RBZ Jewellers Limited (RBZJEWEL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to RBZ Jewelers Ltd. Q1-FI27 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Rhea Dharia from EY Investor Relations team. Thank you, and over to you, Ms. Dharia.

Thank you, Renju. Good afternoon to all participants on the call. Welcome to the Q1 FY27 earnings call of RBZ Jewelers Ltd. Before we proceed with the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must be viewed in conjunction with our business risk that could cause future results, performance, or achievements to differ significantly from what is expressed or implied in such forward-looking statements. Please note that we have mailed the results and the same is available on the exchange. In case you have not received the same, you can write to us and we will be happy to send the same over to you. To take us through the results today and answer your questions, we have the management of RBZ dwellers represented by Mr. Harit Zaveri, Joint Managing Director and CFO, Mr. Harshit Gandhi, Internal Financial Controller, and Mr. Bhavesh Sabnani, Senior Manager, Accounts and Finance. We will start the call with a brief overview of the quarter gone past and then conduct the Q&A session. With that, I hand over the call to the management. Over to you.

Good evening, everyone, and thank you for joining us today for RBZ Jewelers' earnings conference call to discuss our performance for the first quarter of fiscal 2027. On behalf of the management team, I extend a warm welcome to all the investors, analysts, and stakeholders participating in today's call. Before I take you through the financials and operational highlights for the quarter, I would like to briefly introduce our company for those who may be engaging with RBZ for the first time. RBZ Jewelers is one of India's leading organized gold jewelry manufacturers and is steadily strengthening its presence in retail jewelry segment. Over the years, we have built our business founded on three core pillars, trust, craftsmanship, and design excellence. These values have helped us earn enduring relationships with customers, retail partners, and stakeholders, and continue to guide our growth journey. I would like to take a moment to share the core principles that define how we conduct our business and create long-term value for all our stakeholders. A key aspect of our philosophy is conducting business with the highest standard of transparency and governance. At our retail business, Harit Zabiri Jewelers, we strictly follow zero-cash transaction policy, ensuring complete transparency and printability in every customer transaction. We believe trust is not built only through the quality and purity of jewelry we offer, but also through the integrity of professionalism with which we operate. As a listed entity, we are committed to maintaining robust corporate governance, regulatory compliance, financial discipline, and ethical business practices. We aspire to be recognized not only as a leading jewelry player, but also as a company who is known for clean, transparent, and professionally managed operations. As you all know, RBZ operates a unique diversified business model. We cater to leading national jewellery retailers through wholesale and job work relationships, while simultaneously serving end consumers through our flagship retail brand, Haraj Javari Jewelers. This integrated presence across manufacturing and retail provides us with valuable insights into customer preferences, while allowing us to capture opportunities across multiple segments of the jewellery industry. Our manufacturing operations are supported by a state-of-art facility equipped with advanced casting, laser, and 3D printing technologies. Backed by a team of more than 200-plus professionals and around 250 skilled carriers, we combine cutting-edge technology with fine craftsmanship to create jewelry that resonates with today's consumer. One of our key differentiators is our strong in-house design capabilities. We continuously invest in design innovation and product development, enabling us to offer distinctive collections that blend traditional artistry and contemporary aesthetics. This design-led approach has been instrumental in strengthening our consumer appeal and enhancing our competitive positioning in the market. We offer a diverse portfolio of jewelry across multiple categories, techniques, and price points. While our collection caters to bridal festive occasion wear and everyday wear requirements, our strength lies in antique gold bridal jewelry, a segment where we have established a strong reputation for craftsmanship and design excellence. Though Harith Zabiri Jewelers, customer can choose From an extensive range of gold, silver, studded and other jewelry products, including bangles, chains, necklace, rings, earrings and several other contemporary and traditional offerings. Looking ahead, we remain focused on further strengthening of retail presence and brand recognition across Gujarat. Leveraging our strong brand equity in Ahmedabad, we are focused on expanding our key market in East Ahmedabad, Gandhinagar, Rajkot, Surat, while also continuing to deepen our footprints in Ahmedabad. Our long-term vision is to transform Haridzavari jewellers into India's leading Indian jewellery brand, recognized by exceptional design, superior craftsmanship, and transparent business practices. and an outstanding customer experience. We believe that our integrated manufacturing capabilities, design expertise, government-led approach, and a growing retail presence provide a strong foundation for sustainable growth. As consumer preferences increasingly shift towards organized and trusted jewelry brands, we are well positioned to capitalize on the opportunity and create a long-term value for all our stakeholders. With that, let me now take you through the financial operations, performance for the quarter. We are pleased to report a healthy performance of quarter 1 fiscal 27 delivering revenue growth in line with the guidance shared in the previous quarter. For the quarter under review, revenue from operations stood at 121 crores, registering a strong growth of 60% by-on-by. With the revenue growth in line with the guidance shared in the previous quarter driven by robust consumer demand, higher jewelry sales, and strengthening brand decoys. EBITDA for the quarter is 18 crore, reflecting a healthy growth of 39% buy-on-buy, with EBITDA margins coming in an healthy 14.9%. Profit after tax for the quarter has been 28% at 9 crore, translating SPAT at 7.5%. In terms of segmental performance for the quarter, retail revenue stood at 78 crore, registering a robust 70% buy-on-buy growth. Wholesale revenue stood at 42%, reflecting a strong 47% buy-on-buy growth. Job work revenue stood at approximately 1.2 crores. During the quarter, we also strengthened our market presence through activities, participation in five major jewelry exhibitions and trade shows across Savrashtra region, North Gujarat, Ahmedabad, and other key locations. This platform enabled us to showcase our latest collection, deepen engagement with trade partners, and enhance our reach among prospective customers. In parallel, we continue to invest in brand-building initiatives through a series of targeted digital marketing campaigns that highlight both our occasion-led and everyday jewellery offerings. For our occasion where portfolio campaigns such as Akshay Dritya, Aangan, Godbharai, Madhasek, Polki should effectively showcase our antique fusion and traditional Shingar collection, resonating with consumers during key celebratory moments. At the time, we strengthen our positioning of our Lightweight and elegantly crafted daily wear range, including our growing 18-carat rose gold collection through campaigns such as Homecoming, Samayu, Rose, and Vintage. This initiative helped us improve customer engagement, enhance brand visibility across digital platforms, and reinforce our positioning as a trusted jewelry to both aspirational and everyday jewelry needs. With that being said, I would like to open the floor for question and answer session. Thank you and over to you.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on a touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Isha Shah from Malhotra Family Office. Please go ahead.

