RBZ Jewellers Limited (RBZJEWEL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the RBZ Jewellers Limited Q3 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Before we proceed to the call, let me remind you that the discussion may contain certain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business. Risks that could cause actual results, performance or achievements should differ significantly from what has been expressed or implied in such forward-looking statement. Please note that the company have uploaded the results and the outcome of the board meeting on the website of stock exchanges and website of the company. I now hand the conference over to Mr. Harit Rajendrakumar Zaveri, Joint Managing Director of the company. Thank you and over to you sir.

Yes, good afternoon all. We have just completed the quarter 3 of fiscal '25 and the results are out. The company has done a revenue of around INR 194 crore which is 60% or plus than the last year's Y-o-Y. We have made a profit before tax of INR 18 crores and which is again compared to the last year results on  Y-o-Y basis are exceeding by, last year it was INR 9.14 crores, this is INR 18.16 crores. There is an increase in employee cost as in my previous earning calls, we are building up a clean and robust structure for continuous growth and development for the company. So team is being an essential element, so yes there is an increase in employee cost and the financial cost has also proportionately increased.  In quarter 3 we require good working capital funds, quarter 3 is the prime season for the jewelry industry and I think in this year we have made a profit of INR 13 crores plus. The volume of the company has stood at 461 kg which on Q-on-Q basis last year was 312 kg, so there is a clear increase in volumes due to increase in sale of services. The sale of goods business that is the retail and wholesale business has done exceedingly well by getting a revenue of up to 60%. I think this is the brief from my side, on the forward looking a quarter 4 seems to be good. We have already completed January and February is on. I think from the last year quarter 4, this year quarter 4 will be again far exceeding well and comparatively I think this quarter 4 January has gone as per our expectations. So let us hope for a better quarter 4 and the promise remains that we had expected  INR 35 crore of PAT and the cumulative PAT has already crossed INR 30 crores. I think quarter 4, INR 5 crores seems very much in control and achievable. This is just a little brief about the company's financials. Over to the questions, if any.

Thank you very much. We will now begin the question and answer session. [Operator Instructions] The first question comes from the line of [ Abhishek from AB Capital ]. Please go ahead.

Yes. So you had guidance for INR 500 crores to INR 600 crores revenue and INR 35 crores PAT this year. So considering your brilliant performance this quarter, would you like to revise your top line and bottom line guidance?

So top line, I suppose it will be around as far as right now, we are looking, I think INR 520 crores to INR 530 crores should be or INR 535 crores should be the top line and the bottom line. I think let us say INR 35 crores is what we have committed. I think it will, it should surpass whatever committed levels are. I think we are in control of whatever we have said and we would want to keep it as it is. Yes from the turnover top line perspective, this will be from INR 500 crores to INR 550 crores.

Okay, okay. Another thing, like at a broad level I wanted to know, like in the long-term, maybe in maybe 3, 4 year view, what is the broad vision for the company? Like do you want to grow predominantly into your contract manufacturing firm for antique jewelry, who also has their own brand or do you want to go predominantly your Harit--the Harit Zaveri brand and make that into a premium brand with multiple showrooms all over India and have contract manufacturing as like secondary? Which one will be your more focus?

