Thangamayil Jewellery (THANGAMAYL) Q4 13/14 earnings summary

Executive summary

• FY2013-14 revenue from operations was ₹119,611 lakh, down 22% YoY; net loss was ₹1,257 lakh versus profit of ₹2,963 lakh, amid severe demand and gold-market disruption.

• Customer count rose 53% to 127,064 and bills increased 7% to 531,050 despite a 22% sales decline; sales per employee improved 54%.

• Gold inventory was reduced to 975 kg from 1,288 kg, helping cut bank borrowings to ₹21,285 lakh from ₹35,538 lakh and improve stock rotation.

Financial highlights

• Revenue from operations, including other income, was ₹119,611 lakh versus ₹152,479 lakh; product sales fell 22% YoY, while comparable net sales excluding traded goods fell 16%.

• Gross profit was ₹8,236 lakh versus ₹16,527 lakh; EBITDA was ₹1,959 lakh versus ₹8,467 lakh.

• PBT was a loss of ₹2,077 lakh versus profit of ₹4,306 lakh; PAT was a loss of ₹1,257 lakh versus profit of ₹2,963 lakh.

• Other income rose to ₹481 lakh from ₹181 lakh, including ₹357 lakh from restatement of customer-scheme liabilities and long-pending credits.

Outlook and guidance

• FY2014-15 was planned as a consolidation year, targeting higher market share and customer numbers, improved stock rotation and return on capital employed.

• First two months of FY2014-15 showed improved market share and gold volume after price rationalization; silver volume sales rose 47% YoY, and most branches exceeded break-even sales.

• RBI’s May 2014 restoration of bank metal-loan facilities, subject to the 80:20 gold-import policy, was expected to provide natural hedging and reduce interest costs.

• Priorities included deleveraging, a higher-volume/lower-price product mix, more silver articles, better resource utilization and inventory turnover.