Hi, sir. Sir, the management has indicated plans to expand into Surat, Rajkot, Gangi Nagar, and Mani Nagar. Sir, could you please explain the expected timeline for these store launches and the estimated investment for store and even the anticipated break-even period?

Okay, so Surat will be launching in Water 2. And Rajkot in early quarter three and same, I think, Maninagar and Khandi Nagar both will be launched in quarter three itself. So three stores in quarter three and one store in quarter two. That is Surat. The size, large format stores are typically around 10,000 square feet carpet area and mid format stores are 5,000 square feet carpet area. The inventory deployment in large format stores are typically around 125 to 150 crores, while in small format stores are around 50 crores, plus and minus 10-15%. The capex, you know, when you say about the break-even point, the capex break-even will be achieved in an year or less.

And sir, what are the initial customer responses and pre-launch indicators for the Surwath and Rajkot flagship stores?

So, the company has done quite enough exhibitions in all these cities before coming to the conclusion of launching stores over there. And as we go near, there are a lot of marketing initiatives and campaigns that have been planned. Before the launch of the store, once it is done and the store is operational, we would get engaged the exact response, but we are expecting a lot of positive response. As in Ahmedabad, we are not a legacy player. The store was, I came into the operation in store in fiscal 21 when it was a 24 crore turnover, and last fiscal year, we closed at 408 crores. So seeing that there is no legacy and the store, we are able to deliver a very high percentage of a very high growth rate. We hope that in Surat and VatchCorp, we deliver strong performances without having any, you know, because we have done that in Ahmedabad too.

And over the next three to five years, how does the management see the revenue mix between the wholesale and the retail segments? And additionally, what is the level of contribution you expect retail operations to make?

For revenue mix, we see that the job work percentage right now in quarter one stands at 54. And, you know, the mix, I think the B2B to B2C mix has to be 50-50 or so in a year or two. And in long term, it will be 75-25, 75 being retail.

Thank you so much, sir. That's all from my side.

Thank you.

The next question comes from the line of Subhi Gupta with Trineta Asset Managers. Please go ahead.

