on the commitment? If you're not -- if you're committing something, you must make some calculation between -- behind that. Then why that is...
So let me answer the second. Because if I commit INR 1,000 crores, then we have received -- we have paid INR 800 crores, I don't think that we are -- that there is a failure in the commitment. And we have cash on the balance sheet out of -- because as the FDR maturity dues, we pay it to the bank. It is not -- it's as simple as that. We are not saying that we will bring the money from somewhere. We will -- that money on the balance sheets. And the second thing is we don't talk about any company because there are so many things. First quarter, our growth was there. And our -- the company you named the growth was not there. Second, our margins have increased in this quarter. And I heard that some companies' margins have declined in this quarter. So you cannot compare to company-to-company. You have to see the whole industry. And every company has their different business model. And this quarter, we focused on the margins. We didn't focus on the top line. So every quarter, a company -- last quarter, definitely, we run some schemes and we did 15%, 18% growth versus some companies. The growth was not there. So it is -- one quarter you cannot -- so this quarter definitely, we focus on more on the margin side, and we don't want to give more discounts. So it is -- so our margins have increased. So you have to compare in all the parameters, and you have to look at the growth of the whole industry also, that the whole industry there is a degrowth if you look at the industry.
Sir, one more thing. If you're coming in the public domain and specifying something that company is going to reduce the debt of -- by INR 1,000 crores, it was your call that you will come in a public domain and you will specify that, as per your calculation, the -- because the bank has refused for the buyback, I will reduce the debt by another INR 1,000 crores. And after saying all those things in a public domain, when you come into a public domain and you say it like this...
Again, I'm saying everything on the public domain. I'm saying again on the public domain that have cash on the balance sheets, and I have committed the INR 1,000-crore return because we have the cash on the balance sheet. That's why we have committed for the buyback. Bank had refused that and cash on the balance sheet only, and I have committed from the balance sheet only. And today, if you look at the balance sheet, cash is there. We are committing out of that only.
If the cash is there, then why the company is not committed?
Mr. [ Gulati ], may we request you to come back in the queue for a follow-up, please? The next question is from the line of [ Chetan Drew ] from [ Blue Banner Investment Advisors].
So I have 2 questions to the management. One is what component of the receivables is from the franchisees? And what component of the revenue is from the franchisees in H1?
So actually, if you look at the receivables, the franchisees is almost negligible. All of our receivables are from the exporters only. In domestic side, I think only INR 15 crore, INR 20 crore altogether is there. Otherwise, everything is from the export side only.
This is the receivable side, right?
Yes, yes.
What about the revenue? How much of the revenue is coming from the franchisee stores?
So we don't have this detail of franchisee versus owned. Definitely, as our franchise model grow, we will disclose that separately also.
The next question is from the line of Shekhar Singh from Excelsyor Capital
Can you, sir, give me the target for, say, 31st March 2019 trade receivables inventory and net debt again?
So I have already given the target of these trade receivables that our target is to reach INR 1,000 crore. And definitely, I cannot give the target of inventory level. But definitely, we are focusing to reduce the inventory, number two. Number three, debt level, definitely, we have given the -- debt level will not more than between INR 3,000 or INR 3,200 crore.
Can you just repeat, sir, debt will be how much?
INR 3,000 crore to INR 3,200 crore.
INR 3,000 crore to INR 3,200 crore? And the inventory you mentioned was -- will be around?
Inventory, I can't give the target because we are opening stores also right now. But definitely, we are focusing to reduce the inventory also.
So from around INR 5,100, you expect it to come down...
I cannot give that number. I have given 2 targets for debt because -- and the inventory level.
And receivables, what is the target that you mentioned?
INR 1,000 crores.
INR 1000 crores. And can you also just mention why was the interest cost so high? You were giving that reasoning, but I didn't understand it.
Yes. Let me just take this. So see, we get allocated bank limits. Now as I told you, either we can draw down cash from the bank for use in working capital and for buying our raw material or we could take limits. Now the limit used to come at a lower cost, which was around 4%. And the fund-based utilization, if you do, is somewhere around 12%, right? Now what is happening is the limits were used to take gold on loan, right? Now that gold on loan availability in the market has gone down, okay? So we have to now basically take gold by giving an upfront fund, right? Therefore, I'd draw down the loan amount from the bank and give it to the catalyzing agency from wherever I buy. Therefore, there is a -- between a 12% and 4%, there's an 8% additional cost, which is what is partly reflecting in the finance charges for this quarter.
Okay. And lastly, sir, if I was to look at inventory in terms of tons of gold because there has been a sharp fluctuation in terms of rupee-dollar. So compared to 31st March 2018, how much has inventory gone up in terms of tons of gold or gone down?
