Thanks, @satyajitpatra2005 for putting together the numbers. This is exactly what I was referring to.

As long as the LTCG tax rate is non zero, it never makes sense to sell every year as the money invested after selling will be less than what could have actually compounded in the market.

As far as Govt. increasing the LTCG is concerned, they usually introduce a grandfather clause. For e.g. when the LTCG tax was introduced in 2018 on 31st January, all the gains upto 31st January were exempt and the cost of acquisition was taken from that day onwards. Hopefully, this will be followed in future everytime the rate will be increased.

Transcript of the above success story.

Before I (B. Ramesh) would start about the business, I want to talk about it from a different subject.

I will tell you about me and our family.
Our father gave the shop to us in 1980, just 6 months after we joined the shop.
Normally in a family business the elders will not handover the business to the younger ones easily.
That too in a jewelry business there are No1 and No2 transactions which they would not want to reveal, since we would not handle it the right way.
But our dad gave it to us within 6 months and on giving it he held a family union and explained us the struggle and the work which has gone into it. On that day it was 10 feet by 10 feet store, and a sale of about 7-10 lakhs. On that day it was a substantial amount and there were bigger players in the market also. He wanted us to not lose the working capital on any circumstances, he emphasized that we are doing it for our family.

Later, everyday me and my brothers would discuss every thing about the business and the incidents which happened during the day, we would pull each other’s legs, even to the extent of ridiculing the customers, in free speech, later we realized that its SWAT analysis which we had done unknowingly in very deep depth.
When we started, it was license raj in 80’s. Volumes were less but we had profit even in that though situation. We would deeply analyze the business as to how it’s growing and the direction, we should take it.

In 1991 the liberation happened (India), in 2000 globalization and in 2007 VAT was introduced.
From 1979 until 2007 it was like the bamboo tree story, we had deep rooted our business experience and all the expectations and the urge to grow, opened in front of our eyes.
We changed the business accounts totally to bill sales only. This change brought in a dramatic change in our attitude towards the business we introduced systems and technology into it.

In 2017 GST was introduces and we were well prepared for it. We had not taken out our profits we left it in the business for it to grow. We concentrated what the bankers would expect, what collateral they expect what stock ratio they require, and created properties in company’s name.

In 2008 we planned for IPO but because of GFC we had to delay and we went public in 2010.

We have to relate our life experiences with our business in a way to grow it. I will explain a real-life incidence, when my son was 4-5 yrs old we walked into a shop which sells sweets, the shop keeper was very happy and he showed all the stuff he had in his store my son asked him for a chocolate that he had seen through an advertisement (importance of advertisements). The shop keeper didn’t have it, we left that store and went into another store, and that store had the stuff which my son needed. We took 2 of it and I handed the shop owner a ₹100 note, the store owner said its cost in only 25 paise altogether. Immediately the store keeper showed other sweets whih he had and the total cost came up to ₹ 75. This incidence shook me a lot, what I realized was just because a store didn’t have the stuff the customer needed, he lost ₹ 75 worth sales.
Those years our average bill value was ₹ 2000, if a store lost a sale because of not having a 0.25 worth product. What would be the amount of choice & service that we will have to provide to our customers to materialize a ₹2000 worth sale.

We always wanted our product to be of good quality.
I will share 2 incidents which made us realise it.
In 1991, we started export business and we went to Dubai, thinking I am going to do business with an Arabic person. There what I saw was all the shop owners are Sindhi’s and Gujaratis and all customers were Indians. The designs are Indian but still if customers are buying it here meant that the product sells because of the quality. Then we started making 916 jewelry.
Another incidence is I had a customer who wanted the chain which I was wearing, to that I responded by telling him this was Singapore quality and the price which I have quoted to you is not that. For that he said if you give me what I ask for I will pay its cost. I realized if we give what the customer asks, they are willing to pay its cost.
Another incidence, myself and my assistant were travelling by car and we had crossed a school where the kids were walking out, I asked my assistant what thoughts come to you when you see this, he said it’s a school zone and many kids are leaving it after the school. In a short distance away another school and the same scenario I again asked my assistant the same question and his reply was also the same. In a span of 10-12 mins we had crossed 4-5 schools and every time I asked the same question and by the 5th time my assistant got a little annoyed and asked “what brother we are travelling since morning and you are unyielding for my answers.
“What thoughts are in your mind please tell me”
I said, if all these kids grow up, they will come to my shop for purchase, will my store size fit all these people, I have to sell them jewelry, there is a huge opportunity. I will have to expand and also increase my store size.
I had been to a store in Chennai “Pothy’s” (A mega multi garment store) the store was filled with customers. I stood for a second and thought what’s attracting the customers to this shop, the hospitality here and there they served Kesari bath. I realized we will have to give something for our customers also to eat at our store, and we started serving our customers with round peanut chikkies & butter milk. About 50-60 ppl are getting employed in that segment.

We would enjoy our business, we adored it at every situation the thrill and satisfaction it gave, this cannot be experienced in a normal job. This is only for businesses. We had a huge exchange of culture by bringing the designs which are in Mumbai and Bangalore here. Our first priority was customer and their satisfaction. Second are our employees, we have about 1500 ppl working. And their satisfaction is also very important. We have not employed them we have empowered them; We have given them the liberty to think and bring in changes which helps us improve our business.
We are sellers of gold jewelry which is one product, besides that we are consumers of a 1000 different products and services. We encourage our staff to think in practical terms of how a customer will think to get satisfaction in his purchase. My staff have improved a lot and their performance has improved tremendously. After we introduced incentives, one of my staff came up to me and gave a suggestion. He said allocate your incentives budget as employee share of profit. That changed the perspective of my staff they run the stores as their own and bring in changes. Sales are happening all by itself.

Quality, Choice, perfection, price and buy back were our moto. This changed our business different from our competitors. In our concern there will be no changes to what we say and what we do. Since everything has been brought under the system, we are able to do sales of ₹10-15 hundred crores, very soon we will reach 10-15 thousand crores, we have market and setup ready for it.
We went public because we wanted funds to grow, for that we had decided to become a trustee structure. We will only stress more on the valuation of the company at the end of the year. We realized valuation is the biggest asset and I always stress on that.
In the 1970’s I went to Mumbai, my father asked me to visit Tribhovandas Bhimji Zaveri stores, that was the biggest stores in India those days. There was a bank also inside their store, I spent 2 days in their store and dreamt of growing my business to that scale. We went public in 2010 even before Tribhovandas did,

There are 4 types of profit when a jewelry business goes public, Profit because you are in business because we are selling products, profit because of creating our own products in higher volumes, selling in taxed bill itself there is a profit, there is input credit for our purchases & capex which other sellers don’t get because it’s sold for cash and the tax is not claimed. In share market we are trading our shares itself that also gives us a profit.
We should have a dream a big dream and associate ourselves with people who will make us achieve that dream into a reality. Business will throw a lot of situations which will test your patience, we should enjoy all those situations by innovating solutions to overcome those. We should see what opportunity we get through the troubles we encounter.
Q&A
Q. Are your jewelry designs made in house or do you outsource?
View your business from yourself first (How will you sell it to yourself) don’t look at it from a customer’s view, there are some basics of jewelry designs and most of the designs are based on that a few patterns will change, adopt it. Apart from that there are people who have specialized in that field we have such people also as our staff. One third of the jewelry are made in house, one third is out sourced and one third is purchased from others.
Q. How are you controlling pilferage?
We have to believe our employees; “my employees will never do a mistake” (huge applause from the audience) . Unknowingly an employee will do a mistake, but if you believe in your staff and give him the responsibility they will not cheat. After all these there are pilferage’s a little bit of it is provisioned for in 50-50 ratio (Our profit and their incentive)

Q. Visibility of the stores has improved, I was told you give discount to your customer if they produce bus ticket which they had used to come to your stores. Your brand equity has grown high in visibility angle.
And do you refine your gold jewelry? Yes, we refine it. 30-40% are old gold he have our own refinery unit.
There is another angle to your question, my stores are present in tier 2-3 cities only and as such the customers who come are not well off. For that reason, I fully reimburse their bus ticket cost along with a discount.
Q Wastage and making charge is not prevalent in North India please explain it?
We fix our rate on 92% purity, in north India they base their price on 98% purity some places in Kolkata even take it to 99% purity. The wastage cost will get recovered in that. Hence, they don’t charge it separately. The volumes are more in the south, total market for gold jewelry in India is 4 lakh crores out of that 25% sale happens in Tamil Nadu alone.

Q. You are very calculative and never compromise on your profits?
Check our balance sheet, we are unable to reach 2% PAT margins. We are only concentrating on our expenses and how to reduce it.

Q. Do you think or believe the next generation will carry forward the same values that you and your brothers uphold?
In 2001 my elder brothers son came into our business, I studied him for 6-7 years and after that only I decided to expand the business and went for IPO. They are very dedicated and grow the business.

embassy_business_hub.pdf (806.6 KB)

Hi. I am new entrant in learning the basics. How’s its going. Are you looking for anyone now:)

Raymond