Hello, sir. So my first question is that I think our long-term plan is to open about seven stores, if I'm not wrong. Sir, and in general, in long-term, do we plan to sort of open everything in cluster around Gujarat or? Do we plan to open Pan-India first? Second of all, also, if you could just give some color on our debt-to-equity ratio, what is our target for that since our borrowings have sort of increased? Also, I think that's due to short-term inventory, right, short-term borrowings for inventory. So, if you could just give some color on that also.

So, Because we had a store in Ahmedabad and there was a clear success, we had same demographics in Surat Rajkot and Gujarat market. So we are first primarily wanting to tap that. The eye is set for expansion across India, but we will want to understand how and when the timelines. Given that the debt-equity ratio right now is we have a sanctioned debt of around 300 crores. So debt-equity ratio and we are here to utilize it, which is sufficient for the four stores that is coming in this financial year. By the end of this financial year, we will be still below one is to one ratio. I guess point eight will be debt and one is to be equity. Over the period of time, we are wanting to get up this to 1.5 or 2 is to 1 debt equity ratio, wherein major leverage will be through gold metal loan, because the interest cost, then even if the debt equity ratio are 2 is to 1, the cost of GML is around 3, 3 and a half percent. Which allows us to leverage more and pay the similar kind of interest that we are paying right now in the debt equity of one is to one. So, this is about the, you know, the leverage that we are wanting to take. Not that we are not doing any exhibitions outside Khusrat. We have done exhibitions in Bombay this year. We are planning for exhibitions. We are scheduled for indoor, doing exhibitions. So, we are exploring cities. We are understanding demographics. We have got a strong learning curve from E2B about the merchandise. But we are taking our steps in a right manner and focusing on retail transformation on an overall basis.

Okay, all the best. Thank you.

Thank you. Next question comes from the line of Dipesh Sancheti with Manya Finance. Please, Kupan. Hello, Harit Bhai, can you hear me?

Yes, Dipesh Bhai.

Yeah.

First of all, I just wanted to ask, how was the IAJS show and how many orders and how was the orders from the customers and how was the consumer confidence before the festive season?

So IIJS has been really warm this time. It was really good this time. It was encouraging, and we have seen a buyer growth. We have seen a good order backing. I think order two, we think that because of the orders and all, we are hoping that the performance will be very much in line with whatever we have projected in earlier commentaries.

Great. And were there any new customer additions in this IJS?

So, a good amount of family jeweler were added. Customer penetration was there. So, because of the variety mix, wherein the lightweight and the look versus the weight ratio was achieved in a very... Strong way. We have seen that the orders are better, you know, from a particular customer. So penetration has been high. There has been a good, successful... Thank you.

So, have we introduced anything below caratage also, like below 22 carat, 18 carat, or 14, or 9?

So, we have introduced this since December. Our sales mix in corporate, before it was 100% 22 carat, I see by the end of this year, it will be at least 20% will be of 18 caratage.

20%, 18 carriages. Now, just wanted to understand, our B2B business for this quarter, it was approximately 125 kgs, including the sale as well as the labor job that we did. And we did about 49 kgs in our retail. How much was out of this 49 kgs was our own production?

Approximately around 20%.

20% was our own production.

I really don't have numbers in hand, but yes, that is what the ratio generally remains.

Okay. And so what is our capacity utilization of our factory? Just wanted to understand that.

The total capacity still remains at around 1.8 to 2 tons a year, and the production that we are doing or the consumption that we are able to do is somewhere around 900 to 1,000 kilos. So, we are utilizing factored around 50% of the capacity.

Okay. So, you expect that going ahead in Q2 and Q3, where the festive season would actually start, will we have a higher number on the, I mean, almost 70-80% of our capacity utilization?

In the season times, currently, as of now, our capacity utilization generally goes at 70-80% minimum. 75 percent, 85 percent sometimes, depending on, you know, which days are all. Sometimes it is near to, you know, 90 percent or so. But not on the off-season times. These are the four-season times, July, August, September. Quarter two is very heavy for corporate job work load.

Right, right. And just wanted to understand also that why was the margin lower in spite of our sales growth in volume and numbers were there? I mean, I'm talking about year on year.

Yeah, so can you tell me which margins, net profit margins or EBITDA?

No, no, EBITDA.

