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PC Jeweller Ltd
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Ladies and gentlemen, good day, and welcome to the PC Jeweller Limited Q4 FY '18 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 of the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.I'll now hand the conference over to Mr. Sanjeev Bhatia, CFO, PC Jeweller Limited. Thank you, and over to you, Mr. Sanjeev Bhatia.
Good evening, ladies and gentlemen. A very warm welcome to the earning call of PC Jeweller for the Q4 FY '18 as well as full fiscal 2017, '18.Along with me on this call, I have my MD, Mr. Balram Garg. The results for the Q4 and the complete FY are already available with you. We have also put a management presentation on our website, which provides a detailed analysis of both our P&L as well as balance sheet figures. I will not go in details of the figures already available with you and leave that to Q&A. I'm sure that you have all gone through our presentation. We have tried to increase the disclosures and provide additional data points to our investors. However, we are very happy to report a Y-on-Y growth of almost 27% in our domestic sales and almost 32% growth impact. The company has improved its profitability in spite of doubling its ad spend during the year.At the same time, I would like to present the management clarifications on some of the issues raised in the last 2 months. The first is gifting of shares by one of the promoters, Mr. Padam Chand Gupta. PCJ is a first generation business, which has been set up by the combined effects of Mr. PC Gupta and his younger brother, Mr. Balram Garg. These 2 brothers have the full management control of the company and any gifting by Mr. Gupta has not changed this position. This gifting has been made by PC Gupta in his personal capacity and within his family itself. This is a personal decision which has not affected either the management control or the future growth prospects of the company, and the company is not affected or concerned by the end use of the gifted shares. The promoters have, until date, never sold or pledged or touched their shareholding in any way, and this gifting was the first-ever transaction they have done with their shareholding. Thus, they do not have any anticipation of the market reaction to this step. They, however, convey their regret to the investors on this entire episode. The promoter's involvement in this business and the commitment to the same is also reflected in the fact of providing their personal guarantees and collateral to the bankers for the working capital loans given to the company.Second point, cash on the balance sheet. As disclosed in the financials, PCJ has almost INR 1,500 crores of cash lying on its balance sheet. The company is using this cash in the -- on the balance sheet in the form of fixed deposits. The company is using this cash to support its working capital requirements and will also be drawing down the required amount of the buyback from the same. We also clarify that as the number of franchisee stores goes up, the requirement of internal working capital will continue to decline as the franchisee investments also come in. The company is also reducing its liabilities from banks from this cash.Number three is finance cost. The finance cost components include CC interest, [ NGL ] interest as well as SBLC commission and bank charges. During the past 2 years, the company has built [ coupon ] on the CCBs and which is also included in this figure. The percentage of finance cost to the overall sales has reduced to 3.06% from 3.86% over the last 2 years. Going forward, this ratio is expected to decline further as the company is utilizing more and more of its cash for reducing its liabilities oblig debts from banks.Number four, export business. There has not been any change in the company's export model since beginning. This business continues to move on its own steam and has contributed 25% of the top line and 15% of the PAT in the FY '17 rating. Also the overall weighted of export business has already come down this year and going forward, we expect this weighted to decline further in the current fiscal as well. Regards our export business, we would also like to further clarify that the company exports only gold jewelry. All its sales of studded jewelry are in domestic market only. The company does not export or import loose diamonds. It imports gold from international banks against SBLCs, manufactures jewelries and exports the same. The company does not use LOUs or LOCs or any such similar trade documents.The export business is a B2B business and, thus, has receivables. But we wish to advise that, until date, there has not been any bill returned unpaid. At the same time, company is working on various initiatives to reduce its receivable levels during the year, and they should start getting reflected in our results a few months down the line.During the current year, the company will continue to work on strengthening its brands, its designs, systems and processes. We will continue to emphasize on growth through franchising model only. The company has finalized around 15 new franchisees, and we expect to keep on opening stores regularly in this vertical.I'll now leave the house open for Q&A.
[Operator Instructions] The first question is from the line of Jay Doshi from Kotak Securities.
Yes. This is Rohit Chordia. Very quick question on your franchisees. If you could help us with what is the typical size of a franchisee? How many franchisee stores did you open in the fourth quarter? And what is the typical initial stocking level at the franchisee?
