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Shree Ganesh Jewellery House Ltd (SGJHL) is expecting boost on its margins due to the dual impact of the expansion of bullion trade as well as the commencement of the refinery beginning this fiscal. The 100-tonne per annum gold refinery at Domjur in West Bengal is expected be operational by September.
Speaking to Business Line , SGJHL Chairman, Mr Nilesh Parekh said: “The entry into gold refining segment and the increase in bullion trade will boost our profit after tax by about 1.5 per cent”. The company's operating margin was at 6.5 per cent as on March 31, 2011.
The refining business has got a shot in the arm following reduction in basic customs duty on gold ore and concentrate from two per cent ad valorem to a specific duty of Rs 140 per 10 gram of gold content.
According to Mr Parek, approximately 35 per cent of the refining capacity built at a cost of Rs 60 crore would be used for SGJHL's captive consumption.
A licensed canalising agency, SGJHL is expecting a quantum jump in its bullion business during the year from approximately half-a-tonne to nearly 25 tonne. “We usually import bullion for banks and other such institutions, now with our own refinery set up we can source the bullion for them,” he said.
Domestic Retail
Meanwhile, the company is focussing on expansion of its domestic sales from as low as Rs 740 crore to over Rs 5,000 crore during the next five years through a rapid expansion of the retail network. SGJHL, which currently has a network of 17 stores across the country, plans to take the total number of outlets to 51 by the end of this year. “It (the stores) will be a combination of exclusive boutiques, shop-in-shops, franchisee or even distributor driven outlets,” he said.
The retail thrust coupled with a proposed increase in share of the lightweight machine-made jewellery is expected to boost the margins substantially in the days to come.
“The share of machine-made products will increase as there is a growing demand for fashionable lightweight jewellery. This will further boost the company's margins,” he pointed out.
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