The EBITDA level is approximately 40% and generally there are two components that We have understood one is that the average gold rate has remained stagnant, you know, and thus there is negligible inventory gain in the system as of now. So, you know, on the quarter one side, the EBITDA margins have reflected that. There are other two impacts that are there. The amortization of lease assets is 76 lakhs, and the impact of lease liabilities is at 115 lakhs. So, because of this too also, there has been a, you know, sluggishness and margins. So, and because of Suraj store opening, you know, in the month of September, we have already, you know, booked, we have already offered and engaged the employees for the BDL activities and training and stuff. So, even for that, the employee expenses has been a little higher. And the stock engagement and...

The stock level as well as what you mentioned for the previous participant about, you know, you're planning to go for GML, I wanted to understand that will this GML will be for a new retail store or will we apply entire inventory of our 350 kgs for the retail? And for the business, for the factory and B2B business, we will have the GML. Just want to understand that where are we going in the next two to three years? Are we looking at being a prominent retail company? Or are we looking at B2B as an equal, you know, participant?

So, retail, we are going to transform into the... So if I say in a medium-long term, I said that the ratios will be 50-50 in terms of the retail versus the B2B. Given that the profits from the side of value of merchandise will... The retail is a scalable. Anywhere that wholesale business is going, you know, now we are going good in wholesale.

You can also mention the stock allocation and where do you use the GML?

GML, we are planning that, you know, during the course of the journey, we should actually have an inventory which is hedged. We should, we have already started using...

The current inventory will not be hedged, right? As in, we are not doing anything to our current inventory.

No, current inventory. I mean, the current inventory will also be hedged. On the long run, we assume that why not really go for. Thank you. We need to hedge.

If I can just ask that, you know, how are you going to currently hedge? Like, if you have, suppose, let's say you have around 350 kgs of gold, are you going to sell it and then convert the entire loan into a GML? I mean, just want to understand how are you going to hedge your current inventory?

Yes. So, what you're telling is the methodology of hedging, like, methodology of how are you going to do it? So, whatever the sales happens in retail. Okay, it will be, there will be a cash flow, and that's cash, whenever we want to utilize the bank from that cash flow, it will be done via GML. So, currently, we are in negotiation with bank regarding the sublimit as GML, and we will be using all our bank limits plus the equity, everything, you know, that will be rotating. Things slowly and steadily as the sales happens, things will be more in on the GML level.

Thank you. Mr. Sancheti, please rejoin the queue for more questions. Next question comes from the line of Sahil Patani with Strokes Capital. Please go ahead.

Hey, hi Harith. Most of my questions have been answered, but just a clarification. So, the remaining three stalls that you are planning for next year, are they also going to be based out of Gujarat?

So, when you say remaining three stores, do you mean apart from the four stores that are coming right now?

Correct. Yes, correct.

So, yes, couple of them what we have for which the lease has been signed is from Gujarat itself.

Okay, all right. And just to piggyback on... Previous participant's question on EBITDA margin, because obviously we have the three stores, four stores coming up this year. So do we kind of save the similar range of margins for like the rest of the quarters as well? Because you'll obviously be spending on the stores, marketing and stuff like that.

You will be seeing an increased amount of marketing expense. In this quarter also, a good amount of expenses have been, you know, We have accounted or recorded for the expenses so that, you know, it does not come heavily on a single quarter. There is a spirit of expenses. But seeing that we are invested in brand building, upcoming stores are very crucial. It will actually see us how we are performing in retail in chain store level. Given that the longer-term outlook is more on the transformation of retail, we are positive that the brand-building exercises will lead us into a more scalable approach.

Okay, got it. And since obviously your Suraj store is slated for Q2, so we are already in the middle of August, so should we expect something in the next three to four weeks, like some sort of an announcement?

So, Surat store date is coming approximately, coming on the last week of September.

Okay, got it, got it. All right.

It is coming closer to Navratri. The whole thing is that, can it be closer to Navratri? Things, if Surat and Rajkot, both the Megastors are opening closer to Navratri, this is best. So, Navratri is at 11th of October. So, Surat might be in quarter 2 and Rajkot might be in quarter 3.

Got it. Got it. Cool. Thank you, Eric. Thanks.

Thank you. Next question comes from the line of Rahul Verma with Alpha. Please come back.

Hi, good evening, man. Thank you so much for taking my question. Apologies, I joined in a bit late, but I have a few questions. So basically, sir, I wanted to understand on the volumes, are wholesale volumes grew modestly, you know, while retail remained the key growth driver for us, right? So how do you view the demand trends from large retail partners such as maybe Malabar Gold or let's say Titan?

So, the demand, all the corporates are giving us orders because of the upcoming season, that is quarter three, and demanding corporates for quarter one has also been good. I think we are anticipating good response, you know, from the B2B side as well. B2B side will go on doing well. I don't see growth constraints, but major leap of growth is still going to happen from retail. What we are currently, you know, what we are delivering numbers is a store which is a five-year-old. Growth has happened in five years. So basically, it's the same store sale growth, which itself is very promising. So if we really are going on building up new stores, I think we will be getting good response.

And on the client addition, if you could provide some color during the quarter, you know, how many clients we added and maybe the opportunity to increase wallet share from the existing market customers we have?

Sure, I think, let me understand, you know, how can I share the data about, but these are mom and pop stores which we have added, the family jewelers, and there's a good amount of penetration also that we have done, you know, in the existing customers. Generally, the B2B volume and the revenue mix would be able to give you an idea of that. But if there is any addition and numbers that are required, we would be sharing those numbers.

Understood. And just a last question from my end on the JobWorks segment, basically. So, basically, this segment is supposed to be the highest margin and, you know, most asset-light business is what I understand. So, what initiatives are being taken, you know, to increase its share in the overall revenues for us?

So, we are approaching every, be it a family store or be it a corporate, to give us gold in advance, so that less amount of working capital is blocked to do this. And we have at least remained consistent. If you see the mix, the job work mix is right now still at 54%. And I think you are true at saying that it helps. It is a very, you know, it's a very fast moving cycle. And I think our approach will be there, but to what extent can we convince a B2B player to still give us any job work is, you know, let us see in the coming season. I mean, the improvement should be there. Generally, it depends on the consumer's preference.

All right, so that's all from me. Thank you. Thank you so much.

Thank you. Next question comes from the line of Rajendra Pasi with NP Analyst. Please go ahead. Hello.

Yeah, thank you for providing me the opportunity. So my first question would be from the demand side, like Q1 has been sluggish in Whitman like for a few weeks because of whatever happened in the past. How are we seeing the demand for the Q2 as half of the Q2 is almost gone?

So, July has been good. August so far has been right. IIJS has gone good. But still, we would not want to really comment on numbers. I think company so far is on a right track, be it the transformation that is taking place on a directional move, be it a developing team. And I believe that with this kind of a transformation and changes that we are undertaking, we are all set to, you know, grow fundamentally on coming years. And the demand side looks to be good and promising for quarter two. As we are approaching and quarter three will be led by retail. And in quarter 3, We are, all of our stores are going to be operational, so it is going to be an exciting quarter.

Okay, and one more question would be, as you already said, that from the long-term side, we are already in the right direction. We are opening stores. We have plans to open three new stores maybe in the next financial year. So that part is going good. But what we are seeing right now at least From our peers, the lightweight jewelry section is performing really well over the companies which are in the lightweight jewelry section. Absolutely giving, like, the crushing numbers. So, and you already mentioned that by the end of the year, we are going to have 20% of our B2B work coming from the lightweight jewelry, which is in, like, the 18 carats. So, what more are we doing on that side to cater more, you know, market share on the lightweight jewelry side?

So we are in occasion where business what we understand is the preference of consumer and the preference that comes from the merchandising or the store end to us. We still believe that 22 carat is going to be dominant in our category. Yes, doors of 18 carat has opened. This sign, the success of IIJS is very, was evident because the look to weight ratio has been very strong. There are certain categories which people don't want to compromise caratage on, and those are categories like Mangal Sutra, where people still believe in purity, and there are certain demographics which people don't really want to go into 18 carat. Also, you know, makes things more interesting and complex actually. So, we are not seeing demand across India for eating carrot to rise in occasion where in certain parts, there is good demand of eating carrot that we are witnessing. And for those areas, we are developing designs, we are understanding how to, you know, cater them more better. The whole play on our end, being a B2B manufacturer, is how fast we can deliver the goods, how good we can make the aesthetics that is designed, and how fast we can deliver. I think the company is doing well in all the street.

Got it. Got it.

We have lost the line of the participant.

We'll move to the next. That is Shikhar Mundra from Vivo Commercial Ltd. Please cover it.

Hi, is it possible to share the EBITDA between the different divisions, retail, wholesale, and job work?

So, as the company is actually transforming from B2B to B2C, right now, we are not, you know, sharing it because of competitive reasons. But, you know, in future, we very well will take a feedback and evaluate.