So as of now, we are doing healthy, we are doing good in both the segments, that is B2B and B2C. And yes, there is a current capacity is around 1,700 kg or 1,800 kg is already there in wholesale. So there is, you know, because of the price which has hiked up in this year also it has in this quarter, there has been around 10 to 15%, you know, from 75,000 to 88,000. And last year it was from 16,000 to 75,000. So I think still the capacity is not fully utilized. And we have a good room, there is no need of an excess capacity as of now. We can, whenever we want, we can tune up to job working and, you know, we can also make in the market, the job work practice is already there. So there is no need of an additional capacity. On the retail front, I think we have our store Harit Zaveri Jewellers and as expected, even before the, you know, IPO, whatever, because we have projected for the retail showroom has come across good. Looking forward, we will want to, we will want to sustain our margins and we will want to grow the top line, let's say in the next coming fiscal to INR 700 crores, INR 750 crores. And going forward 2 to 4 years, we are expecting that, you know, the contract manufacturing business, my volumes will grow and even there will be better margins, there will be better business prospects in retail. So these two fronts will grow. I think there will be, we have already added a floor in retail for next calendar year, when there is calendar year '25, there is going to be, supposing we are yet to, you know, we are yet to see the season. I think next year INR 700 crores, INR 750 crores just seems to be a very achievable kind of revenue figures with INR 44 crores, INR 45 crores back. The further raise of net will also be there. So, you know, looking, considering that, let us see, you know, how the 3, 4 year looks like. But yes, we have got a very robust backend. That means the manufacturing setup is extremely robust. If we are going anything in front end, it will just be a, you know, better, the margins will be better in that case. So the kind of infrastructure that we have from manufacturing to retail helps in sustaining our margins in all forms. For a 3 to 4 year outlook, I think the company will consistently provide a target of around 35% plus year on year basis. So let us say this year it has grown to 525, next year 750 and further it will grow again to 35 to 40% top line growth will be there.

So revenue mix will be 50-50, you want to maintain it 50-50 for both sides?

Revenue mix, yeah, it will be 50-50 as of this calendar year or the coming financial year, yes, the revenue mix will be again 50-50.

Okay, so do you have any plans to open more showrooms like in the near future as of now?

Let us see first, this showroom already has a capacity of around INR 600 crores to INR 700 crores. We have not reached our capacity. This year, I think we will be reaching 50% of our capacity. So even if you are crossing INR 250 crores, INR 300 crores this year, then also we have got time. It's a great marketplace. We need to push more inventory. We need to get the sales out first, we have a 10,000 square feet showroom in Ahmedabad. So that showroom is sufficient for INR 600 crores, INR 700 crores. Let us wait for this quarter, at least 2 quarters, and then we can understand what the retail looks like. But yes, certainly, if this space is exhausted in the sales, we will look forward to another venture, another retail space.

Okay. And what will be the ROE trajectory going forward? Can you give some guidance or anything?

ROE, we always focus that if we have INR 100, we should be earning INR 20 to INR 25 net. 20% to 25% that is if we maintain our business in that sense.

So you want to bring your ROE to around 20% to 25% in the...

20% to 25% is a sustainable ROE, and we have always been throughout the business journey, the ROC or ROE is 20% to 25%.

The next question comes from the line of [ Ankit Agarwal from Value Cap Investment ].

Am I audible?

Yes you are.

First of all, congratulations on a very good set of numbers. And also, I would like to thank you for meeting your guidance. Okay. So sir, my question is in one of the earlier calls, I think 2 quarters ago, you had mentioned that you are looking for some new land to expand your capacities for the B2B side of the business. So anything on that front, sir, you would like to say? Are there any plans that have come along?

You are quite correct in this sense. But the gold trajectory when we were in IPO, gold was around 50,000 to 60,000. Right now, it is 85,000, 90,000 approximately. So in this sense, there's already quite a buildup on gold and further, there could be further escalations. We don't understand. So as of now, we are meeting our revenue guidance. But we are not able to meet our volume guidance because of the very high growth in terms of gold prices. So in this case, again, it is not 100% advisable to build up a factory as of now. And even if there is a capacity expansion, that will not 100% lead to a demand expansion because we will again need a huge working capital. So if we have a 1,700 or 1,800 kg facility right now, and we are doing, let's say, 1,200 kg, even if we grow at 20% next year or next year, we still have enough capacity and we can also do a job work outside. So doing the CapEx of INR 40 crores odd right now, I don't think so is what we are thinking. In the future, yes, once we at least come across 1,600 kg of quantity, we can still have like 300 capacity that can be expanded in-house only. So 2 tonnes is easy. Next couple of years or at least 1 calendar year, we are not thinking of building up anything. So just because of a strong increase in gold prices. But yes, because we are a manufacturer, we have got a cost advantage. And when we are doing retail, that profitability seems to come out in a much better way. So we are focused on the current business model. Job work, yes, we are doing with corporates and wholesale and retail. So yes, these are the things. And we are focused on how can we increase the volumes despite the increase in prices. So can we increase, let's say, can we increase the same percentage of revenue next year? These are all our questions and bring in the correct ROE, ROE, and profitability.