So the franchise model is actually -- we have only one model that every investment by the franchisee only. And right now, the total we have around 94 stores. Out of 94 stores, 12 stores are the franchisee. Last year, we have 92 stores. Out of 92, 10 stores is the franchisee. And this 12, we have only opened 2 franchisee stores. And going forward, we have 7 stores on the pipeline in the next 2 months. And another 2 months, 7 or 8 more stores. So we have, finally, 15 new stores, are only franchise stores. So going forward, we are 90 -- over 90% stores are the franchisee only. So this is the franchise model. And typically in the franchisees, the store size is around -- between 2,000 to 3,000 square feet. And the inventory level, it depends on the city. It's around -- from INR 8 crores to INR 13 crores, inventory level of the franchisees.
And how many franchisees did you open in the fourth quarter?
So fourth quarter, actually, we were supposed to open 3 stores, but that 2 stores we haven't opened in April, because franchisee model, what is happening there, because once we do the dividends completely then in our own store, when we sign the agreement, it takes only 2 months. But in franchisee model, it takes 4 to 5 months when we sign the -- sign any franchisee agreement because we have the set vendors in our own store, but they have their own vendors, so they took more time. Then every franchisee is bank-compliant and every franchisee is funded by the banks. We have tied with SBI bank and every franchisee is bank-compliant. So banks and others take more time. So that's why it's around 2 months, franchisee stores take 4 months to open.
So you opened only 1 net in the fourth quarter?
Fourth quarter, we opened only 1. This April, we opened 2. Then 7 stores in the pipeline, which we are opening in the next 2 months.
Sure, understood. And the -- on the export business side, your fourth quarter revenues came in at 300. Understood that there is a lot of pressure in the gulf, especially after that issue. What is the normal run rate you would like to maintain here?
So actually, if you remember, when the -- in the start of the year, we have already -- because that time, we have already imposed the 5% import duty. That time we have already given the guidance for the export, that export business will be stable. That's why there's no increment in the export business. But again, our export business is stable. But in this fourth quarter, we -- in January, they've imposed a 5% VAT also. So that's why there's a decline in the export business. So now, they have removed the VAT. So now, this year also -- this year, we think that our export -- we are expecting the export business either stable or some decline.
With the stable...
[Operator Instructions]
The deals -- your receivables, you said you are working on a lot of measures, if your outlook for export business is stable to modest decline only.
Actually, because -- the reason is behind that because in Gulf -- already Gulf has imposed 5% import duty. Yet they have removed the VAT, that's why we cannot accept that decline 30%, 40%. If they will not remove this VAT, maybe we are expecting 30%, 40% decline. But now, we are expecting some decline in the export business in the coming year.
How do you reduce receivables if export is flattish?
So definitely we are working hard to -- and we have set a target until September to reduce the debt by 30%, and we have already started that.
The next question is from the line of [ Hitesh Kumar ] from [ Aksa Capital. ]
My question is only with regard to your revenue growth this quarter. So historically, if I look at -- Q4 typically accounts for 27% to 30% of your business and of the annual turnover, and that also coincides with the wedding purchases. However, if I look at this particular quarter, despite gold prices being higher sequentially as well as on a Y-o-Y basis, both on a quarter-on-quarter and Y-o-Y basis, your revenue growth hasn't been to that extent when you have opened about 10 to 15 stores in this particular year. So quite possible that you have seen a volume decline despite adding stores. So could you just throw some light on this aspect?
Actually, if you see that overall industry from the fourth quarter. So because of the gold price has suddenly increased, if you look at 3 quarters ago, the growth is more than 30% or 20% in the domestic business. So we were expecting some decline -- already decline in the fourth quarter because there's a lot of business earlier. And -- but if we look at the fourth quarter industry-wide, there is a decline in industry-wide. There is 20% decline over industry-wide in the fourth quarter because the gold price has suddenly gone up. And what we have -- but we did around 12% growth. And if you compare to the [indiscernible] 30 years and we are in the line of that only. And we are not in the -- again this first quarter after the [ successive ] year, the demand has come back. And because this is definitely quarter-to-quarter, demand can be -- fluctuate. But if you look at the whole year, we have said so many times earlier also that quarter-to-quarter maybe demand can fluctuate. But this is a clear sign that business is setting from an -- unrecognized. And the -- so we are expecting a good growth in this year also. And the businesses -- if you look at the fourth quarter, the business is back to normal. And if you look at the last year, the growth was more than 40% of base, a little bit high also. But we are very satisfied with the 12% growth in the domestic compared to the other players.
