Renaissance Jewellery will foray into the capital markets with a public issue of 53.24 lakh equity shares. The issue, which has a price band of Rs 125-150, opens for subscription on November 19.
Sumit Shah, Managing Director, Renaissance Jewellery, said the company has hedged itself against the appreciating rupee.
Excerpts from CNBC-TV18's exclusive interview with Sumit Shah:
Q: Where are you going to deploying this Rs 80 crore? 90% of your revenues come in from the US market, do you expect that to be hit by the rupee appreciation?
A: 95% of our revenues come from our US business. Our company is uniquely positioned, as we have a natural hedge against the appreciating rupee. 83% of our sales are raw materials, which are dollar denominated. Even our working capital loans are in terms of dollars. So, essentially our company is hedged against the appreciating rupee.
In terms of deployment, we plan to use about Rs 35 crore to setup a distribution company in the US to distribute to small and mid-size retailers. Currently, our business comes from large retailers like Wal-Mart, who awarded us the Global Supplier of the Year in the past. We do not distribute to small and midsize retailers but we plan to increase our presence there.
About Rs 15 crore, will be spent towards increasing capacity at our Bhavnagar and Mumbai manufacturing facilities. The balance will be utilized to increase our long-term working capital.
Q: What are the average margins that you operate at? For the first quarter of this year, you have done about Rs 118 crore in terms of revenues. Would it be fair to assume that you could go in excess of Rs 500 crore for revenues, and if so, what margins and profitability?
A: In the first quarter of the year we have done Rs 118 crore. The first quarter tends to be the slowest quarter for the jewellery business worldwide because most of the main selling seasons are Christmas, Valentine’s Day and Mother’s Day. We expect to continue to grow at good pace. The first quarter results were quite encouraging.
Source: Moneycontrol.com
Wednesday, November 14, 2007
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