So maybe because we manage our inventory like that with no loss or profit on account of gold fluctuation.
So there's no loss or gain on that?
Yes, yes. No loss and profit on that account.
Okay. But just to measure inventory in terms of tonnes, has the quantity gone up in terms of inventory over -- in the last 6 months?
No, no. Because the inventory -- in the last 6 month, the inventory has come down. Because you look at -- compared to the March, the INR 30 crore, INR 40 crore inventory has come down.
The next question is from the line of Srijan Sinha from Future Generali.
Yes. Sir, just wanted to check what is management's take on doing an open market purchase? I mean, your stock has erupted by nearly 90%. So why is management not interested in doing an open market purchase?
We cannot comment on this.
Our next question is from the line of Ankit Shah from White Equity .
Sir, can you please clarify the receivables recovered of INR 185 crores in October? Is that the net recovery or is that amount recovered?
And net recovery means, sorry?
Meaning is this net of the addition in receivables?
Yes. Net, this amount is...
Overall.
The total amount recovered, INR 185 crore.
Okay. So some -- there would be some increase also in receivables here?
No, no, no. Negligible. Very negligible.
Okay. And sir, can you please help us understand what portion of the corporate receivables is overdue as of 30th September?
So that figure we don't have. But definitely, when we change, there's a little bit of delay also. But now there's a little bit of delay, but not -- we don't have the exact figure. But definitely, there is some delay also because of when you change your business model. But recovery has start fast now, and we are very hopeful that we will achieve what we have set the target.
Okay. Sir, one more. Help us, post your December quarter results, would you be disclosing the receivables number?
So actually, we have increased -- yes, definitely. We have increased our disclosure. You try look at in every quarter, definitely, every quarter we have increased the visibility. Only I can say that. Definitely, we'll increase our disclosures in the next quarter.
In any case, our debtor numbers are published every quarter in the financials. So...
Balance sheet. Actually, balance sheet is 2 tables, you are right. But what do you see? Look at the last quarter also, we have published some numbers of balance sheet also. Definitely, we will increase our disclosures in the next quarter.
Yes. So just to clarify, you've disclosed things related to debt. But for the receivables piece, you did not disclose the last quarter. That's precisely the reason I'm asking...
So definitely, we -- every quarter, we are increasing the disclosures. Last quarter, we have started something, and that thing -- inventory thing also. And let's see, we will -- definitely, we'll try to disclose as -- so definitely, we'll try to disclose this debtor number also.
Okay. Sir, just the last question from my end is, sir, you've given a target, export number for the year, right, at INR 2,000 crore. And so far, I think we have done roughly around INR 800-odd crores. So does it mean we plan to do INR 1,200 crores of exports in the next 2 quarters?
Yes. Actually, when we see this receivables numbers decline, definitely, we'll do that.
So there is this one mismatch that comes here, is if we target INR 1,000 crores of receivables by, let's say, March 2019, and if we are doing INR 1,200 crores of export sales in the last 2 quarters, understanding that exports would be a long tail, would you really be able to achieve INR 1,000 crores? What's the logic?
Actually, why I -- yes, yes. The logic is now we have -- tell our buyers that this is the position and we want to do that. So they are also realigned in the new regime. And now they are also tightening this credit squeeze in -- for their customers. So definitely, we are very hopeful there because now payments has come -- started fastly from this month. And as we think that now this level is okay. So it is not that in future what we'll export, it is the high current days. We will allow the buyers. So lesser guarantees. So we have aligned our business like INR 2,000 crore of sales and INR 1,000 crore of debtors.
Okay. So yes. So could you also share what is the approximate receivable days that you allow or the credit period that you would be allowing now?
So it will depend on buyer-to-buyer. But definitely, it is -- some buyers, we will give 30 days now. In the future, some buyers, we will give 60 days, some buyers with 90 days. So in the future, we are setting the target that we'll not allow between 60 days to 180 days maximum.
Okay. So maximum is still 180 days?
Yes.
The next question is from the line of [ Ayush Shri ] from AZB.
Yes. I'm just reading out the transcript from the previous call. You had clarified that there'll be a INR 1,000 crore reduction in debt in this particular quarter, which will bring down the overall debt from INR 4,500 crores to INR 3,000 crores on 30th September. So can you just clarify whether that was a misprint? Or what was it?
Actually, we have committed debt from INR 4,400 crores to INR 3,400 crores. So now it is INR 3,600 crores. We have reduced INR 800 crore. And we have given debt, further, we are reducing. So we said INR 1,000 crore, but we were able to reduce INR 800 crores. And further, we are reducing. We have cash on the balance sheet.
Yes. But in the previous transcript, you had said INR 1,000 crores in this quarter, not in the entire half. And now what we're seeing is INR 400 crore in this quarter.
