The Hindu Business Line : Shrenuj sparkles

THE diamond and jewellery stock Shrenuj & Company is adding sparkle on expansion and all round growth prospects. The counter moved up 10 per cent to finish at Rs 93.55 (upper circuit) on the BSE on strong delivery-based buying with a traded quantity of 66,343 shares, nearly double its two-week average.

The Managing Director of the company, Mr Shreyas K. Doshi, told Business Line that to increase its global presence, the company was now setting up a wholly owned distribution subsidiary in Dubai, and looking for establishing another subsidiary or joint venture in the US.

These follow a marketing joint venture in France and a subsidiary in Hong Kong in the past year or so.

The US outfit could be through an acquisition, he indicated and expected this to be in place in the next couple of months.

It is targeting the US, European and West Asian markets with its `Fiana' brand products. Its branded jewellery had the first overseas launch in Europe recently.

The Hong Kong outfit, before acquisition, had a six-shop chain. Now, it has been extended to 10 and two franchise arrangements covering the South China region outside Hong Kong.

"Further expansion plans are in the pipeline along with reposition and makeover of the chain," Mr Doshi added.

In the past year, the Hong Kong venture is fetching better margins but planned investments would take a few more quarters to translate into profits.

At present, it is breaking even and has yielded sales of around Rs 13 crore.

During 2004-05, Shrenuj reported an operating profit of Rs 35.99 crore and a net of Rs 11.16 crore on a total turnover of Rs 490 crore. The 2004-05 EPS is placed at Rs 11.06. It has recommended 30 per cent dividend for 2004-05 on an equity of Rs 10.90 crore. The growth in net is over 70 per cent against management estimates of just 10 per cent.

Mr Doshi said that the company has recently scaled up its manufacturing capacity at one of its three units at around Rs 10 crore to cater to the overseas market with its branded products.

According to a fund manager, the turnover of the company on a conservative estimate is expected to grow by 10 per cent during the current fiscal.

"At today's closing price, the ratio of market capitalisation to sales is low, and the margin of safety is reasonable," he added.

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