Organized retailers have the resources and they are expanding very strongly: Harit Zaveri

According to Harit Zaveri, Joint MD, RBZ Jewellers, the brand already has a pool of independent retailers across India that are shifting from a single store to a chain of stores

Mumbai: According to Harit Zaveri, a headroom of 3X growth is necessary across industries. He believes that the percentage of retail versus wholesale should remain the same. Here is an excerpt from his interview with ET on the growth metrics of fast-growing retail jewellery brands today.

RBZ Jeweller stock is locked on the upper circuit today as well. The way it has been since it got listed about a month and a half back. I am assuming that the people understand how much value you left on the table since your IPO. And that is why the kind of movement which you are seeing. First, it was a 5% circuit, now a 20% circuit. Talk to us in volume terms. How much volume are you aiming at for FY25?

Harit Zaveri: In volume terms, the company last year did around 1,059 kgs, and this year, we are on our set targets to do about 1,200 kgs. In the subsequent two years, because the company has raised Rs 100 crore of equity and we are going to raise again, the debt-equity ratio will be maintained at 1 is to 1. So again, there will be a raise of debt of Rs 100 crore plus.

We are aiming to double our volumes in the subsequent two years. The company should touch around 222.4 tonnes in the subsequent two years. Here the case is quite different. We are an organized manufacturer and an organized retailer has always been wanting to procure goods from organized manufacturers. Organized retailers have the resources and they are expanding very strongly. Now, given the task that in a year they are opening 50 showrooms, 100 showrooms, demand is bound to come to us. Wedding demand is robust. India has a great population. According to the carriage report, there are 11 to 13 million weddings happening in a year.

So as a company, I do not think there is a clear demand drive. Organized retailers are 100% aggressive and because there is a delink, there are 40% organized retailers and only 15% of organized manufacturers. Our company is growing in volume. We are in a fundamentally strong position compared to any other. The industry grows at 2.5% volume, while we are growing at around 10 to 15% volume. We are supposed to grow by much more volume in the subsequent two years because of the funds coming in.

Your list of clients includes marquee names at the top of the line. You are doing more volumes with Malabar, Joyalukkas, Senco, and Titans of the world. The other part is that more and more unorganized jewellers also want to do quality work with you. These are companies deploying technology and precision manufacturing. Are you seeing that shift happen and are you being approached by new clients beyond these marquee names?

Harit Zaveri: Correct. We have already got a good pool of independent retailers across India. Those are shifting from one store to a chain of stores. So two things are happening. One, is an organized retailer who is already expanding there. Another one is the segment which is also transforming into an organized player. So with both the shifts happening simultaneously, we have got good names on the basket and the demand is there to fulfill.

Generally, in the jewellery industry, the season starts from the first or the last week of July and then the whole rolling happens aggressively. But there are names already there and the demand is there. With the funds coming in, we will be able to fulfill them much better.

On the B2C model that you have, right now you only have one showroom in Ahmedabad. Do you have plans to expand your B2C kind of profile as well and open more showrooms or would you like to stick to the B2B model?

Harit Zaveri: Right now, as a company, we always imagine that in whichever segment we are in, at least we have a headroom of 3X. Let us say the retail store is right now doing 135 to 140 crore, this year the percentage of retail versus wholesale should remain the same.

In that case, if wholesale demand is moving to, let us say 2X in terms of volume, retail should actually grow at the same pace. Right now, we are not looking for a clear answer. Let us first optimize the retail store that we have. Our outlook is 100% more focused on being an organized manufacturer and serving those retailers who have their resources and who are compliant and planning for heavy expansion, which will drive the demand on our side. And it is a low-hanging fruit, so let us catch them.

You said margins are stable, so between 13 to 15% going forward?

Harit Zaveri: You must understand the business model in terms of margins. We are into servicing and retail. And then we are into the wholesale side. So, servicing will have much more margins if we take it from the top-line segment.

On the volume side, if you calculate the margins, it will be the lower side and the retail and then carried forward by the wholesale. So, in that case, I think one has to look at my business model more accurately to judge my margins. But yes, on the ROCE part and the ROE part, we will remain stable.

Courtesy: economictimes.indiatimes.com