So, sir, do you think you can maintain this 35% top-line CAGR with the current capacities, both B2C and B2B included? For the next 2 to 3 years, I'm asking.

Yes, there is no doubt for 2 to 3 years. Otherwise, we would have instantly gone for a capacity expansion. There is already a very high increase in gold prices.

Thank you. The next question comes from the line of [ Prerana Amanna with the Equity Research Program ].

Congratulations on a good set of numbers. So my first question is, in the first 9 months of this year, how many kg of gold have you done? And what is the target for next year?

So first 9 months, we have done 1,005 kgs and we are focused, we should be doing around 1,250 kg or 1,200 kg to 1,300 kg by the end of this fiscal. So that will be an increase of 2% in gold volumes.

And what about the next year, that is FY '26?

It depends on what is the pace of gold prices. If the gold prices are going to skyrocket, you can expect that the revenue increase will be at least at around 35% or more. I mean if I'm giving a guidance of INR 750 crores, I am giving a guidance of 35% to 45%. So we will be meeting that guidance. That is what we are looking for. The demand is strong. And the demand we are into an organized segment of doing retail or job work or wholesale. And I think the way we are operating, we will be meeting 35% to 40% of revenue guidelines.

Okay, sir. And what has been the sales mix as of this Q3 how much has come from your B2C, your wholesale, and your sale of service?

So volume-wise, we are 30% in retail and 70% in B2B. That is B2C is 30% and volume-wise, B2B is 70%. And it fluctuates internally, whether it is the sale of goods or whether it is job work because generally more organized player tends to go on GML, gold metal loan and they give us gold as an inventory day just 1 or 2, but they give us gold in advance for the finish and we hand over the finished goods, whatever we have produced to them. So because of that case, if you take B2B as one, we are 70% in volumes in that. If you build the revenue breakup, revenue breakup right now will be around 55% B2C and 45% B2B.

The next question comes from the line of [ Deepesh Sancheti with Manya Finance ].

What is the order book right now in terms of kgs? And how much does it come from the top 5 clients? B2B...

Order book right now will be around  65 bids. That is still the month of February and we will be completing that order. Retail does not have any order book to carry. And the month of March, we are yet to see. We'll be seeing the visibility will be there post-February 25. But I see that whatever the volume guidelines that I have given, I think we will be matching through that. We'll be doing a volume of around 200 to 300 kg this quarter. Quarter 1, we are on track.

[indiscernible] you said that in 9 months, you've already completed 1,005 kgs and you expected around 1,250 kg. So you already gave a guidance of around 250 kg for this quarter. Okay. And how much does it come from the top 5 clients?

More than 50% -- 50% of the volume has come from the top 5 clients.

50% is coming from the top 5 clients. Okay. Do we also give it to the new company, which is of Aditya Birla Indriya? Do we also have those orders from there that company also?

We are a strategic vendor partner to Titan in the category that we deal in, they have limited vendor partners. And we are a strategic vendor partner to them, our -- see, we have not declined in volumes in terms of job work. That clearly indicates the gold prices have risen by 25%, 30%. That clearly sees that we are -- even in volumes, we are -- we will be -- we will be ending the year positively in terms of job work also. So I don't see that, Aditya Birla will have a learning curve, like it will be a 5-year learning that will have. We are with Titan. And apart from Aditya Birla, there are major players whom we cater Malabar is there , Joyalukkas is there, so there are ample of players, Senco is there. So we have been there and looking forward for a better partnership with all the corporates. Plus our retail store is also doing pretty well in terms of PAT margins in terms of contribution to the overall bottom line. I suppose the cost that we are having an advantage as a back-end player is playing a very crucial role when it comes to contributing the margins in retail. So overall, yes, that is why we are able to maintain margins and the coming quarter will be -- I think will be -- so far, it is good. Let us see, around INR 35 crores, INR 36 crores should be the figures.

