Suvankar Sen, the Managing Director and Chief Executive Officer of Senco Gold, on the motivations to list the company on the market, the journey to their oversubscribed IPO, dogged determination to return value to investors, commitment to ensure the company’s future readiness, and why going public should not necessarily mean becoming a national player

For those in the industry, Senco Gold, the largest jewellery retail player in the eastern region based on the number of stores, needs no introduction. The company has a retail network of 136 showrooms, including 61 franchises and 75 company-owned showrooms. It also has over 4.50 lakh sq ft of retail space with a store network across 96 cities.

This month, the retailer made news with its IPO being subscribed over 77.25 times, receiving bids for 69.1 crore equity shares against 94.18 lakh shares on offer. Overall, the company raised Rs 405 crore comprising fresh equity issues of up to Rs 270 crore and an offer for sale (OFS) from SAIF Partners aggregating up to Rs 135 crore.

Senco’s successful IPO listing is perhaps a cause for celebration for the entire industry, as it fills the hole in the heart of an industry that has unfairly suffered reputational damage due to successive financial debacles of a few errant players.

At this pivotal moment for the company, Soma Bhatta speaks to Suvankar Sen, the Managing Director and Chief Executive Officer of Senco Gold. The conversation traces back to the brand’s journey when Founder Chairman Late Shri Shankar Sen first dreamt of building a future-ready organisation on par with the best corporate institutes- a structure less prevalent in family businesses (back then), the KPIs that build confidence in investors, the potential risks and opportunities for the jewellery business

Edited Excerpts:

Soma Bhatta (SB): What were the motivations behind Senco Gold’s decision to go public?

Suvankar Sen (SS): The decision to go public has been a long-standing aspiration for us, not just a sudden realisation. It traces back to 2008-09 when I joined the business after completing my MBA. At the time, my father had the farsightedness to create a sustainable and system-driven organisation, amalgamating our proprietorship and partnership firms into a private limited company.

We engaged top auditors and implemented an ERP system to ensure systematic expansion. In 2008, the Lehman Brothers crisis hit the markets, and as a relatively smaller organisation, we faced the impact. Despite this setback, we continued to build our foundation and structure, adapting to the circumstances.

After stabilising the 2008 crisis, in 2013-14, we secured investment from SAIF Partners, a private equity player. During that period, we were among the few jewellery companies considering partnering with a private equity firm and diluting our stakes. We were inspired and motivated by the industry’s changing landscape, witnessing fellow jewellers achieving remarkable milestones; during the times legacy brands like TBZ-The Original went public.
In 2018, we attempted to enter the market, but unfortunate incidents in the industry and negative investor sentiments compelled us to postpone our plans. Subsequently, the pandemic struck, further delaying our IPO timeline.

So, the IPO we are witnessing in 2023 is the culmination of a 15-year endeavour that began in 2008-09. We believe in the tremendous potential of our country and the trust we have built over 50 years across generations. We recognised the responsibility to adopt best practices and prepare the company for a future that lies ahead.

SB: The IPO is oversubscribed 77 times. What led to such an exceptional response from investors?

SS: One crucial factor is consistent financial performance over some time. Investors seek stability and growth demonstrated through consistent results rather than sporadic bursts of exceptional performance followed by periods of underperformance. In our case, investors showed trust in the 10-11 years of audited financial statements that preceded our IPO. This trust was built not only in the period leading up to the IPO but also over a substantial duration, thanks to the involvement of external auditors. In the last three years, we had Grant Thornton as our auditor and, before that, KPMG. This, coupled with the goodwill of our brand, instilled a sense of stability and trust among investors.

Moreover, we carefully priced our shares, considering our shareholders’ interests and ensuring investors could see the potential for investment returns. We needed to balance competitive pricing and offering value for money. The company fixed the price band for its public offer at Rs 301-317 per equity share.

Another critical aspect that investors assess is the presence of robust systems and processes within the organisation. This includes having a strong Enterprise Resource Planning (ERP) system in place, which helps streamline operations and ensure efficient management of resources.

SB: At a granular level, what changes have you implemented within the company’s system to facilitate the transition from being a family-owned organised jeweller to a corporate one?

SS: Our journey of transformation has spanned 15 years, and the evolution of our company occurred gradually and organically. The focus was not solely on the IPO; it was about becoming an organised player in the industry. Even if the IPO had not happened, we would still be an organised player focused on growth. The IPO accelerated the journey we had been undertaking for many years. We established a chain of command and implemented systems and processes typically found in corporate institutions. This structure is less prevalent in family businesses.

The first essential change we made was implementing an Enterprise Resource Planning (ERP) system. This robust backend system ensures that our stores operate efficiently, with everything being tagged, data-driven, and easily traceable. This shift at the granular level allowed us to establish a strong foundation for the company.