No. But then -- I mean if the business is going strong, the organization should have been some beneficiary offered despite as you said the industry has indeed grown. But -- and okay, but then the earlier -- your competitors have shown reported growth and this is much about the price growth. So at least, if not for the volume growth, your price growth should have offset the volume decline that you may be suggesting, which happened in your case.
No. The price difference, if you look at -- around, there's no volume decline because the price -- if you look at diamond jewelries also they're at more than 30%. And if you look at the growth of -- its price difference, it is around, I think, maybe 5% compared to the last year.
Sure, sure. My second question is with regard to your -- if you could just share what is the current debt and give a breakup of that between your bank borrowings and your borrowings, okay, and your gold on borrowings. What would be the split of this?
Just if you look at the follow-up presentation, we have given a detailed presentation on that. What is our bank borrowing, the liability of leased gold, what is the cash available in the balance sheet in the form of FDR. And how we are going to use this cash in this year. We are [indiscernible] in the...
Sorry, this is not -- I couldn't see the presentation on the website and...
So let me explain. The gold on lease is around INR 3,384 crores, and that is around INR 1,000 crores. So -- and we have a cash of around -- more than INR 1,500 crores.
Okay. Of this INR 1,500 crores, how much is income or the [indiscernible]?
No. Only the 10% -- we have to give only 10% -- our margin for the -- to avail the gold on lease.
So how much is that amount? Please tell me amount, which is income growth?
Around INR 300 crores.
So as I look at the balance sheet, the bank balance, are those the number -- is that the encumbered bank balance?
No, no, no. That is the -- there are 2 balances. One is the long-term FDR, one is the short-term FDR.
So you're telling me, not the entire fixed deposit is encumbered against gold loan?
No, no, no.
Only part of it is encumbered?
Yes, only 10% is requirement.
[Operator Instructions] The next question is from the line of [indiscernible] from [ Newbury Capital ].
My first question is in respect to your average interest cost. So what is your average interest cost?
Average interest cost is around [ 3% ].
The average -- do you want the average interest cost as percentage of sales or because the interest cost is different on bank loan as well as [ NGL ]. So combined interest cost is about 3.08%.
This is [indiscernible] percent of the sales.
What is your percent for outstanding borrowings?
So our outstanding borrowing for the gold on lease is around INR 3,300 crores, and our [indiscernible] around INR 1,000 crores. So gold loan is around -- if you include the gold loan rate, it is gold loan rate plus LC commission, everything included, is around -- we have 5.5% and working capital is around 11% to 12%.
And my second question is related to the number of franchisee stores you are planning to open for FY '19. Like you -- given the number of stores for the next 4 months, so for the past quarters, so what is the plan for the next [indiscernible]?
So total store we want to open the next year and this year -- coming year is around 30.
So 90% of this will be the franchisee stores?
Yes. 90% will be the franchisee.
The next question is from the line of [indiscernible] from Lucky Investment Managers.
Sure. I have 3 questions. First of all, I was just trying to look at who your bankers in the last year's annual report, but you haven't mentioned. I just wanted to know who are your bankers. Second, why should you have a structure wherein you have cash of about INR 1,500 crores and long-term debt of about INR 1,000 crores or working capital of INR 1,000 crore which is -- highlight that. And my third question is how much of your balance sheet is in the export business?
We have already -- we have -- because earlier, we were not having that cash. And earlier, we don't have enough cash in the balance sheet. But now, because we are [ building ] cash, and now, if you look at the complete presentation, we have given the plan this much cash we have and we are reducing the liability -- how much will be reduced this year, the liability. We have given the complete plan in the presentation. INR 400 crores, we will do the buyback, and balance we will reduce the liability from the bank.