INR 35 crores, INR 36 crores in terms of what...

Yes, in terms of overall PAT figures.

Overall PAT figures, that's for the entire year, right?

Yes, entire entirely.

Yes, yes. No, I was trying to say is that since we are already a preferred supplier with Titan, we are already a preferred supplier with Malabar and other big names and other big corporates. Why not also incorporate a new and a more aggressive client like Indriya, I mean, which is already -- I mean, a lot of other B2B players who are listed also, they are also mentioning that they are going aggressively for Indriya because they're pretty aggressive. So why our company not looking at that kind of situation?

So see, when you are a wholesale player and you are a strategic vendor partner to Titan, then they are promising us of a very good volumes. We are into occasion category where designs are sensitive. And we are already getting good volumes from this all players. So right now, we are not looking forward for Indriya or Aditya Birla Group. In future, let's say, in the coming 2 years, we don't know what could be the case. But as of now, we are fairly well placed in the category and in the clients that we are in. We are already expanding clients. We are expanding independent retailers. We are expanding corporate players. We are penetrating corporate players. I think so far, the strategy has worked for us. Just, let's say, if I'm doing Indriya or I'm doing -- that will be a direct competition to most of our clients. And if we are having the confidence, they have already got the learning curve, it is better to right now penetrate the existing client. And it's enough capacity that we have. We are just a ton player, right? If you actually see the headroom is very high. In any of the segment that we are in, be it retail space or be it wholesale space, the headrooms are very high. So company has got a long way to go. It doesn't matter that if we have -- like in Indriya market, he may be having, let's say, whatever store plans that Indriya has. I think a similar kind of expansion is already there in Titan and Malabar, Joy put together, not even put together individually also.

I know you mentioned that you have a target of more than 5 tonnes going ahead. So I mean...

We are -- you are true, but at that time, the gold figures were different. We are still -- if we have increased the volume this year also by 20%, the company has -- see, I have also told that I have raised INR 90 crores or INR 100 crores as, let's say, equity, net INR 90 crores, what was available to us in our hand. So company was at that point of time, let's say, INR 100 crores of equity, we have added INR 100 crores of equity. Again, INR 100 crores of debt was there. We will be planning to raise debt in this year. So overall, this year, the profitability is INR 35 crores. Last year it was INR 22 crores. So INR 22 crores to INR 35 crores, INR 35 crores to INR 44 crores or INR 45 crores that is what we are planning for next year. So we are in sync with the numbers. But yes, volume number fluctuates because of gold price escalation. And to do 5 tonnes, like we can expand, but then we need working capital, excessive working capital for that.

Right. What I'm trying to say is that your B2B, where you said that the inventory turnover is almost 1 day only, where most of your clients give you advanced goal. This is what you mentioned just to the previous caller. Just wanted to understand what is the capacity in terms of that angle? Because these -- I'm sure that these are the companies which are like the Titans or the Malabar as you mentioned. So when these are giving you advanced gold and you're doing a faster turnover, then I mean, what is the capacity? How much can we -- how much capacity utilization have we done? And how much is the legroom?

So I'll correct you in this. One must understand -- I just want to clear the business model again. When in many corporates, when they have GML, they give an inventory holding days of, let's say, 10 days. Let's say, our manufacturing time is 45 days. So the inventory is being deployed by us almost at the stage of near about semi-finished goods to finished goods. The replenish their goal or they provide their goal and we give them the finish -- we deliver them the finished goods with higher job works there. That is why if you see the inventory turns in RBZ would be lower as compared to other peers. But in actual, if you compare the volume data, we do a volume of 1,200 to 1,300 kgs versus the inventory of, let's say, 300 to 350 kg. That means the 4 tons are already happening. But in the books because the job top line is booked at just the labor value we are exactly not catching the inventory days. Now coming again back to your question, the inventory holding days that are required, let's say, for an example, a corporate A gives me a 10 kg order of the finished goods that I already have. That means he will give me 10 kg of gold bar as GML and we will bill him by a job per crew. Let's say, if it is INR 100 per gram, for an example, then 100 kg will be -- let's say, we are booking INR 1 crore of revenue, and we are giving them 10 kg, that is INR 80 crores of goods or INR 8 crores of goods. So this is the cycle that we follow and in which inventory days of ours will be much higher and not just 1 day. Their inventory holding days will be 1 day.