The next crucial step was restructuring the team to work within the system rather than bypassing it. We fostered a culture of accountability and ownership. It is important to note that such changes take time; they require careful planning and execution. We created departments, entrusted individuals (who had been with us) with responsibilities for a long time, and empowered them to contribute to the organisation’s growth. This hierarchical structure included store managers, zonal managers, and other key personnel.

My message to others in the industry is not to pursue actions solely with the IPO as the end goal. Instead, the goal should be to create a long-lasting organisation, establish a legacy, and strive for excellence. The IPO is just a method or a part of this broader objective.

SB: The IPO unlocks huge capital for the organisation. How do you plan to deploy the funds?

SS: It’s important to note that our IPO raised a limited amount of funds, approximately Rs 270 crore, with Rs 135 crore coming from the partial sale of shares by SAIF Partners. It is not a huge sum. As for our plans for the next five years, I cannot provide extensive details. However, we have been opening 5-6 stores per year, and with the IPO, we aim to open around 12-15 stores per year. We will also focus on consolidating our position in existing locations and continuing our growth trajectory.

SB: How do you see the jewellery industry’s future in terms of risks and opportunities?

SS: Potential risks affect the entire industry, not just Senco Gold. One of the significant risks is the volatility of gold prices. Gold prices are subject to fluctuations, and customers must be willing to purchase jewellery within their budgetary constraints. As an industry, we must remain relevant to the customers, considering both the rise in gold prices and the changing preferences of the new generation of consumers. We all strive to attract and engage with this new consumer base uniquely.

Another challenge for the industry is to ensure the availability of quality trained manpower across the country. With improving lifestyles, the aspirations and dedication of the younger generation may differ from that of the senior generation. It is crucial to have committed, loyal, and willing individuals to work hard at the ground level. Acquiring and retaining such talent becomes a vital challenge.

Competition among industry players is both a learning opportunity and a potential challenge. While we learn from each other and take inspiration, there can also be a tendency to become overly aggressive in capturing market share. Excessive discounting and price wars, similar to what has been observed in other industries like Coke and Pepsi, may not be beneficial for the long-term health of the jewellery industry.

Additionally, the industry must address the issue of skilled new-generation artisans, particularly handcrafted jewellery. Ensuring motivation and sustainability for these artisans becomes a collective responsibility for the industry. Balancing growth, profitability, and sustainability is crucial not only for individual organisations but for the entire ecosystem of the industry.

SB: Senco is a strong regional player, with 63% of its showrooms in West Bengal. How do you see the journey from here to becoming a national player?

SS: We aspire to become a national player, but it is important to acknowledge and give credit to being a leader in one’s zone. While the goal of becoming national is admirable, it does not diminish the accomplishments of regional leaders. For example, DMart is not a national player, yet they have achieved great success in their own right.

I greatly respect brands like Tanishq, which have successfully established themselves as national players. Other fellow jewellers, such as Malabar, Kalyan, Joy Alukkas, and TBZ, are also making significant efforts in this direction. At the same time, I greatly respect regional players like Thangamayil, who have carved their niche in the market. DP Abhushan, for example, has achieved remarkable success by focusing on its zone and experiencing significant growth in its targeted markets of MP, Rajasthan, and surrounding areas. Learning from such examples and drawing inspiration from each other is crucial to find the best growth strategies for individual brands. Becoming a national player is a strategic goal, but it is important to recognise and appreciate the achievements of both national and regional industry players.

SB: So what you are trying to say is that becoming a publicly listed company does not necessitate a brand to think ‘national’?

SS: Precisely. Becoming listed does not necessarily mean that a brand has to expand on a national level. It is possible to stay focused on the core market and leverage the opportunities within that region. India offers ample growth opportunities, and utilising the funds to maximise profitability and return on investment is essential. The notion that an IPO is synonymous with becoming a national player is a myth. There are various ways to grow and expand without pursuing a national presence.

SB: What markets are on your radar right now?

SS: Our core and home markets are the East, with significant potential for growth. We will continue to focus on expanding our presence in that region. Additionally, the North and Western parts of the country are on our radar for expansion. We already have a presence in the Delhi NCR region with 7-8 showrooms and in states like Uttar Pradesh and Punjab. We are also in the process of opening stores in Madhya Pradesh. These regions allow us to expand our footprint further and serve a wider customer base. We attract both Bengali and non-Bengali customers. Bengalis naturally feel an affinity towards our brand due to our presence in Bengal. Our reach extends to other States such as Orissa, Bihar, Jharkhand, and Assam, where we also have a customer base.

