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Sky Gold Limited Earnings Conference Call Summary
Submission Details • Date of submission: June 28, 2024 • Earnings call date: June 24, 2024 • Focus: Audited financial results for Q4 and FY24 (ending March 31, 2024) • Participants: Mangesh Chauhan (Managing Director and CFO), Parth Patel (Moderator) • Compliance: Shared in accordance with SEBI regulations
Company Vision and Strategy • Goal: Become India's leading jewellery manufacturer by 2024 • Focus on: • Leveraging design capabilities and efficient manufacturing • Strengthening partnerships with retail jewellery chains • Enhancing product offerings for regional preferences
Technological and Operational Enhancements • Emphasis on: • Combining traditional craftsmanship with modern technology • Strategic acquisitions to diversify product portfolio • Corporate governance improvements • Revenue target: INR 6,000 crores with a 3-4% PAT margin and 25% ROCE
Export and Market Expansion • Increase in plain jewellery exports • Plans to open sales offices abroad, targeting 30% export revenue by FY27 • Entry into diamond-studded jewellery segment to enhance gross margins
Strategic Hires and Advisory Board • Key hires in HR, production, and product development • Formation of an Advisory Board to improve operational techniques
Financial Performance • Q4 revenue increase: 90.2% year-on-year • Gross margin: 7.2% • Plans to reduce interest costs via gold metal loans
Unique Product Offerings • Focus on Kuwaiti and Turkish jewellery • Expansion of exports to Dubai, Singapore, and Malaysia • Development of products for US and European markets
Revenue Projections and Client Base • Projected revenue: INR 6,500 crores over the next three years • 65% of business from top clients (e.g., Malabar Gold, Kalyan Jewellers) • Diversification of customer base to include mid-sized and smaller corporates
Collaboration and Funding • Ongoing discussions with Tanishq, onboarding delayed • Transition to gold metal loans: 6-7% of debt converted • Increased revenue guidance from INR 5,000 crores to INR 6,300 crores
Diamond Jewelry Strategy • Targeting lightweight, budget-friendly designs for large corporates • Pricing for diamond jewelry: Rings and earrings (INR 20,000 - INR 60,000), Necklaces (INR 50,000 - INR 2.5 lakhs)
Future Outlook • Targeting a 3% PAT margin over the next three years • Implementation of an ERP system for inventory tracking • Focus on B2B operations, no plans for B2C segment • Optimistic about achieving revenue targets ahead of schedule due to acquisitions
Sky Gold Limited Q3 FY24 Earnings Conference Call Summary
Financial Results • Q3 FY24 Revenue: INR 460 crores (72% YoY increase) • 9-Month Revenue: INR 1,232 crores (39.4% increase) • EBITDA: INR 18 crores (3.9% margin) • PAT: INR 8.9 crores • FY24 Revenue Target: INR 1,700 crores
Strategic Goals • International Business Growth: Increase contribution from 3% to 30% in three years. • Focus Areas: Expanding client relationships, improving productivity, enhancing corporate governance.
Capital Expenditure and Production • Capex Plans: Modest future investments (INR 50 lakhs to INR 1 crore). • Current Production: 250-275 kgs/month, targeting 400-450 kgs next year, and maximum capacity of 750 kgs in three years.
Export Channels • Export Distribution: Even split between corporate clients and distributors for small retailers in Gulf and Southeast Asia.
Debt Management • Current Debt: INR 160 crores, expected to rise to INR 240-250 crores next year. • Gold Metal Loan (GML): Plans to utilize 70-80% to reduce interest costs from 9.5% to approximately 4.5%.
Balance Sheet Insights • Debt Purpose: Primarily for working capital; plans to replace collateral with fixed deposits. • Profitability Focus: Improve return on capital employed and profit margins.
Revenue Growth Strategy • Future Revenue Targets: INR 2,500 crores next year, INR 5,000 crores in three years. • Client Acquisition: Focus on new clients and exhibitions to maintain growth.