And for in Q2, what expenses did we incur for the Suraj store? Like, have we already started stocking up the inventory? And for the employee cost, how much of our employees have we hired for the Suraj store, which hit our P&L in Q1?

Approximately 52 to 60 people were hired. And we are also making, because there is a good amount of, you know, stores coming up, the whole change on HR is happening, be it the roles of head merchandisers, head supply chain, head vigilance and security. The team development is going to be continuous in nature, and that is how, when I say the business will move fundamentally, that is how I understand the team, tech, and the whole experience to the customer has to be, you know, made in a right, and the growth has to fundamentally remain. So, this employee cost will be on the rising trend, I expect. In this fiscal year, yes, 60 employees were added. I am here to see the data of an average cost. Other than that, there is these liabilities of 115 lakhs that I have told and amortization of assets at 76 lakhs, which was there.

Okay. And what is the KPEX incurred for the Suraj store? And you said a break even of one year on the paper. So what is the KPEX incurred? And what are we estimating the sales for the first year for the Suraj store?

So, approximately 10 crores is the capex incurred for the store. And I'm sorry, can you repeat the second half? The revenue. Revenue forecast would be... At least, you know, I mean, let us tap into it. It is too early to just, you know, for all the forecasts. I think quarter three, we will be more clear and visible of, you know, what we are having. But I suppose that we should be, let us right now not spill out the, you know, forecast numbers. I'll be, you know, I'll keep it with myself. So let the store begin. After a month or two, let it gauge. Let us put all efforts in for marketing activities. And yes, we are thinking that we should be able to break even in a year or so with all the CAPEX.

All right, all right. Thank you.

Thank you. A reminder to all the participants, that is my best star and one to ask a question. Next question comes from the line of Dipesh Sancheti with Marnia Finance. Please go ahead.

That's just one question. Actually, it's not a question. It's actually an observation. Now, when you said that you are going asset light and basically the Titan way, if you are planning to do, you have and if you are planning to hedge your entire inventory. So, correct me if I am wrong, but your current inventory value is almost your market cap. So, if I were to assume that in one to two years, you are going to liquidate that entire inventory. Better converted to maybe a GML and a more ROE, you know, sustained business. Then, literally, like, you're, I mean, as an investor, I'm getting the company for free, only the debt part which is there. Just, if you can correct me, I mean, is that the right assessment or am I going also there?

So, Dipesh, you know, how I see is that the commodity of gold is volatile. In India, it becomes stable because of dollar appreciation and custom duty. When we say that we are using GML, what we are really trying is, we are trying to arrest the volatility of gold and gain benefit. From the low cost of loan that we are getting from GML, that is, let's say 3, 3.5% versus 9% that we are getting on the interested value that we are paying. So that 5.5% is giving us a very good amount of, you know, interest. And also the business becomes more fundamentally right. Now, what you talk about the inventory levels, It is a call that, it's a directional call that we have taken that on an ongoing business, if we were to, you know, put our inventory and this amount of inventory onto, let's say, you know, in an open position, it is not, it is going to, you know, call for risk. The second point is we are able to leverage more if we are using GML. Because the cost of interest doesn't go up, and if we are able to leverage more, then the scalability and the visibility of stores are spread across. So, because of these two instances, we think that GML makes a lot of sense to us. So currently, you know, completely indulging into it, but slowly and steadily, progressively moving towards that. So maybe by this fiscal year, we see that can we have some portion in next year, let's say, can that portion really becomes more, you know, better? Can we be 50%? And then third year, can we really make it at 75%? So on and so forth. Now, if you calculate the cost of inventory, Currently, in the book value versus the market value, the difference is obviously around 18%. But I would certainly see this as a directional view of hedging gold and taking no risk on the commodity level of gold at USD prices.

What is the book value right now?

I think the book value versus market value still remains at around 18% or so, you know, the difference that we observe basically on a weekly basis.

No, no, I am talking about the book value of the share, per share, the book value as a parameter, as a financial parameter.

What is the price of value? Approximately 400 crores.

400 crores. Okay. Great. That's really exciting. And so, we are basically saying that we will go the asset-light model for a better ROE and for a better business performance.

That is really exciting. And, yeah, please. Thanks. Thanks, Ditesh.

Yeah. Thank you. A reminder to all the participants that we may press star and want to ask a question. Next question comes from the line of Yash Modi with Ashika group. Please go ahead.