No, no. If you look at it from INR 4,400 crores to INR 1,000 crore, it is for the 6 months. And it could be balance sheet numbers on there...
Is the transcript...
Yes, balance sheet comes only September. The last balance sheet was earlier in the March.
INR 4,500 crores as of 30th September...
Because last balance sheet in the March. Now it is September. So it is 6 months.
Okay. I'll just leave it at that. I'm just saying that in the last transcript, specifically, it says that is INR 3,000 crores on 30th...
We'll see that transcript. But because maybe the misprint is there. But because we have -- because INR 4,400 crores was -- debt was on the March only, not in the June.
Could be a misprint, but that what I was...
INR 4,400 crores in the March only, and then there's an actual fee here in the balance sheet. That's INR 4,400 in the March. And now it is INR 3,600 crores. So we have already reduced by INR 800 crores.
Yes. I mean, I would just suggest that you should once again go back and check the transcript because it says INR 3,000 on 30th September, that the projection was that the debt will be INR 3,000 crores on 30th September.
Our next question is from the line of Vinay Jaising from ENAM Asset Management.
This is Jiten on Vinay's line. Now my question is that I think your intent is very clear. Whether you have reduced INR 1,000 crores or INR 800 crores doesn't make a difference. The fact is you are reducing the debt. Can you give us a road map of long term? Let's say what would you see this in 2 years or 3 years? Let's say, 2 years. Like March 2029, where do you see all your debt levels if your export business becomes 0? Where do you see your debtors and debt level probably in 24 months from today?
So right now, I can say only that if you look end of March, we have given the target of debt level, INR 3,000 crores to INR 3,200 crore, right? So that level is okay for us. And we -- and whatever we have that cash we are generating in the business. So we will keep opening stores after that. And right now, we are opening stores for franchisers, which is less capital-intensive. So the company's future plan is definitely in future also in this year and another 2 years also. We have a plan to further reduce the export depending on the situation. So right now, we have sent a target of going forward and next year, definitely, we want to reduce our export. We want to grow from the -- more on the franchise model versus our model, so that there is no investment from the company side in inventory or the store level. So this is our plan. So once we want to -- and for this March level, definitely, our debt level target is INR 3,200 crores and export is INR 2,000 crores and debtor receivable INR 1,000 crore. In future also, definitely, we want to reduce the credit business further, but I cannot give the target. But definitely, this company want to reduce that credit-based business in the future.
But Balram, the best thing would be if you are not going to kind of make the business 0, which is your export business, would you be looking at demerging this into another company? Because this is not something that is helping the balance sheet here at PC. So would you look at it from another perspective where basically the overall return on capital numbers are not very good. So let's say your export is about -- going to be INR 2,000 crores this year, but not prefixed too much on -- every direct. It's touching 5% or so in the margin, which is about close to INR 1,000-odd crores profit And if you bring it down to 0 and if you see your capital employed, I think it will make your ratios look much better. What is your view on that?
Yes. So it's a fair observation. See, you have to understand that this year is a year of too much activity for us, right? So there is the liability side that we are managing. And therefore, we are also changing the asset side, whether it is inventory or debtor levels. At that right time, we're open to evaluating all the options. But the way we think about the business for the next 2 quarters, we have to do a lot of things on the operational side, and that is where our effort is going to be. Once those stabilize, and we have a more stable environment, both externally and internally in the company, then these larger calls on -- of the kind of a demerger or a separation of the business can be taken at that point of time. But to do it in this environment, in the current environment would be slightly premature.
Definitely, first, we want to achieve in March what we said right now. Definitely, we will evaluate the situation at that time.
So Balram, you said that your export receivables are about INR 700 crores, right?
INR 1,700.
Actually, we want to come -- we want to bring down to INR 1,000 crores. It is now INR 1,700 crores.
That is export receivables?
Yes.
So if you look at your export turnover, it will be INR 2,000 crores this year, and your receivables is about INR 1,700 crores? Am I correct?
No, no, no. This is -- until March, that export turnover will be INR 2,000 crores, and receivable will be less than INR 1,000 crore.
Right. But all will be virtually export. That's what you're saying, right?
Yes, yes. Domestic, we don't have debtors in the domestic.
That's what I'm saying, Balram. What kind of a business is this business? 6 months of receivable. Why don't you shut this business or why don't you demerge it? Because you are not getting value in your main company only because of this. But if you shut this INR 1,000 crores further, your volume will go to INR 2,200 crores.
So actually, shutting down the business, everything is totally completely, right now, not possible. But definitely, we will see this idea. And definitely, we'll discuss this.
Right. It's so common sense that on a INR 2,000 crore sales, one side of an INR 8,000 crores sales you have no receivable. One on INR 2,000 crores, you have INR 1,000 crore receivable. Might as well check this and improve your market cap, no?