Okay. Okay. So just to understand, from the design being passed, till the actual jewelry being made, what is the time what is the inventory time which happens? Actually, 45 days is what you mentioned? Or is it less?

30 to 45 days will be the time lines.

30 to 45 days. Understood. Understood. Now in this quarter, have we booked any inventory gain because we have an inventory of about 300 to 400 kg. Have we booked any inventory gain because of the price hike in gold?

So whatever we sell, we buy. It is a natural hedge that we do. And we follow the fixed cost method when the FG is created. Other than that, we follow moving average price method whenever it is there from raw material to semi-finished goods. So during the business cycle, yes, there will be inventory gain and inventory losses per transaction or per things. But overall, yes, the whole -- if you look at the whole business, 50% business comes from job work that is replenishment of metal from metal. So again, that is also completely hedged. And whatever we sell, we buy, so the hedging is always clear. Whatever gains that we have booked from the size of gold prices, I think that will be yet to determine. But there will be a gain, right? Because if we are not booking that gain, then we should be actually getting the gold metal loan at, let's say, 2% or 3%, whatever. And we are paying the CC at around 9%, 10%. So 6% is what we are spending on CC if we are not booking the gold gain.

Right. So we don't follow FIFO or LIFO method, right?

No, no, we are not following any method. We are following from raw material to semi-finished goods, it's moving average price. Whenever that goods are getting into finished goods, it will be at a fixed cost and the price will be freezed.

Okay. And what is the debt right now situation? And how much are you planning to increase it?

So the debt right now is approximately INR 100 crores of short-term loan is there. And we have just paid INR 18 crores towards the long-term loan that we have for taking the further working capital loan from the same collateral.

Okay. And how much are we expecting the working capital loan increase? INR 100 crores expecting...

INR 50 crores to INR 70 crores minimum to increase from the existing collateral that we have taken out from the long term -- in which long-term loan was.

Okay. And out of the INR 80 crores, which we net utilized up to now until December, how much of the stock addition have we done in this?

I'm sorry, can you come back again?

Out of the INR 80 crores, INR 100 crores, which is what we raised from IPO, INR 10 crores was your expenses. INR 8 crores is, I think, what you already have right now in the banks. And what INR 80 crores, which we utilized, how much of it went into inventory increase?

Fully.

At what average price is INR 50,000 to INR 55,000?

No, it was around -- the average price would have been different because till the time we got the funds, it was already January and March and all it was something around INR 70,000 to INR 72,000, INR 72,000 to INR 74,000 that rate's there. And it was used as and when it was necessary.

INR 70,000 to INR 72,000 that is what we have increased—.

No, we have INR 70,000 to INR 75,000 because it was used as and when it was necessary. So it was fully utilized after the quarter 2.

Okay. And if I can just ask one more question that how much was in terms of kgs, how much was this quarter in terms of sale and how much was the job work? Because you said that the revenue mix was around 50-50. So is that -- can I assume that 230 kgs was the sale and 230 kgs was job work?

Okay. So in this quarter, quarter 3, 461 kg was the total gold that we had sold in that 224 kg was job work.

224 kg was job work. And going ahead also, we expect similar lines, 50-50 only is what we are looking at, right?

Yes. Going forward also, we will be looking at 50-50 only. Yes, that's correct. It will be minor fluctuation of plus and minus 5% will always be there.

Because I actually really wanted because you're looking at the ROE right now, your ROE is around 14% to 15%, and you're looking to get an ROE about 20% to 25%. Now I was thinking that if you go ahead with your job work, which will actually increase your profitability and not increase your sales to that because it doesn't hit the sales figure. It increases your margin, right? So that will actually increase your ROE. So I just wanted to understand what is in your mind in terms of increasing your ROE from 14% to 25%.

