I had attended the AGM of Thangamayil Jewellers Ltd held on 4th August. Key highlights of the AGM that I noted are given below (might have some discrepancy as had quickly noted it down especially for nos):
• Akshaytritya benefits this year after 2 years. Well placed to perform better in FY23 for following reason: 1. Normal business restoration after 2 years. 2. Higher agricultural income due to rise in price. 3. New outlets 4. Better stock turn. 5. Product mix. 10 more branches to be upgraded. Our core objective to grow sales will help. Objective of opening new stores will help in growth further this. Diamond sales increasing. Good contribution from diamond sales. May not have any difficulty in future expansion. TN enough room for growth. Pent up demand – Aadi Perukku – sizeable turnover achieved in one day as it happened for Akshay Tritya. All our working capital requirements are tied up with banks. Margin limits available through internal accruals. In terms of dividend distribution policy, company paid interim dividend of 10 each. Final dividend of 5 per share. Existing scenario and efforts by management to improve bottom line and achieve reasonable profit in the current year. Confident of achieving 15 – 20% topline growth in FY23. Branding, borrowing from banks and customers and our own internal accruals will result in proper debt equity ratio.
• Aadi Perukku – 62.76 crore turnover – 47% jump in one day turnover compared to last year. Akshay Tritya we did 80 something crore. FY20 – 30 crore sales during Aadi Perukku. More than 100% jump. It is very good number of bills – 5407 in FY20 vs 6020 in FY22 – 8060 bills this year. Weight per bill is also higher. Silver also doing well. 4 tonnes vs 3 tonnes last year sold during Aadi Perukku. Aadi Perukku is over and now Awani - wedding season will start. Q2 will also be very good.
• Expanding brownfield – expand 10 existing stores. Work is already done. Yesterday business was good. Total brownfield – expand – 4464 sq feet expansion in 10 stores. 26,295 sq feet post expansion retail year. Opening of new branches – 2 this year. Erode in October and January 1st or 2nd week – Kumbakonam. Good financial background. Our own internal accruals and banker support. Business growth is very good. Q2 should be very good. This year also our business – 20 – 25% topline growth is possible to achieve this year.
• Erode and Kumbakonam – January and October to be opened. 10 browfield expansion – 4 completed – Madurai – month end and others by Q3 and Q4.
• 4% net profit margin? Already done 2 – 3% margins in Q1. Working on 4%. With present scenario after two years and pandemic – Q2 is also going to be wonderful. Aadi Perukku did well – 112 kg vs 140 kg in Akshay Tritya. We will do well this year.
• Concalls – We are also aware – planning for that. Now we will start doing it very soon.
• QIP – 30 – 40 branches – documentation is going on – board is yet to take decision on what price to sell – merchant bankers and lawyers appointed – we will do very soon. 200 crore.
• Profitability – this year Akshay Tritya – business doing well. One day before collapse in margins. July is good. Changing our business profit ratio. This quarter we will improve margins.
• 4 stores opened last year – period of operation – 3 in Q3FY22, Q1FY23 Trichy. Sales in volume of gold, silver and diamond is above pre covid levels now.
• How many stores diamond is sold? Trying to increase the number of stores – 29 now have 39 large format stores – will sell in them as well.
• GM in silver and diamond? 20% GM in silver and diamond. Trying to increase it to 10 – 12% of sales. Diamond segment more
• Infrastructure across TN – pace of 4 – 5 stores to remain? Will open 4 – 5 stores every year for next 3 – 5 years
• Substantial improvement in inventory turnover? Special software with Goldrat. Achieved 3.13 times turnover in FY22. Current financial year – it will further improve in Fy23. Q1 achieved 4 times stock turnover.
• Ad spend and normal spends? Due to expansion of 5 showrooms, we had higher ad budget in FY22. Depending on expansion, we will determine ad spends. 5 new showrooms have achieved break even.
• Working capital tied up? 5 new stores opened in FY22 and Q1FY23. Tied up for its working capital.
• Profit margins? Price reduction exercise was taken to maintain market share last year and in Q1.
• Next 3 – 5 years company reaching GM of 11 – 12%? Putting all efforts to increase GM going ahead – product improvement in mix. Will achieve it if everything goes well.
• Competition? Reduction in price etc? We have done reduction in price to maintain our market share and able to compete with our competitors.
• Mandatory hall marking? Beneficial to organized sector vs unorganized sector. 2001 onwards started doing it. We are always beneficial and large format and organized sector will benefit from it.
• Goldrat appointed for increasing inventory items. Now this year we are selling costly item also. Same store sales doing well and that is why we are doing brownfield expansion.
• Bar sales will be very little – 3 to 5%. Low value addition items – 40% chains moving items. Chains – more than 40 – 42% of sales. Value addition is less. Design is not much. Fancy items etc are costlier. Chain items margins are 4 to 5% GM and rest items have GM of 10 – 12%.
• First we should concentrate on top line growth – geographical expansion also – every year 20 – 25% growth. Margin some reduction, advertisement spends also there. Trichy – April 14th opened – now its 4 times turnover – 100 kg store. First concentrate on top line and then margins will come.
• Hallmarking – implementation by Government not stringent. Not many new unorganized stores came up in last 2 – 3 years but old stores there. 100% implementation not there. Government implementation is very slow. Future is that organized players will do well – customers want 100% transparency, good service etc. If government implementation is stringent, topline growth will be 30 – 40%.
• Inventory at large and small stores? 60 kg in large stores – 20 – 30 kg in small stores
• Trichy store – 100 – 120 kg inventory available.
• 10 stores – brownfield expansion and new stores opening? We are opening 2 new branches – October – Erode and January – Kumbakodam.
• Inventory turnover planning for 4 times this year. Goldrat other software are very useful. We are using it.
(Disclosure: Invested from lower levels)
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