The Retail Jeweller India Magazine

Suvankar Sen, the Managing Director and Chief Executive Officer of Senco Gold, on the motivations to list the company on the market, the journey to their oversubscribed IPO, dogged determination to return value to investors, commitment to ensure the company’s future readiness, and why going public should not necessarily mean becoming a national player

For those in the industry, Senco Gold, the largest jewellery retail player in the eastern region based on the number of stores, needs no introduction. The company has a retail network of 136 showrooms, including 61 franchises and 75 company-owned showrooms. It also has over 4.50 lakh sq ft of retail space with a store network across 96 cities.

This month, the retailer made news with its IPO being subscribed over 77.25 times, receiving bids for 69.1 crore equity shares against 94.18 lakh shares on offer. Overall, the company raised Rs 405 crore comprising fresh equity issues of up to Rs 270 crore and an offer for sale (OFS) from SAIF Partners aggregating up to Rs 135 crore.

Senco’s successful IPO listing is perhaps a cause for celebration for the entire industry, as it fills the hole in the heart of an industry that has unfairly suffered reputational damage due to successive financial debacles of a few errant players.

At this pivotal moment for the company, Soma Bhatta speaks to Suvankar Sen, the Managing Director and Chief Executive Officer of Senco Gold. The conversation traces back to the brand’s journey when Founder Chairman Late Shri Shankar Sen first dreamt of building a future-ready organisation on par with the best corporate institutes- a structure less prevalent in family businesses (back then), the KPIs that build confidence in investors, the potential risks and opportunities for the jewellery business

Edited Excerpts:

Soma Bhatta (SB): What were the motivations behind Senco Gold’s decision to go public?

Suvankar Sen (SS): The decision to go public has been a long-standing aspiration for us, not just a sudden realisation. It traces back to 2008-09 when I joined the business after completing my MBA. At the time, my father had the farsightedness to create a sustainable and system-driven organisation, amalgamating our proprietorship and partnership firms into a private limited company.

We engaged top auditors and implemented an ERP system to ensure systematic expansion. In 2008, the Lehman Brothers crisis hit the markets, and as a relatively smaller organisation, we faced the impact. Despite this setback, we continued to build our foundation and structure, adapting to the circumstances.

After stabilising the 2008 crisis, in 2013-14, we secured investment from SAIF Partners, a private equity player. During that period, we were among the few jewellery companies considering partnering with a private equity firm and diluting our stakes. We were inspired and motivated by the industry’s changing landscape, witnessing fellow jewellers achieving remarkable milestones; during the times legacy brands like TBZ-The Original went public.
In 2018, we attempted to enter the market, but unfortunate incidents in the industry and negative investor sentiments compelled us to postpone our plans. Subsequently, the pandemic struck, further delaying our IPO timeline.

So, the IPO we are witnessing in 2023 is the culmination of a 15-year endeavour that began in 2008-09. We believe in the tremendous potential of our country and the trust we have built over 50 years across generations. We recognised the responsibility to adopt best practices and prepare the company for a future that lies ahead.

SB: The IPO is oversubscribed 77 times. What led to such an exceptional response from investors?

SS: One crucial factor is consistent financial performance over some time. Investors seek stability and growth demonstrated through consistent results rather than sporadic bursts of exceptional performance followed by periods of underperformance. In our case, investors showed trust in the 10-11 years of audited financial statements that preceded our IPO. This trust was built not only in the period leading up to the IPO but also over a substantial duration, thanks to the involvement of external auditors. In the last three years, we had Grant Thornton as our auditor and, before that, KPMG. This, coupled with the goodwill of our brand, instilled a sense of stability and trust among investors.

Moreover, we carefully priced our shares, considering our shareholders’ interests and ensuring investors could see the potential for investment returns. We needed to balance competitive pricing and offering value for money. The company fixed the price band for its public offer at Rs 301-317 per equity share.

Another critical aspect that investors assess is the presence of robust systems and processes within the organisation. This includes having a strong Enterprise Resource Planning (ERP) system in place, which helps streamline operations and ensure efficient management of resources.

SB: At a granular level, what changes have you implemented within the company’s system to facilitate the transition from being a family-owned organised jeweller to a corporate one?

SS: Our journey of transformation has spanned 15 years, and the evolution of our company occurred gradually and organically. The focus was not solely on the IPO; it was about becoming an organised player in the industry. Even if the IPO had not happened, we would still be an organised player focused on growth. The IPO accelerated the journey we had been undertaking for many years. We established a chain of command and implemented systems and processes typically found in corporate institutions. This structure is less prevalent in family businesses.

The first essential change we made was implementing an Enterprise Resource Planning (ERP) system. This robust backend system ensures that our stores operate efficiently, with everything being tagged, data-driven, and easily traceable. This shift at the granular level allowed us to establish a strong foundation for the company.