Okay. So around INR 1,500 crores cash, you will use INR 1,100 crores to pay off the liability?
Yes, yes. Already we have started the reducing. And we have in the 12 months, we are reducing.
Okay. Who are your bankers?
The bankers, we will -- there are so many bankers. SBI, Union Bank, so many bankers. So I don't know, okay, because this job [indiscernible] whether this requirement is there or not. But we'll -- definitely this year, we will let this to the auditors.
Okay. What portion of your balance sheet is in export business?
So this figure we don't have right now. If you look at clause 41, then the segment-wide asset liability figures are available in the clause 41. And then the clause 41, the complete details are given.
Okay, okay. You said you have 15% of your profits in -- in terms of profits in the export business. What percentage of your balance sheet is in export business?
It is less than 25%.
Less than 25%?
Yes, yes.
And my last question is, do you have any -- or do you want to consider splitting the 2 businesses or are you merging the 2 businesses?
So because we have already announced the buyback, so we cannot -- we are not discussing any of this such thing until the buyback.
Sorry. You are not disclosing any?
No. We are not discussing -- we are not -- the management is not discussing any internally, any about -- any splitting of business or any discussing.
The next question is from the line of Devang Patel from Crest Wealth.
As I look at the difference between the standalone and consol numbers, there is a loss like these auxiliaries and associates are contributing and that has gone up this year, so can you explain that?
It's only because we have one subsidiary that -- let me recall that because that [indiscernible] brand do well, and we are developing that brand. So in that company, there is some loss because we are developing that brand, we are spending on -- to develop that brand. So that it's the only loss in the company.
Okay. And for the full year, FY '19, what kind of growth are you expecting in revenue? You said the growth has started to come back in Q1...
Definitely, right now, the business is good, and we are not giving any guidance. Definitely, after the result of first quarter, we will give the guidance for the full year.
Okay. And then on the quarterly basis, if I look at the other income that has come down in the last quarter. Is there any mark-to-market or any other items [indiscernible].
Yes, yes. Actually, if you look at -- you get the result of this quarter compared to the last quarter, last year fourth quarter, the INR 40 crores M2M profit-wise in the last quarter. And this year, in this quarter, INR 5 crores, INR 5 to 6 crore loss of M2M. So there is a difference of INR 45 crores. Then if you look at the marketing balance, it is almost 2.5x. If you compare to the last year, fourth quarter. In spite of that, the growth in the domestic profit is around 10%.
Okay. So then finally, the shares which have been gifted to family members, can you confirm if any of these shares have been sold? Or they still remained within the family?
So actually, in this [indiscernible] -- I want to clarify that since the IPO, neither any promoter have pledged any shares, any -- sold any shares, transferred any shares. So this share is gifted to the one of the promoter, my brother, to their daughter-in-law. And because that person is not in the business, so it will not be appropriate for us to discuss any action by the individual.
Okay. And so I noticed you mentioned some INR 400 crores of issue [indiscernible] subsequently post the balance sheet date has been recovered. Can you also comment why there was some dividend [indiscernible]?
Yes. Actually, in January, [indiscernible] the UA government have declared the 5% VAT. So suddenly, the sales have come down there. So there's a little bit delay in the agreements but these agreements have come in the April month. And that -- also certified in the clause 41 also [indiscernible] because of some delay, the bunch of payment came in March. And subsequently we received April, but now the business is, because they have moved everything and the business is normal. And that amount as we have already reduced for that liability.
The next question is from the line of Akash Singh from Alpha Alternative.
Sir, I have 2 questions. Like, one is on the franchise model that you have. Like, as you mentioned earlier, all the investment is by the franchisee. So what's the other implication on the margin sharing or the profit sharing with franchisee?
So actually, you can see the profit sharing because we are -- there is no expense involved because in our company, there's a gross margin. Then we are spending on this -- on -- 45% is the expense and the -- then the interest also. So in our franchise model, so there is no cost involved. So definitely, we are sharing almost 50% with the franchisee.
Okay. And the second question is, like, what's the inventory turns in -- of the company in terms of selling gold jewelry and studded jewelry?