You are right. You are right. Actually, earlier, that's why the company have decided to reduce it because earlier the credit fund is really available at a very cheaper rate. And we were doing this business, and we were making profit also. So now because credit squeeze is there, definitely, that our company's thinking on this line. And instead of demerge this business, it is good that you reduce the business first. Then you plan for anything.
Definitely. Titan is talking about turnover of INR 50,000 crores in this thing. I'm sure your INR 8,000 crore can become INR 24,000 crore domestically, and you can do much better. And ultimately, management, Balram, will get released also from it.
You are right. Definitely, we will discuss these things. And definitely, we'll think on these.
Sure, sure. And where do you think ultimately you're now targeting your balance sheet return on capital employed?
So that's why, Jiten, I cannot give you the number. But definitely, when the company is more focusing on the franchise model, definitely, in future, when this business -- this model is stabilized, definitely, we are -- the ROE will increase.
So I just want to remind you at one time it was 35% in your case. So if you get back to your old model and focused way, your ROI can hit 35%, and I think that will be very, very solid.
You are right, actually. Yes, you are right actually. That time, our base was 4, 5 store only. So definitely, we opened from 4, 5 store to around 9 -- more than 90 stores. So every year, we were opening more stores. So -- and that's why our ROE definitely is impacted. But now, we have shifted to the franchise model. Again, we think that our ROE we will improve.
Okay. My last question to you is, what is your blue sky scenario? Because Titan is talking of INR 50,000 crore. PC is the #2 player. It's a very solid company. It is not like Gitanjali or something. We don't -- we respect you more than Gitanjali. So exactly what is your vision? Like we are saying INR 50,000 crores can happen in 5 years. What is your vision? Are you as bullish? Or you are seeing that this is main cap?
No, no. Definitely, we are very bullish because there -- because why we are bullish, that market is shifting differently from unorganized to organized. And we -- if you look at the -- until March '18, we were growing annual compounding growth of 15%, 20%. And even first quarter, our growth was 15 -- more than 15%. Only this quarter, that growth -- there's a degrowth. But definitely, we think that jewelry industry market is shifting from unorganized to organized. And there's a huge potential to grow in the jewelry segment, where only 30% market is organized or 65% market is still unorganized. So we are very hopeful that business is shifting. Only quarter-to-quarter impact is there, but long term, we are very bullish.
And see the thing is we don't want to show you very big numbers too much down the line because then you will come back and say, this second quarter number...
But definitely, you look at -- don't look at the quarter number. But definitely, long term, the business is shifting from unorganized to organized. And look at until last March '18, every year, our annual compounding growth is more than 15%, 20%. So growth is there.
So Balram, please, I would request you to close down this export thing. I think it's causing too much a problem to you, to shareholders, to all of us. Just make the receivable 0, make the export 0. It doesn't make any difference. You are not getting any payment anyway for that. On the contrary, if you see, when you shut down all the export, you'll reduce another INR 1,000 crores of borrowing because all these debtors will go away. On INR 2,000 crores and plus, whatever you are generating, you'll do much better. On the contrary, all your borrowings will come down. You will be a focused, branded retail jewelry business on domestic side. Your fees will raise some 5, 6. -- maybe that will become 15, 20 times. You will do much better. Why don't you look at it, please?
Look at this quarter, our 95% sales from the domestic only.
But I want 101% from domestic from you.
No, no, no, you are right. But definitely, we have -- communicating on the same path. And definitely, we will think about it.
And what is -- lastly, what is your management proposal for shareholders now in the company, all this put together?
It's around -- 58% around.
58%? So there is no...
58%.
58% around.
58%? So over a period of time, do you believe that there is no plan to dilute that, right?
No, no, no. There is no plan to dilute. Definitely, they will...
We can imagine that this would remain static for a while?
Yes, yes, yes. There's no plan to -- there's -- definitely, there is no plan to dilute.
Very good. Very good. So we hope that by the end of March, when you come back and report your results on 31st May, basically, you'll come back and you'll also guide us on this whole export business, please?
We will definitely give that complete -- even we have given the guidance until March. And in the March, when we announce the result in March, that's when we'll definitely give the complete guidance.
Right. Please consult all your other members, board, family members or your brothers, et cetera, and just shut this business down. My real advice is you'll do very, very well if this goes away. I hope you'll look at this. All the best for the next 2 quarters and for the future.
Definitely. Thank you. We'll discuss this definitely.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Sanjeev Bhatia for closing comments.
I thank everyone for taking out their valuable time and participating in this call, and a very good evening to all of you. Thank you very much.
Thank you very much, sir. Ladies and gentlemen, on behalf of PC Jeweller Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.