The next crucial step was restructuring the team to work within the system rather than bypassing it. We fostered a culture of accountability and ownership. It is important to note that such changes take time; they require careful planning and execution. We created departments, entrusted individuals (who had been with us) with responsibilities for a long time, and empowered them to contribute to the organisation’s growth. This hierarchical structure included store managers, zonal managers, and other key personnel.

My message to others in the industry is not to pursue actions solely with the IPO as the end goal. Instead, the goal should be to create a long-lasting organisation, establish a legacy, and strive for excellence. The IPO is just a method or a part of this broader objective.

SB: The IPO unlocks huge capital for the organisation. How do you plan to deploy the funds?

SS: It’s important to note that our IPO raised a limited amount of funds, approximately Rs 270 crore, with Rs 135 crore coming from the partial sale of shares by SAIF Partners. It is not a huge sum. As for our plans for the next five years, I cannot provide extensive details. However, we have been opening 5-6 stores per year, and with the IPO, we aim to open around 12-15 stores per year. We will also focus on consolidating our position in existing locations and continuing our growth trajectory.

SB: How do you see the jewellery industry’s future in terms of risks and opportunities?

SS: Potential risks affect the entire industry, not just Senco Gold. One of the significant risks is the volatility of gold prices. Gold prices are subject to fluctuations, and customers must be willing to purchase jewellery within their budgetary constraints. As an industry, we must remain relevant to the customers, considering both the rise in gold prices and the changing preferences of the new generation of consumers. We all strive to attract and engage with this new consumer base uniquely.

Another challenge for the industry is to ensure the availability of quality trained manpower across the country. With improving lifestyles, the aspirations and dedication of the younger generation may differ from that of the senior generation. It is crucial to have committed, loyal, and willing individuals to work hard at the ground level. Acquiring and retaining such talent becomes a vital challenge.

Competition among industry players is both a learning opportunity and a potential challenge. While we learn from each other and take inspiration, there can also be a tendency to become overly aggressive in capturing market share. Excessive discounting and price wars, similar to what has been observed in other industries like Coke and Pepsi, may not be beneficial for the long-term health of the jewellery industry.

Additionally, the industry must address the issue of skilled new-generation artisans, particularly handcrafted jewellery. Ensuring motivation and sustainability for these artisans becomes a collective responsibility for the industry. Balancing growth, profitability, and sustainability is crucial not only for individual organisations but for the entire ecosystem of the industry.

SB: Senco is a strong regional player, with 63% of its showrooms in West Bengal. How do you see the journey from here to becoming a national player?

SS: We aspire to become a national player, but it is important to acknowledge and give credit to being a leader in one’s zone. While the goal of becoming national is admirable, it does not diminish the accomplishments of regional leaders. For example, DMart is not a national player, yet they have achieved great success in their own right.

I greatly respect brands like Tanishq, which have successfully established themselves as national players. Other fellow jewellers, such as Malabar, Kalyan, Joy Alukkas, and TBZ, are also making significant efforts in this direction. At the same time, I greatly respect regional players like Thangamayil, who have carved their niche in the market. DP Abhushan, for example, has achieved remarkable success by focusing on its zone and experiencing significant growth in its targeted markets of MP, Rajasthan, and surrounding areas. Learning from such examples and drawing inspiration from each other is crucial to find the best growth strategies for individual brands. Becoming a national player is a strategic goal, but it is important to recognise and appreciate the achievements of both national and regional industry players.

SB: So what you are trying to say is that becoming a publicly listed company does not necessitate a brand to think ‘national’?

SS: Precisely. Becoming listed does not necessarily mean that a brand has to expand on a national level. It is possible to stay focused on the core market and leverage the opportunities within that region. India offers ample growth opportunities, and utilising the funds to maximise profitability and return on investment is essential. The notion that an IPO is synonymous with becoming a national player is a myth. There are various ways to grow and expand without pursuing a national presence.

SB: What markets are on your radar right now?

SS: Our core and home markets are the East, with significant potential for growth. We will continue to focus on expanding our presence in that region. Additionally, the North and Western parts of the country are on our radar for expansion. We already have a presence in the Delhi NCR region with 7-8 showrooms and in states like Uttar Pradesh and Punjab. We are also in the process of opening stores in Madhya Pradesh. These regions allow us to expand our footprint further and serve a wider customer base. We attract both Bengali and non-Bengali customers. Bengalis naturally feel an affinity towards our brand due to our presence in Bengal. Our reach extends to other States such as Orissa, Bihar, Jharkhand, and Assam, where we also have a customer base.

The Retail Jeweller India Magazine