So actually, we have the complete turn. The complete turn is around 1.6 because we have mainly our own store. And only we have the franchise model just started this year -- last year only. So as the franchise model grow, our inventory turn will also grow.
Okay. And like, what is the difference between the inventory turns in terms of owned stores and franchised stores?
So because in franchise stores, the inventory on the books of franchisee. And own store, the inventory on our books. But the -- so if the franchise stores -- as we increase the franchise stores, the sales -- we will book the sales to the franchisee. But there is no inventory on the books of company, so it -- so our turn will be higher.
The next question is from the line of Manish Poddar from Renaissance.
I just had one question. This entire share [indiscernible] that, so why does the promoter did not focus in increasing their stake by market purchase? And let's say, if the value within the company, why isn't this option was explored?
So actually, we can do only one thing, either we will purchase the shares or buy back. Both the things, we cannot do simultaneously. So that is not allowed. So that's why company have decided to buy back the shares because we think that this is the undervalue, and we have to -- so the company...
No. I get it, but I'm just trying to understand that since you gifted that shares, you earlier issued CCBS also. Why not increase the share when the share price is back to where it was there, let's say, 18 months, 24 months back?
What I want to say that this was also discussed, and the promoters are very much willing to buy back. But there's one issue that if the share price is moving so -- in such a high level and if the promoter keeps on buying when the share prices have fallen, then it can create an adverse -- then it may [indiscernible].
What is your question you want to ask? That's why the promoter is not buying.
Yes. I just want to understand, let's say, if there's so much value in the entire business, when the promoter is approving for share buyback because it's majority approval up there, why is the promoter not participating in the initial part through market purchase by itself?
Actually, first of all, in buyback selling, we are not participating, yes. These are options, and we can also buy. But simultaneously, it is not allowed because if we buy shares, then we announced buyback. That is some -- the legal compliance is there to buy back. Yes.
The next question is from the line of [indiscernible] from Mount Intra Finance.
First, I have 2 questions. Like, where can I get you this presentation because I'm not finding it in your website or BSE filing? So can you help me?
That is on NSC. That is -- I think BSE, that is not yet...
I think they will take some more time, but NSC is available.
NSC is available.
Okay. So NSC have already uploaded it. But it is [indiscernible]
We have uploaded in BSE also at around 3:30, 4:00 NSC also, but BSE takes some more time to -- before it starts showing. Yes.
Okay. In your website also, it is not uploaded as of now, sir, most probably.
We'll check.
We'll check, but we did upload it, I think, But we'll check.
Okay, okay. Not an issue, sir. This is the first thing. The second thing is just to understand, sir, from a broad perspective, like, you previously, I mean, said almost this time you were working on your own store base model. And like, we have been very successful on that. So why we have decided to shift and change our model to a franchisee base? So on a broader perspective, if you can tell me -- help me to understand on that, sir.
Actually, there are 2 things. One is that if you look at the company is focusing on how to increase the ROE, how to reduce the working capital requirement. So -- and we have built -- if you look at -- yes, so from beginning, I can open the franchise store model always better. But we were building the brand. We are not like other brands who have built their brands. We are -- we were building our brands. And we have just started our company in 2005. Then we did our IPO in 2012. We were building our brands, once we build our brand, then definitely franchise model is always better because you don't require any capital, you don't require any working capital. So the franchise model is always better. And now we have built our brand, and we are getting very good response from the franchisee also. So now it is always better. And any customer will not know whether this is franchisee or own store. Everything is same. Only thing here in our store, we are investing, and franchise store only franchisee is investing. So franchise model is always better to open more and more store. Yes, if there -- if I want to open own store only, then we -- everybody -- we will require whatever profit in the company then reinvesting in the own store only. So now we are generating free cash. That's why -- and that's why we are focusing on franchise model only.
Okay, okay. Second part, just to -- you have extend, but still -- let me -- since I don't have the presentation as of now. So now out of this, you reinvested, like, INR 1,500 crore of cash, like you have decided to go with the buyback for INR 400 crores and risk this INR 1,100 crore and tell you used to pay back the loan. Number one, is it correct? And second, what is the time period?