Yeah, good afternoon. Congratulations on a good set of numbers, and congratulations on taking the hard steps which was required prior to opening up the new stores. My continuing with the last participant's question, so earlier when we were basically not taking gold metal loans and saying that we would prefer cash credit limit, because obviously gold going up, we would need to give margins. And also I need to, I want to just understand what has changed fundamentally in our thought process that now we are open to taking the gold medal loan. That will be question number one.

Okay. So, Yash, if you see on a CAGR basis, the gold has increased at about 13% a year in India. Now, gold as a commodity in India is split into three parts. One is gold at USD level, another is gold at INR, the dollar composition, the dollar appreciation, depreciation, and the third is custom duty. Three variables together makes gold INR a value. Now, what we notice is that gold in USD has fallen or corrected 30% from its peak of 5528. Okay, let's say $4,000. The dollar has appreciated and custom duty has gone up from 6 to 15%. Which has given a negligible impact in gold INR. Now, if you go on a historical data, gold as a commodity drops heavily and rises heavily. But on a CAGR basis, it has a 7% appreciation. If I were to arrest the gold volatility through GML, By keeping the dollar and the custom duty component separate, then I am playing a good part by just giving this 5.5% of margin, that is 3.5% versus 8.5%, 9%, that thing, and then sacrificing the 7% with 3.5%. And so I'm remaining on a very, very long term business at minus two. But it helps me a lot to scale the business because my debt leveraging capacity increases robustly. So, this composition overall seems to be a better composition. Now, why we are not taking in before because of this margins, etc., that is true. And over here also, we have said that in the long-term approach, we will be getting it to a 100% thing, not in a year or so. So, slowly when the trading improves from, let's say, BBB plus positive outlook to, let's say, an A band and plus and plus, and we see that the banking relationships are strengthening and the accounts and department, the finance department is able to take care. That is how we will slowly progress. Got it, got it.

So basically what you are trying to say is that because our balance sheet size has increased, the ability to, if there is some margin hit also, the ability to take that margin hit has also improved. Plus it is also acting as a natural hedge, which now that we are becoming more and more retail in nature, we would prefer to be more hedged rather than take that volatility on. Is that the correct understanding?

Yes, yes, it's the correct understanding.

Okay, okay. The second question would be, now that we have planned these seven stores, what is our plans of going the franchisee route? Because ultimately, like taking on the previous participant's question, obviously, now that you'll take the gold metal loan, the operating cash flows will improve. But now another lever of improving operating cash flows will also be the franchisee route. So what are your thoughts on the franchisee route?

So, when we say that we are opening Suraj's store and, you know, there is a heavy spend on marketing that we are doing or brand building we are doing, we are really not looking or keeping our eye on, you know, a higher side of developing unit economics. What we are really doing is we are investing in brand building so that tomorrow the brand is lucrative for franchisers. So before we go and step into this people to take our franchisee, we want the brand robustness to be there so that when they take it, the goods from their shelf moves faster. Hence, this exercise is taken. So it is just a effect that, okay, there is a Suradan Rajkot store coming up, so this is the expenditure that we are doing. But we know inside that this expenditure is not done only for Suradan Rajkot. The whole approach for doing this exercise is to actually gain, come on to the, or build the brand, so that tomorrow we can go on to the franchising route. But today it is too early to say anything, so let us stick on to the brand building world itself.

So, in the long run, is it fair to assume that there will only be two verticals for our business? One will be job work and the other will be retail, and typically all our franchisee stores and our other retail stores would be acting as our clients for the B2B part of the business that we're doing. Is that the right way of thinking about, say, the tighten job work business stays, and obviously retail and the franchisees become so much that the B2B part of the business that we're doing right now goes to those people. Now that we, obviously, because we have manufacturing excellence and capabilities, is that the right way to think about the business in, say, three, four years from now?

So, B2B will remain, be it Titan or Family Jewelers, but B2C will really transform and accelerate the brand building will happen. We will explore routes for bringing high store visibility expansion and building the brand that relates to consumer on a better space. The sales mix would change for sure. The profits that you see today comes, you know, let's say if it comes from B2B a good share, tomorrow it will come, a higher share will be taken by B2C. So that will be our, you know, long-term story. You know, approximately that is three to four years as you quoted. And yes, hopefully if we are building the brand in a right way, we should be, If we are going on franchising, it is going to be a different scale altogether that we would want to achieve. But yes, yes, your overall opinion is right.

