About the company:

Senco Gold Limited is a pan-India jewellery retail player with a history of more than five decades and is the largest organized jewellery retail player in the eastern region of India. The company sells jewellery made of gold, diamond, silver, platinum, precious and semi-precious stones, and other metals. Senco’s other offerings also include costume jewellery, gold and silver coins, and utensils made of silver. The company sells the products under the tradename “Senco Gold & Diamonds”. Senco has also started DSignia branded showrooms to focus on more premium or higher value jewellery with an average ticket size of ~Rs 51,000 (FY23) and to provide a premium shopping experience.

It offers a large variety of designs of handcrafted jewellery, most of which are designed and manufactured in-house. It offers more than 120,000 designs for gold jewellery and more than 69,000 designs for diamond jewellery. The company also manufactures machine-made lightweight jewellery in gold and diamonds and source jewellery from third-party vendors. The company has over 136 showrooms which have a total area of approximately 409,882 sq. ft. It includes 70 company-operated showrooms and 61 franchisee showrooms spread across 99 cities and towns over 13 states across India.

The objective of the fresh issue:

The company intends to utilize the net proceeds received from the fresh issue of Rs. 270 crores towards:

1. Funding working capital requirements of our Company and

2. General corporate purposes.

Key Strengths and Business Strategies:

1. One of the key strengths of the company lies in the meticulous craftsmanship of the Bengali Karigars. There are about 170 experienced Karigars in Kolkata renowned for their exquisite and artistic work in the carving and processing of jewellery.

2. Senco Gold has a strong brand name with a heritage and a legacy of over five decades. It has been BIS hallmarking all of its gold jewellery since 2012, prior to the regulatorily mandated hallmarking which started in 2021. It has also installed gold testing machines (XRF machines) at all the showrooms to ensure stringent and transparent purity checks and quality checks of the jewellery before being sold to the customers.

3. The company uses a “hub and spoke” approach to enter new geographies and optimize its inventory management. This means that they typically foray into large new cities with company-operated showrooms and then leverage the franchise model to expand into tier–II and tier-III locations.

4. The company intends to cater to the upwardly mobile and younger generation by focusing on light, affordable jewellery. This is owing to several factors including an increasing number of working women, exposure to global designs, a rising number of young consumers who prefer jewellery over investments, shift in preferences from traditional bulky jewellery to light-weight fashion items.

Risks:

1. The company requires significant financial resources for each new company-operated showroom which includes capital expenditure, financing, inventory and hiring of additional employees. An inability to effectively manage the expanded operations or pursue its growth strategy may result in a material adverse effect on its business prospects

2. Timely procurement of materials such as gold bullion, diamonds, etc…as well as the quality and the price at which they are procured play an important role in the successful operation of Senco’s business. Any decrease in the supply of gold or its inability to effectively procure gold at competitive rates may adversely affect the company’s operations.

3.  Senco derives substantially all of its revenues from the sale of innovative, trend-setting, stylish jewellery products, which depends significantly on the strength and reputation of its brand. The inability of new designs or new jewellery lines to gain market acceptance or the inability to cater to changing customer preferences could adversely affect the brand image.

Financial Snapshot: