For the complete FY21,Kalyan posted a loss in its consolidated balance sheet amounting to Rs 6.1 crore. Ramesh Kalyanaraman, executive director of Kalyan, talks to Rajesh Ravi about the outlook for the year. Excerpts:
Jewellery retailer Kalyan Jewellers reported a 54.1% year-on-year growth in consolidated net profits for Q4 of FY21 to Rs 73.9 crore, mostly on robust revenue growth in India and strong recovery in the west Asia operation. For the complete FY21,Kalyan posted a loss in its consolidated balance sheet amounting to Rs 6.1 crore. Ramesh Kalyanaraman, executive director of Kalyan, talks to Rajesh Ravi about the outlook for the year. Excerpts:
What is your outlook for the current fiscal given that last fiscal business was muted due to the pandemic?
In the last fiscal Q1 was a total washout for all because it was a complete lockdown. In Q2, the recovery was fast in India and we got a turnover of 92-93% as against Q2 of FY20 with 90% of our showrooms functional. And in Q3, we had double-digit growth and all our showrooms were opened.In Q4, Kalyan grew by almost 61% y-o-y, and for the complete FY21, we ended having revenue of 93% of last year.
Compared to last year, the first quarter of this fiscal was not a total washout and currently, 50% of the stores are open. The first three weeks of April were normal, while we had to close in May. In the Middle East, all our stores are open. Last year we opened only 2 showrooms, while we have opened nine showrooms already in April 2021.
Experts, including,World Gold Council, report that gold-related business could see a surge in the second half of 2021.
Last year people spent more on gold jewelry while restricting expenses on other wedding-related expenses. During H2 of 2020, growth was in the range of 20-30% as weddings happen after the lockdown. And in Q4, the growth was more than 60%. With the opening of the market and more weddings happening revenue should comeback this year too.
Are you expecting a pent-up demand in the gold jewelry, including investment demand, once things return to normalcy? And what will be the impact of mandatory hallmarking?
In Q2 when the showrooms opened,90% of the business was wedding demand as against a normal share of 15%. Interestingly small-ticket buyers stayed out in the fear of the pandemic. More than pent-up demand there is a significant increase in new customers post-Covid, especially in Q4. More people are shifting to organised sector due to the Covid. People are preferring stand-alone big showrooms. Mandatory hallmarking will also add to the business of the organised players. If the shift to organised players continues, we expect all players in the organised sector to do well. Currently only 30% of business comes to the organised sector and this policy will make a big change.
What is your outlook on gold price?
Gold price moves up and down in the short run.But in the long run, say 5 years or 10 years, it has only moved up consistently. Gold is a liquid asset and investors have seen it moving up in the long run. Most people, even youngsters, are now looking at this commodity very seriously as a good.
What about the expansion of your showrooms in India?
Kalyan has plans to open 21 showrooms this year. We had announced in April that we will open 14 showrooms and we could open only nine showrooms.
Normally we open 12-15 showrooms a year. Kalyan raised Rs 800 crore via the IPO for expansion in India. Our usual investment for a showroom is Rs 35 crore.In the Middle East, we are waiting for the market to settle down and then make a decision.
Kalyan had invested in an online platform. What is your experience in the platform?
We acquired Candere about four years ago and have seen the business grow almost double every year. In FY20, the total business was Rs 56 crore, while it jumped to Rs 82 crore in FY21. Our revenue has been growing even without the impact of pandemics.People are using the online platform for the gifting vertical and additional revenue and not a competition to the offline customers. We are also seeing young customers trying out products in Candere and then becoming a Kalyan customer.