Yes, yes, it's correct. This is correct. Yes, this is correct. And we have given a detailed thing to how much cash we have and we have, how much we will keep for the supplies. I'm reading this. We have cash of INR 1,491 crore. And subsequent realization of export received is INR 416 crores, less reserves for buyback, INR 424 crores. Amount required for margin money to leased gold, INR 300 crore. So balance amount is around INR 1,187 crores. So approximate this amount, we have already started reducing the liability, and we are reducing the liability. It will help us to reduce our interest cost also for this year.
Yes, yes. Yes, sir. I understand. Only, sir, to understand, like, what will be the time period so that we can repay back loan of around INR 1,100 crores, so total time period will be taken by the company to reach that step?
So I think we have already started. And I think [indiscernible]
Okay. So within next 3 months, we can achieve that, sir.
Yes, yes, yes, because FDR has some days, we are breaking the FDR and it's being also -- so the next 2 to 3 months, it will be over.
Okay. Great, sir. Just another question on the buyback side, sir. Any progress on the legal aspect of the buyback side? Like, when we -- or what is the progress? And by what time can we expect, like, this buyback to....
So soon -- so definitely, our merchant vendors here are doing their work. And soon, we are going to put a seal of approval. So that is on the timeline, I think, we are going for -- in maybe 1 week or 10 days' time, we are going for the seal of approval. Once the seal of approval is received, then I think whatever time is taken, we are on right track.
The next question is from the line of [ Annu Aggarwal ] from NDA Securities.
This is [ Annu ]. And sir, my question is regarding so much volatility in the PC Jeweller store. Sir, there are so many bulk bills taking place, and I think the stores have been hammered intentionally by these traders. So are you doing anything? Like, are you planning to take any action regarding such big traders?
So we cannot take any action. It is up to regulator if they find anything wrong. So I think they will take an action because it is not -- the company cannot take any action. The company is doing only the business and -- or -- on regular basis opening stores. And company is focusing on business only. So now, for the share price, everything, it is up to the regulator to monitor.
But sir, I think whenever there's any issue, you give clarification. Despite that, there is so much negative propaganda going on, on business channels regarding PC Jewelers. So...
Whatever we heard in last 2, 3 months, we have already disclosed in detail. So company -- whatever company can do, company is doing. Whatever -- like, one caution came that if that is INR 1,000 crore, then why [indiscernible]. cost is high? We have clarified this issue so many times that we have the leased gold on the balance sheet. And the balance sheet -- balance among these are leased gold interest. And this, we have already clarified so many times. Now again, we are clarifying. So everything is clear. Only we cannot go to that rumors. And then I think -- and company is -- and if you look at our presentation, I think this is a maximum disclosure we are doing. So what company can do, company is doing.
Okay, sir. And one more question, sir. The issue like this, so there's around INR 400 crores in the short-term borrowings in Q4. So sir, this is pertaining to what, sir.
No, no. This is -- actually, this is -- if you look at the margin, the borrowings is fluctuating time to time. So according to season. So you should know that the limits are sanctioned. So there is no additional thing is there. And in whole the year, the balance -- balances between INR 700 crores to INR 1,100 crores always. So it is particular days, supposed my debt agreement came in March only. Then you will see that this amount is INR 650 crores. And we have already adjusting in April, May that amount. And we only have come down already. And we have started reducing further also.
Okay, sir. And sir, you have communicated that you are going to take approval for buyback in 1 week or 10 days because now there are rumors on social media platform that this buyback will not happen because, sir -- that's why, sir, I wanted to be assured that you are going to take approval in next 1 week or 10 days. So is it -- can I assure you -- assure that to my clients [indiscernible]?
Definitely, we are going to vote the shareholder approval in -- shortly.
Because I know that I have just come to know that PCJ is among hundred luxury brands, like gold chains, [indiscernible] all over the world. Because your company is doing so well, then there should be no such hammering investor price.
You're right. But company can do only what company is doing their work and company is focusing on business and company, definitely, we have increased our disclosure also. And -- so we are doing -- and we are opening regular business. We are opening stores.
And sir, sorry. I can assure you on your part that promoters are genuine. They don't need to be worried. Company is growing. So you sit tight and have faith in the management -- company. Your debts will be backed. We can do INR 400, INR 500 in near future also. Like, I can assure my clients, no?
