Senco Gold Ltd, which operates under the trade name Senco Gold & Diamonds, is looking to ramp up its presence in north India and step up its play in diamonds as it looks to diversify its product portfolio.
The Kolkata-headquartered jewellery manufacturer has filed the draft red herring prospectus (DRHP) with SEBI in April this year to raise ₹525 crore through an initial public offering (IPO). The IPO comprises of a fresh issue of equity shares aggregating up to ₹325 crore and an offer for sale aggregating up to ₹200 crore by the selling shareholder.
The company proposes to use ₹240 crore of net proceeds from the fresh issue towards funding working capital requirements and the rest towards general corporate purposes. The company has received approval to float an IPO in July 2022.
According to Suvankar Sen, MD & CEO, Senco Gold, the company currently has 127 showrooms and nearly 63 per cent of them are in West Bengal. Plans are afoot to ramp up its presence across the country, particularly in north India, which is mostly dominated by unorganised or unbranded players. Senco currently has 25 showrooms in north India, spread across Uttar Pradesh, Delhi NCR, and Chandigarh.
“We plan to use a part of the IPO proceeds to open around 20 company-owned showrooms across the country in the next two years. A majority of these would be in north India, where we want to strengthen our presence,” Sen told businessline..
The company would also look to strengthen its franchisee network by opening at least five-to-seven stores on a franchisee model each year. Currently, 57 out of its 127 showrooms are operated under a franchisee model.
Diversifying product basket
Gold jewellery accounts for nearly 88 per cent of the company’s total sales at present, while around nine per cent comes from diamonds and another three per cent from platinum and silver. The company, which clocked a turnover of ₹3,500 crore in 2021-22, has been growing at a CAGR of 10 per cent over the last eight-to-ten years.
Senco expects the share of diamond jewellery to increase to around 15 per cent of its total sales over the next three years. Since diamond jewellery is a high-margin business, higher sales are likely to give a boost to its margins. The company’s gross margin is close to 17-18 per cent at present.
“Recent reports peg the total addressable jewellery market to be close to ₹4,40,000 crore. The share of organised players is expected to touch around 40-50 per cent by 2026. While the overall industry grew by around five per cent, the organised players grew by a CAGR of 6.4 per cent,” he said, highlighting the scope for growth in the segment.