Thank you so much, Aledra. All the best. Look forward to the next call.

Thank you. A reminder to all the participants that we might press star and want to ask a question. Next question comes from the line of Shikar Mundra, Bevo Comercial Limited. Please go back.

I just wanted a clarification. Our net worth was 300 crores on March 26th, and we have earned like 9 crores. So our net worth should be around 310 crores, right? Because you mentioned 400 crores. So I just wanted a clarification on the same.

Inventory level, we mentioned at 400.

Okay, that was inventory. Because we were discussing the book value. So, okay. Got it.

Got it. Mr. Monza, are you done with the question?

Yeah, yeah, I'm done.

Thank you. Next question comes from the line of Rajinder Pasi with NP Analyst. Please go ahead.

Yeah. Sorry for the last disconnect. As I was asking earlier as well, so Haritbhai, we were discussing a part that from the long-term perspective, we are doing good. We are taking all the right steps to build a brand, and we are obviously into the occasion where jewelry, which generally goes into 22 carats. But my question was, from the lighter weight side, be it 18 carats or even lesser, do we have any plans or are we looking for something to grow our business on that side as well, or our focus is only going to remain on building the brand on the retail side and whatever we are getting along with that in the lighter heritage from our B2B consumers, we are going to do that.

So, see, we see business of B2B very separately from B2C. In B2B, we have registered a very strong growth, be it wholesale or the complete segment. Our volumes itself have grown in B2B segments. So, there is no doubt that B2B is neglected in any case. Given that we aren't a B2B player, we understand demographics, we understand consumer demand, we understand merchandising taste, and with the... The change of taste and preferences that we see, we are developing products and we are seeing a very encouraging response in IJS for that. Now, 18 karat, currently there is a shift, but what proportion of shift it is? I have said that the revenue mix that we are getting from 22 was 100% before, now it is 18%, 20% is 18 karat. To that level, the change is there. And design aesthetic-wise, I don't see much of change. People are still asking for superior designs, better designs, but on the lighter weight. So when it comes to lighter weight, the look aesthetic ratio has to change, which we have again delivered in this exhibition. So overall, we are agile and we are very much there to address the need of the market which is there and we are doing it so. When you say about lightweight jewelry, we are not into categories like daily wear. But we are an occasion where clear in B2B, if we remain as an occasion where clear in B2B, yes, we are very much flexible and agile on the shift of heritage that is happening.

Okay, but we are not going to basically entertain the daily reasside as of now.

If you see, even in the research reports, There is from a 50% or 55% of daily wear, occasion wear, proportion. Occasion wear, proportion are event link purchases. And this has gone up. So a steady or a steep increase in price. Makes occasion wear segment very resilient to demand, a weakening of demand. In daily wear, people purchase daily wear on their anniversaries, birthdays, but those are for the moments of joy. Occasion wear is purchased on a compulsory basis and we are in a segment wherein the demand is more resilient and hence I think it's the right proposition to be in this segment and grow in a profitable gold segment. And that's the antique category. Even in the gold category, if you look at it, we are in an antique domain, which is... In an industry-wide is known to be a profitable gold segment, not unlike a plain gold segment wherein you don't have stones or where you don't have margins.

Got it. Got it. And the second question was regarding the store opening part. So, Surat one is going to come up towards the end of September, and we are going to have three more openings in Q3, right? So, can we expect those three openings towards the early Q3 since that is going to be the main season?

Yeah, so, make a large format stores are opening at the right time. I think Suraj is well before Navratri and Rajkot is going to be somewhere before October itself. So, I think we are in the timelines and we will, both the stores will give a good attraction. Given about the Maninagar and the East Ahmedabad and the Gandhinagar timelines, we will be opening in Q3. They will be witnessing the wedding season on a whole, but we are not really sure of opening it before Diwali or in the month of October.

Got it.

And both the stores are mid-format stores. So we want that both the large-format stores to leverage the complete season demand. These mid-format stores can come in November.

Okay, and according to you, or the plan is to have a break-even in just one year, right? That's what we are targeting right now.

Yeah.

Got it. Yeah, that was all the best.

Thank you.

Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question and ask session. I now hand the conference over to the management for closing comments.

Thank you all for participating in the earnings conference call. If you have any further questions or you would like to know more about the company, please reach out to our investor relation manager at E&Y. Thank you.

Thank you. On behalf of RBZ Jewelers Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.