Thank you. Yes, you can.
Because that is the main question, sir, because everyone wants to be, like, tension-free about PCJ.
The next question is from the line of Rajesh Gajra from Cogencis.
Just wanted to understand, you mentioned that in your franchisee model, you will get banks to finance your franchisee. Can shed some more light on this and whether you'll be providing any bank equities to the bank who will be lending to your franchisee?
No, no, no. There is no guarantee provided to the company. Whatever limit is there, within bank and franchisee. So there is no guarantee provided the company. So everything is done individually by the bank, anything, everything. And whatever guarantee is there, franchisee provides the guarantee, not company.
But you are getting -- you mentioned one bank name also. So you are getting that bank name [indiscernible].
Yes. We have tie-up with a particular bank. And the tie-up is if our franchisee apply any loan to that -- to the bank, they will appraise that, everything. If they are satisfied, then they will change the limit for it.
The next question is from the line of [indiscernible] from Newbury Capital.
Just following up on the shares, which were gifted. I just had a follow-up on that, that the gifts were made in tranches. I mean, gift was made after every 4 days. So what was the rationale for that? I mean, why [indiscernible]
One thing I want to tell you that [indiscernible] talk about the disclosure, if you gifted whether the 15 lakh share, 20 lakh share or 70 lakh share or INR 1 crore, that disclosure is same. There is no other disclosure require that.
My question is not that, sir. My question is that, why was the gift not made in one go? And why was it spread across 4 days -- every 4 days or something?
That I cannot comment because I don't know about this. But if you look at the disclosure bank certificate, whether you are giving gift for 1 time or 4 time, that disclosure is same. So there is no -- there's nothing to hide in that because sometimes, if you think that the disclosure for the higher -- for the INR 1 crore share or 80 lakh share is something different, that is not there.
So within the market and if it was more than 0.5%, then it would've been reported to the exchange, right, sir?
It is only required is the -- when you sold, not the gifted. When you sold only.
So I know [indiscernible]
[indiscernible] 1% or 2%. It's not accepted anyway.
The next question is from the line of [indiscernible] from Vision Ahead.
I wanted to ask one question. If after the completion of the buyback, if the share prices are compelling, will the promoter buy it from the market?
That I cannot comment right now.
I mean, are you saying that you were exploring both the options, the buyback and kind of...
For future, we cannot comment for the future, what we are going to do in the future.
The next question is from the line of [indiscernible] from [indiscernible].
Yes. My first question is regarding the share buyback decision, which the board took recently of buying about INR 424 crores worth of shares. That's one, I think, an impulsive decision because the stock was getting hammered, so based on one or the other rumors circulating in the market and not in the best interest of the company. I am highly critical about that decision now because the thing is that what I want from your comment about it. If you look at the balance sheet last year, as of March 2017, your debt was around INR 690 crores, which shot up to around INR 1,050 crores as per -- as on March 13, 2018. And it is not the case like -- as well as had a highly surplus cash, and there is no other avenue for growth, which PC Jewellers [indiscernible]
We have -- We have already...
Let me complete. So what I wanted was rather than taking an impulsive decision of share buyback just because the -- it was not -- market was hammering the stock based on the rumors, the company should have invested those amount in the growth of the business because there is an humongous opportunity ahead for the PC Jeweller. And the capital would be more efficiently utilized for the growth, and the better numbers will reflect in the future if you would have invested the same capital for the growth. But now you are doing that -- using that capital just for buyback and -- which will not yield any growth for the company. So would management reconsider their decision of the buyback?
So this buyback, basically, I think, we're very right because we have -- if you just look at our presentation, we have disclosed the complete cash because we want to -- every year, we plan whatever cash in the balance sheet. Earlier, we were opening stores, that's why we require more cash. Now we are not opening stores. And we have given the complete breakup, how much cash we have, how much debt we have, what amount required for the buyback and balance amount we are already reducing because we are not -- we don't want to keep the cash in the balance sheet. So now we are reducing the liability. And then the balance amount, we are doing the buyback and because we don't require any because we are offering 90% to our franchisees, so we don't want -- don't require any capital. So we are rewarding the investors.
