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00:05 Welcome back to NDTV Profit, you're watching Earnings Edge.
00:08 And on this edition of Earnings Edge,
00:10 we're first joined by the management at Sharda Crop Camp.
00:14 And we're here with V Bhavna,
00:17 the Chairman and Managing Director of the company.
00:19 Good afternoon, Mr. Bhavna.
00:21 My first question is, now the last quarter,
00:23 we did see a decline in your volumes.
00:25 But the company has made a comeback in terms of volume
00:27 growth, 28% year on year in quarter four.
00:31 What stood out this quarter and
00:33 how are we looking at demand going forward?
00:35 >> Madam, the situation going forward is looking very good and right.
00:40 I feel the worst is over for the industry.
00:44 And the excess stocks that the Chinese factories were carrying is getting
00:49 dried up, and the demand is also on the increase.
00:54 >> Mr. Bhavna, Varsha this side, I just wanted to know the sequential growth
00:59 that company has seen.
01:01 Was pricing quarter on quarter better for
01:03 the company which led to recovery apart from volume?
01:06 >> Pricing has not been good recovery, but the demand has been better.
01:14 And the prices will start looking up, in my opinion, in another one or two months.
01:19 >> And talking about your margin, so
01:23 we did see uptake here as well sequentially.
01:26 Now, what were the triggers that led to margin expansion?
01:29 And when are you expecting to go back to normal levels, say 21%?
01:34 >> Madam, that will take some time.
01:38 I do not want to speculate, but
01:41 we will be somewhere closer to that in the next 12 to 18 months.
01:48 >> Okay, got it Mr. Bhavna, 12 to 18 months to reach the 21% margins.
01:53 Mr. Bhavna, can you give us some sense of the export demand
01:57 considering the Red Sea crisis?
02:00 How have the freight costs been as well?
02:02 >> Madam, the export demand is good.
02:07 We are dealing with food production and agriculture, which is necessary for
02:15 every human being and population survival.
02:18 So the agriculture has been doing fairly well.
02:22 I'll give you an example.
02:24 Ukraine is passing through a very severe war for
02:27 the last one and a half years, for almost two years.
02:30 But the agriculture in Ukraine is doing well.
02:34 And our business in Ukraine has grown up and
02:36 the margins have also improved for sale in Ukraine.
02:40 And the payments are being received on time,
02:43 in spite of the war situation in Ukraine.
02:44 >> Got it Mr. Bhavna, and how are the freight, what's the trajectory on the freight cost?
02:51 Is there an uptick and what's your outlook on the same?
02:54 >> Madam, the freight is a very bad situation.
03:00 The quantity, the costs are going up abnormally high, and also the time of travel.
03:06 And with these two factors, the availability of the containers is also shrinking.
03:12 So on the freight situation, the situation is very gloomy.
03:17 But I hope it will improve after the Red Sea situation.
03:21 I hope the Red Sea situation will improve, but this is just a guess and a prayer.
03:25 >> Okay, and I wanted to have a sense on the geographical situation,
03:31 especially in the NAFTA region.
03:33 How is the Europe region panning out for the company?
03:38 >> Europe is helping the company and it is doing fairly well, and so is NAFTA.
03:45 In NAFTA, the worst is over, and we are receiving demands,
03:50 and also a little bit of improvement of the prices.
03:53 >> Sir, I wanted to know about your CAPEX guidance for FY25,
04:00 considering the pressure that we are seeing in the agrochemical sector as a whole.
04:04 So what is your guidance for CAPEX?
04:07 And number two is, are you launching new products which are
04:13 high value added products which will help to increase your margins?
04:17 >> I'll answer your question part by part.
04:21 First of all, the CAPEX guidelines, I think we'll continue to spend about 400 to
04:26 450 crores, also in the current year.
04:30 And new products are always bringing better margins,
04:35 because the competition is less, and they're more helpful for
04:41 the agriculture and less harmful for the community and society and human beings.
04:45 So the margins are always better in the new products.
04:50 And we have a huge amount of products in the pipeline, and
04:55 they will slowly get converted into the registrations,
04:59 which will help the company's performance.
05:01 >> And Mr. Bhavna, in terms of quantity, could you maybe give us some sense on how
05:06 many new products we might see getting launched in FY25, if possible?
05:11 >> Madam, that number is very difficult to quantify and specify,
05:16 because the situation and the process is filled up with a lot of uncertainties.
05:22 The governments and authorities keep on coming with new demands,
05:28 new studies, and new dossiers.
05:30 And at the same time, we all depend upon a lot of
05:36 bureaucratic meetings in every government.