Margin Improvement Plans • Current Margin: Slight reduction acknowledged; targeting EBITDA margin of 4.5% in 2-3 quarters. • Production Plans: Increase to 350-400 kg/month in upcoming quarters.
Market Dynamics • Market Share: Organized players hold 60-65% market share. • B2B Focus: No current focus on B2C sales; discussions with major retailers ongoing.
Future Outlook • US Subsidiary: Established but focused on B2B operations; no immediate fundraising plans after recent allotment.
Sky Gold Limited Q4 FY2023 Earnings Conference Call Summary
Financial Performance • EBITDA Increase: 60% rise compared to Q4 FY2022. • Revenue Growth: 22% increase year-over-year. • Profit Surge: 45% increase compared to Q4 FY2022. • Income: Increased to ₹18 Crores from ₹16 Crores, with all income from business operations.
Expansion Plans • New Factory: Opening in Navi Mumbai on August 1, 2023. • Workforce Growth: Increase from 350-400 to 500-600 employees. • Production Capacity: Tripling to approximately ₹4,500 Crores. • Machinery Investment: ₹10-12 Crores for new machinery to reduce gold loss.
Market Strategy • Customer Base: Top 10 customers contribute 70% of revenue; plans to diversify. • Export Goals: Currently exporting 5-7% of turnover; targeting growth in US and Gulf markets. • Partnerships: Collaboration with Varanium for US marketing; exploring B2C retail options in India.
Future Outlook • EBITDA Margin Target: Aiming for 5% based on production efficiency and metal prices. • Technological Innovations: Implementation of new technologies, including Chat GPT and 3D printing, to enhance production. • Capacity Goals: Anticipating maximum capacity of 750-800 kg within 2-3 years, targeting 2024-2025.
Conclusion • Optimism for Growth: Management remains confident about future growth, production capabilities, and market expansion.
Sky Gold Limited Q3 FY2023 Earnings Conference Call Summary
Overview of the Company • Date of Call: February 10, 2023 • Key Executives: Mangesh Chauhan (Managing Director and CFO), Darshan and Mahendra Chauhan (Whole Time Directors) • Specialization: Lightweight 22-carat gold jewellery • Manufacturing Facility: Located in Mumbai • Business Model: Strong B2B model; recently entered B2C market in the USA through partnership with Varanium (brand: Vesteria)
Financial Performance • Q3 Revenues: Rs. 267.57 Crores • EBITDA Growth: 73.45% increase • Net Profit: Rs. 11.67 Crores • Market Outlook: Anticipated growth in the Indian jewellery market, especially post-wedding season
Production and Operations • Production Capacity: 300 kg per month (currently utilizing 200 kg) • Client Base: Major retailers like Malabar Gold and Joyalukkas • Turnaround Time: 7 to 20 days for production • Facility Size: 18,000 to 20,000 square feet, employing around 300 workers • Gold Loss Management: Initial losses of 5-6%, reduced to 2-2.5% post-recovery
Expansion Plans • New Facility: Planned move to Turbe to increase revenue capacity from Rs. 300 Crores to Rs. 800-900 Crores • Capital Expenditure: Estimated between Rs. 20-30 Crores, with a setup time of 6-9 months • Revenue Projections: Potential to reach Rs. 4000 to Rs. 5000 Crores in the coming years
Market Strategy • B2B Focus: 70% of revenue from top customers; projected growth to 80% in corporate market share • EBITDA Margins: Aiming for sustainable margins around 3% • New B2C Initiative: Targeting the U.S. market and diversifying client base
Product Development • Design Process: 15 to 20 days from design approval to market launch • Design Approval Rate: 4,000 to 5,000 out of 7,000 designs submitted monthly are approved • Product Categories: Includes plain, studded, and Turkish designs, with plain products being most prevalent
Conclusion • Future Outlook: Optimistic projections for Q4 due to wedding season, with potential revenue increase to around Rs. 1000 Crores • Engagement: Invitation for further queries via email from Umesh Mundekar at the conclusion of the call.