SENCO GOLD LIMITED

October has been a very positive month, and while we want to be positive and aggressive, we prefer a conservative approach. Last year Dhanteras was on 10th or 11th November, and our growth YTD is around 15% to 18%, so an 18% approach is fair.

The SSG number is usually around 60% to 70% of total growth. For Q2, the SSG is 20%, and H1 SSG is around 12% to 13%. For October, the SSG will be in the range of 12% to 15% for Q3.

Gross margin will be between 15% to 16%. In H1, gross margin is around 14.7% as against 12.2%. Quarter-to-quarter has come down, but it's better to look at the cumulative trend. The industry is dynamic, and due to volatility in gold prices, despite a high hedging of 95%, results are not symmetric.

The studded share category is currently driven by the daily wear category. There was a shift post-Dhanteras with more customers buying daily wear and small items. To grow the studded share, we need to focus more on daily wear items.

The volume growth would be in the lower single digits, around 3% to 4%. The value of gold compared to last year is up by 24% to 25%. Last year, the value per gram was around INR 5,800 to INR 6,000, and this year it is approximately INR 7,200.

Volume growth will lead to asymmetry in understanding since consumers do not consume by volume. We focus on revenue growth. If prices remain stable, we can expect a 20% growth, but if prices increase significantly, volume may decline.

In the second half of the year, we usually see higher volumes due to the festive and wedding season, leading to higher gross margins. This H1, our gross margin is approximately 15%. The duty cut impacted Q2, but overall, we expect a normalized gross margin for the year.

The duty cut led to a surge in demand, but we noticed a limitation in capital availability to meet that demand. We decided to raise funds through QIP to ensure we can maintain inventory levels and support growth opportunities.

The store addition target remains the same. While gold prices increase the capital needed, we still aim for 18 to 20 new stores. The current market conditions may affect the pace, but our goal is to manifest that growth.

The hedging is on inventory. Last year, it was around 90%, and this year it started at 95% but has reduced to 85% as prices rose. The total inventory hedged is around INR 2,200 crore to INR 2,300 crore.

Competitive pressure will remain as organizations strive to grow. When gold prices rise, companies may offer discounts to attract consumers. This intensity will likely continue for the next 1 to 2 years, but sustainable growth will require unique propositions.

The one-time loss is due to inventory, affecting the cost of goods sold. The gross margin impact is approximately INR 30 crore. Other expenses have increased due to investments in systems, processes, technology, and customer experience, which are seen as future investments rather than mere expenses.

No, the franchisees manage their own inventory and hedging. They have benefited from rising gold prices, and while they took a one-time hit, they are optimistic about long-term growth.

The strategy for Sennes is to create a brand that appeals to the upper middle class with international design and quality at affordable prices. The focus is on lifestyle branding, with plans to add more stores and integrate Sennes products into existing Senco stores. The goal is to position Sennes as a modern brand while leveraging Senco's legacy.

The focus will be on larger pieces, specifically 30 to 50 cents and above, as the value proposition for lab-grown diamonds is stronger in larger sizes. Smaller diamonds may be included as an additional feature.

The protests did not significantly impact the jewellery category, as purchases are planned rather than impulsive. The main season is Dhanteras, and while there was some initial sobriety, sales picked up closer to the festival. The company engaged in various sponsorships to maintain brand presence.

YTD growth is 15%, and H1 growth is 17%. Console revenue increased from INR 2452 crore to INR 2904 crore, reflecting an 18.5% growth.

Unit economics remain a focus, with 65-70% of new stores planned for East India, where the company has strength. While initial investments are necessary for new brands, the company is expanding cautiously and analyzing consumer behavior to ensure profitability.

The upcoming wedding season, with over 40 lakh weddings, is expected to boost sales. The recent drop in gold prices may encourage consumers to purchase jewellery, and new marketing campaigns will target this season.