05:42 And sometimes the meetings which are scheduled to take at one time takes
05:45 another two, three months to, it gets postponed from time to time.
05:49 So these are totally out of our control.
05:52 And these things leads to uncertainty and delays in the process of registration.
05:58 >> Thank you very much, Mr. Bhavna.
05:59 And in terms of geographical expansion,
06:02 what's the plan that the company has going forward in terms of regions?
06:06 >> In terms of region, madam, European Union, particularly Western Europe,
06:13 has been our key factors and a big achievement and
06:17 good results giving region for us, and that is continuing to support us.
06:24 So in Europe, we are hoping to also grow our business.
06:28 And in NAFTA, we are hoping to catch up with what was going on,
06:35 what was going on with us a year back.
06:40 And we hope to come up to that level in the next maybe six to ten months.
06:46 >> Also, Mr. Bhavna, what is the situation in China,
06:51 considering your major raw material source is China?
06:56 So what is the situation there?
06:57 How is the demand in China?
07:01 Because we need to see how China is doing, the dumping by China.
07:06 So how is the demand outlook in China?
07:08 >> I'll answer your question about dumping.
07:12 They have come out of the dumping.
07:14 They had increased their production beyond requirement.
07:21 They have also realized that this is not good for them and for the industry.
07:25 So the production is under control.
07:29 Availability is very stable.
07:32 And the internal demand in China is also growing up.
07:36 So all these factors is going to help the Chinese producers and
07:40 the industry in general universally.
07:43 >> Got it, Mr. Bhavna.
07:46 And in terms of penetration into new markets,
07:49 are there any markets that the company is on?
07:51 >> Madam, we have an excess and
07:56 we have operations in all about 75 to 80 countries globally.
08:00 So geography wise, we don't have much to expand into.
08:06 But every market, our excess is increasing and
08:11 the share of the market is improving.
08:16 >> Considering everything, China situation,
08:19 your new products which are under pipeline and
08:23 the demand progress that we are seeing, what is your outlook for
08:28 FY25 with respect to your top line and margins?
08:32 Any target that company has set in?
08:34 >> Madam, our targets are always good enough, but
08:40 in reality, we get pulled back by the situations which are not in our control.
08:46 Now we are hoping that our revenues should grow by about 15 to 20%.
08:55 And the volume should go by about 5 to 10%.
08:59 >> 5 to 10% volume growth.
09:01 Mr. Bhavna, the last question, and this is in terms of product wise categories.
09:05 Now, fungicides is a 9% uptake, but
09:09 herbicides and insecticides did see a downtick in terms of total revenues.
09:17 And considering that herbicides is 45% in terms of revenue contribution,
09:21 what's the outlook on these three broader categories for FY25?
09:25 >> And all the three categories are going to improve.
09:30 The improvement will be in herbicides, but
09:32 also in the fungicides and insecticides.
09:38 >> Is there a certain range that we can expect in terms of growth in FY25 versus
09:43 FY24?
09:44 >> Now, it's very difficult to give specific figures, but
09:49 there's going to be an improvement.
09:50 It could be 5%, 10%, or even 15%.
09:53 >> Okay, thank you so much, Mr. Bhavna, for joining us and
09:56 giving us an outlook of what the company expects going forward.
10:00 We wish you all the best, and it was lovely talking to you.
10:03 >> Thank you so much.
10:05 >> Yes, so there you have it, a 5 to 15% range in terms of
10:09 top line growth for FY25 for Sharda Crop Camp.
10:12 Now joined by the management of Kalyan Jewellers, and with us today is Mr.
10:17 Ramesh Kalyanaraman, who is the executive director at Kalyan Jewellers.
10:22 Good afternoon, Mr. Kalyanaraman.
10:24 >> Good afternoon.
10:25 >> Yes, so up first, just congratulations for the strong set of numbers.
10:29 Just tell us how the quarter went by, and what are expectations for Q1?
10:35 >> So Q4, as you see, the revenue growth was good.
10:39 Revenue console grew by around 34%.
10:42 India grew at around 38%.
10:45 SSGs were around 38%, sorry, 17%.
10:49 And the PVT growth was also there.
10:52 PVT, which was at 4.4, grew to 4.6.
10:58 So again, if you look at Q1 of this financial year, for
11:03 the first 40 days, which includes Akshaya Tradia of both the years,
11:08 we have had strong footfalls at this score.
11:11 SSGs again have been in the range of double digits.
11:14 This is coming after a 15% SSG, which was already there in Q1 of last year.