So rewarding means you don't require for further growth any more cash than you currently have.
Yes, yes, definitely, because we have changed our model. We are now opening more franchise because we have set our franchisee model. And franchisee model, we don't require any working capital. So that's we -- company will keep growing and don't require any cash. So that's why we decide this.
So going ahead, all of your new stores will be franchisee stores and you will not be opening any...
Yes. More than 90 -- but more than 90 -- we are opening 30 stores this year. More than 90% are franchise stores. And we have already finalized the pre-installed franchisee.
Okay. Can you give me a bifurcation of what is the profit margin for a retail in your company-owned stores and the same for the franchisee-owned stores? How much do you get when a sale is made in the franchisee and the same sale is made in the -- your company-owned? So what is the profit percentage?
So profit percentage, if you look at the activity level, so there is no difference. Yes, gross margin, there is difference because we have to share them. But there is a -- there's no cost involved because when will -- our -- whatever gross margin we have, there is cost involved also, 45%, to running the company. Then there's interest cost also involved. So in franchisee model, these costs are not involved. So there is -- without impacting the margins, we can easily grow in the franchisee model.
Okay. And my second question is regarding I'm concerned about the loss of market share -- risk of market share loss against your listed peers in the cities where PC Jeweller is already existing -- it has existing store. For example, I can explain you with an example of my own city, and that's called Gujarat. There is a PC Jeweller store since more than 60 years, I guess. And Tanishq was also there. And then Kalyan Jewellers came, opened a humongous mega showroom of multi-story showroom. Now what happened was the PC Jewellers visibility, even though it's in the core area, it's -- what would be the reason that is not getting the same traction after the coming of Kalyan? Kalyan came, opened a big store, is getting almost 50% of the market of our city. Now the Tanishq -- what Tanishq did is Tanishq also had a small store. After Kalyan came within 1 -- 18 to 20 months, Tanishq learned the lesson that this market has a potential and they need to do something with their store. Something is wrong with their store. They completely built their new store from the ground up, made it big, multi-storeys store. And now Tanishq is also getting this traction. But we are seeing no action from the PC Jewellers. It is still not getting traction. It Is still not highly visible. And it is still old store and seems like a side store if you compare it to Kalyan and Tanishq. So my point is, is the management looking after their existing stores, whether they are doing good or not? If they are not doing good compared to their peers in the market, then are management in the ground doing....
Yes, this concern -- this is a very good question. And company is already taking the right step of old store also. Recently, in last quarter's time also, we have shifted some of our old store to the new locations also. And so company is definitely, I don't -- I cannot comment in particular what is [indiscernible]. I don't know have the number. But definitely, company is reviewing the old stores also. If then we find okay, whether company want to change the location or something, company do that. And within -- in last quarter's time, company have changed 3, 4 existing location to these other locations. And company definitely -- I recently gave example in NCR [indiscernible], we have small store there. But when we find good sale there, we have shifted to the multi-storey store there in -- come -- in April month only.
Okay. So the management is in contact with the ground team and [indiscernible] about [indiscernible].
Yes, yes, yes, definitely. And when you are giving the report for [indiscernible], we'll inquire there also, definitely.
The next question is from the line of Gaurav Jogani from ICICI Securities.
Sir, wanted to know what is the starting share for Q4? Like, you have given the starting share for FY '18. What is it for the Q4?
Q4 is around 32%, 31 -- from 31%.
And sir, like, a participant asked earlier, so the -- okay, and sir, what would be the volume growth for gold -- I mean, in terms of volume growth, what will be the growth in this particular quarter?
The whole year, the volume growth and the value growth is similar with the price. It's only the fourth quarter, the price was suddenly up. So in 5%, I think. I don't have the numbers. But approximately, the volume growth is around 5%, and the value growth is around 12%.
Due to time constraints, we'd like to conclude this call. I now hand the conference over to Mr. Sanjeev Bhatia. Thank you, and over to you.
I really thank everyone for sparing their valuable time and joining us on this call. I hope that we have been able to clarify a lot of questions and the queries, which were in the mind of our investors. I'm really grateful to all of you for joining us, and have a good, good weekend. Thank you.
On behalf of PC Jeweller Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.