11:19 So momentum is strong, and there is good traction in the last years.
11:23 >> And in terms of quarter one, the company recently released a press release
11:29 in terms of the kind of footfall and demand that the company did see in the first 40 days.
11:35 What are your expectations for the first quarter of FY25?
11:39 >> No, as we speak, because I don't want to give you a 40 days revenue number this
11:44 year versus last year, because it is a bit misleading.
11:48 We would have added more stores, again, so that number can be not relatable.
11:55 So a relatable number is the SSGs, which has been in the double digits for
12:00 the first 40 days.
12:02 >> Okay, and what's the target in terms of the same store sales growth for
12:06 FY25 over FY24?
12:09 >> We actually usually budget for only what, 7, 6, 7% of SSGs.
12:15 But on the ground, reality was that last year ended at around 12, 13% of SSG.
12:22 Q4 was at 17% SSG, and as we speak, Q1 also is in the double digits.
12:29 But we usually budget for 6, 7, but on the ground, reality is bigger than that.
12:36 And the shift from unorganized to organized still continues.
12:40 We have gained a lot of market share in certain markets,
12:44 almost all the markets where during COVID,
12:47 we have acquired new customers who have again started coming back.
12:51 All put together, we think that this should stay.
12:56 >> Is there a chance of you increasing the 6 to 7% budgeted,
13:02 given that the on ground reality is much higher?
13:04 >> No, when it comes, let it come, so always be with the buffer.
13:09 So even if you have budgeted for 6 or 7 SSGs,
13:13 what is going to come is going to come, and we are all working for it.
13:17 And even with that, with the store expansion plan which we have for
13:22 this year, which is around 80 Kalyan showrooms.
13:25 And with the expansion which we did the last year,
13:28 that revenue, full year revenue is going to come this year.
13:31 All put together, anyway, this year is going to be extremely interesting.
13:36 And of course, if SSG comes with double digits, it's again an advantage,
13:41 which we as a brand don't budget for, and
13:44 we don't advise investors also to budget for.
13:47 >> My next question is on the margin contraction that you saw in Q4,
13:51 what were the reasons?
13:52 >> There is only one reason, wherein on the gross margin level at the store,
13:58 there is no contraction of margin.
14:01 It has been very stable over the past four,
14:02 five quarters when compared to the previous year.
14:05 The only margin dip which you see is because of the FOCO model of expansion,
14:11 the franchisee model, wherein we share margin with the franchisee part.
14:15 Otherwise, there is no pressure.
14:16 If you look at the PBT, it's only growing more than revenue in the last quarter.
14:21 >> And what is the targeted blended margin range that the company has set for FI25?
14:28 >> So it again, margin is a bit of, what do you call,
14:32 because it's driving into franchisee model.
14:36 Margins will keep on de-growing, but the only takeaway which
14:41 I can tell you is if the revenue grows by x percentage,
14:47 the PBT margins will be x plus, wherein PBT will grow better than the revenue growth.
14:55 >> I wanted to talk about the difference in margins between a Kalyan-owned
15:01 showroom and a franchisee-owned showroom, maybe a range if not the absolute number.
15:04 >> Yeah, so usually a owned store outside South India,
15:09 if it is x percentage, the franchisee store will be 60% of it.
15:15 Meaning we will have to share 60% almost with the franchisee part.
15:21 We get only 40% and with which we operate the store.
15:25 >> Got it, Mr. Kalyanaraman.
15:29 My next question is the revenue split between owned and
15:33 franchisee showrooms, given that the share of revenue from the franchisee showrooms
15:38 is rising, what is the current split and what's the one that the company targets?
15:42 >> So last year, the franchisee revenue would have been in the range of 20%.
15:49 And this year again, we are adding 80 showrooms.
15:52 And last year, all the franchisee stores have not been contributing for
15:57 the full year because there have been stores which have been opened through the year.
16:02 So all put together, this percentage also should grow.
16:05 If you look at only Q4, the contribution is in the range of 25%.
16:10 If you look at the full year, it was at 20%.
16:13 So that's the way it goes.
16:15 >> Okay, and when you talk about segment wise revenue,
16:20 you have the South market, the non-South market, as well as gold and
16:25 studded which all have seen double digit growth.
16:27 For the company, what segment is the one going to drive growth going forward?
16:34 Especially in FY25.
16:36 >> So South India dominantly goes through the same store sales growth,
16:41 because we are adding few stores in South India when compared to the non-South markets.
16:48 Our predominant focus for expansion for the next two years is also going to be non-South.
16:54 Next year, out of the 80 showrooms which we plan in India,
16:57 only 10 is in South and 70 is in non-South.
17:01 So non-South revenues surely going to grow better than South India revenue.
17:06 And regarding studded again, non-South comes with more studded quotient.
17:11 So the studded revenue growth will also be stronger than the plain gold revenue.
17:17 >> Okay, my next few questions are about the expansion plan.
17:22 Now, in terms of expected store expansion plans,
17:25 you mentioned 80 new showrooms in FY25.
17:28 What's the kind of expansion that the first two quarters will see?
17:32 >> Again, as we speak for the first 40 days,
17:36 we have already opened 10 Kalyan showrooms and seven Candier showrooms.
17:41 Out of the next year expansion plan, the total 130,
17:45 80 will be Kalyan and 50 will be Candier.
17:49 We as a brand will try to open as many stores in the first half of the year,
17:54 because the second half is more heavier in terms of festival and
17:59 bidding outside South India.
18:01 >> Okay, and when you mentioned the 50 Candier shows, these are all the LOIs
18:06 signed, so you expect all of these Candier showrooms to be launched in FY25 itself?
18:11 >> Yeah, so 50 Candier shows, all 50 are not franchisee,
18:17 it's a mix of franchisee and owned for Candier.
18:20 But all 80 will be franchise for Kalyan.
18:23 >> Got it, so by the end of- >> And this is only India.
18:27 Again, six showrooms we plan to launch outside India.
18:31 And we'll also enter one new market outside India, which is the US.
18:36 And the first showroom will be operational before the end of H1.
18:41 >> Okay, so US will be the new market.
18:43 And in terms of, what's the strategy for the US market?
18:47 >> The US also we cater to Indians, so we go as an Indian jeweler.
18:52 So the products or the campaigns and even the employees predominantly
18:57 will be Indians and we cater to the Indian customer set.
19:01 >> Okay, and will all the stores over there be owned or
19:05 will the company follow the franchise owned strategy?
19:11 And will they be Kalyan stores or Candier stores, what will be the mix?
19:14 >> For this financial year, there will be only Kalyan showrooms outside India.
19:19 Because Candier, the first phase is to establish it in India offline,
19:24 which we are doing this year.
19:26 And US, the first showroom is going to be owned store.
19:32 And it will be followed by the franchisee model it.
19:35 >> Got it, so by the end of FY25, in terms of percentage,
19:41 how much of the showrooms will be owned by the company itself?
19:47 And how much will be via the franchisee channel?
19:49 >> So it should be in the range of,
19:53 franchisee number of showrooms should be more than owned store,
19:58 before the financial year.
20:01 >> Okay, and in terms of conversions, now you saw some conversions in FY24.
20:06 What's the plan for FY25?
20:08 >> So again, we maintain the same format of,
20:14 go into two areas, wherein we might convert our own stores to franchise funds.
20:20 One is Middle East, because Middle East for the next two years,
20:24 we will not only open stores, but also convert a few stores to franchisee models,
20:30 so that we can reduce the capital invested in that region.
20:34 Again, in South India, we might convert a few stores in South India also.
20:40 And because we have inquiries from South India,
20:44 wherein we might go and convert certain stores in South.
20:47 >> So what's the targeted mix that the company has for
20:50 the long term, in terms of owned and versus franchisee?
20:55 Because obviously the advantages of franchisee being a set light would help
20:58 the company in terms of financial.
21:00 So what's that targeted, this for the long term?
21:02 >> So more than long term, the next two years,
21:06 the focus will be more of FOCO model franchising.
21:10 Because we have a requirement of using the cash flow to reduce our debts,
21:17 to lighten our balance sheet.
21:18 Because there are certain collaterals in the balance sheet,
21:21 which is mortgaged with banks for this overdraft facility which we have.
21:27 So the next two years, primary focus is to infuse the cash generated
21:33 to reduce debts and to further lighten our balance sheet.
21:37 Most two years, it will be a mix of franchise as well as owned stores.
21:41 Because otherwise, the cash flow which comes into the company will have to
21:46 be utilized to somewhere, right?
21:48 Otherwise, again, the book might go heavy.
21:50 So we might go for owned stores after two years.
21:54 >> Got it, thank you so much, Mr. Kalyanarayan, for joining us and
21:56 giving us that insight on the company's plan and
21:59 how it plans to grow in the future.
22:00 And we wish you all the best.
22:02 >> Thank you.
22:04 >> That was Kalyan Julius for you.
22:05 And with that, we're completely out of time.
22:07 But do stay tuned to NDTV Profit, lots more lined up on the other side.
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