Correct. So when you talk about 14%, you are checking the last year fiscal data in which the IPO funds were -- last to last year, if you check, my ROE was in line. It was around 22%, 25%.

What is the ROE for 9 months?

I don't have the figures in hand. But let's say, if my -- if the PAT is around INR 35 crores, INR 36 crores and if you divide it by, let's say, 0.2, I think if you just measure the ROE with that basis, I think.

We generally do EPS -- I mean for me, the calculation is EPS divided by book value. That is what we do.

Yes, EPS divided by I think earnings per share will be -- we'll have to calculate that. And I think...

That's okay. I mean what you have already to 25%, we are really happy with that. But firstly, I want to congratulate you, great set of numbers and all the very best as your new role for CFO. And are you looking to carry forward this role of CFO or you are looking to get a new CFO sometime in the future?

So we have already created a position for internal financial controller. And the role of CFO for me would be on the temporary basis. Eventually, it will be led by a professional. But yes, right now, for an interim period of time, I would be handling the role. And yes. But ultimately, the accounts and finance team will be headed by an internal financial controller, which will be appointed in 2 to 3 months. We already finalized the candidate.

[ Mr. Deepesh ] we request that you return to the question queue as several participants are waiting. The next question comes from the line of [ Sahil Patani with Strokes Capital ].

Congratulations on a great set of numbers. I have been invested since the IPO, so really good to see the growth. Most of my questions were already asked by...

Sorry to interrupt you. Sir, may I request you to use your handset, sir, your audio is slightly muffled now, sir.

Sure, sure. So most of the questions that I wanted to ask were already covered by the previous participants. So nothing really to add. Just wanted to know that the growth momentum that you saw in the previous quarter and since you're already halfway down this quarter as well, are you seeing that momentum to continue? Or what sort of trajectory are you seeing now since you're already in the middle of February?

So whatever the fresh capital that was deployed has resulted into the set of results that we have declared, I think INR 35 crores, INR 36 crores is what we are projecting this year and INR 44 crores to INR 45 crores for next year. I think the growth trajectory will continue. We will be continuing at, let's say, 35% to 45% -- 35% to 40% of CAGR in terms of revenue. And the bottom line, let's say, this year is INR 35 crores to INR 36 crores, it will again continue by around 30% or so -- 25% to 30% so, yes.

Okay. Got it. Got it. And were there -- in this previous quarter, were there any kind of client additions or major client contracts that happened as such or nothing like that? Nothing material for you to announce.

See, there is already a growth and expansion plan for corporates once we are a B2B organized player, we are -- their expansion plan will derive automatically into our hike in volumes. So I think that goes hand in hand as we are a back-end whole -- it's a B2B player in that case. And as far as retail is there, we have increased the space from, let's say, 3,000 square feet has already been increased. So next year, you will be again seeing retail revenue growth to go up by 40% to 45%. So that is for this -- that is what will be coming for the next fiscal.

[Operator Instructions] The next question comes from the line of [ Ankit Agarwal with Value Cap Investments ].

So sir, I wanted to ask the nature of your job work business. So do you book the revenues that come from the job work business? Do you book it in the top line? Or is it directly accumulated in the bottom line? Hello?

Yes, sir. One moment please, please stay connected while we reconnect the management line.

Sir, I wanted to ask a question regarding your job work. So how do we account the revenues in that does all of the revenues flow directly to the bottom line or we add it to the top line as well?

So correct. So stones and other charges are added to the top line. The base cases are added to the bottom line in the closing inventory.

The next question comes from the line of [ Abhishek from AB Capital ].

Yes. I just wanted to ask one more thing. Like what is the moat in our B2B business? Like do we specialize in antique jewelry or do we make all types of gold ornaments?

We specialize into occasion wear mainly into Antique Jewelry. We do Polki jewelry as well in our product mix. We do anti-oxidized Antique jewelry. We are specialized into it. As a part of our product mix, we also do Polki Jewelry, which constitutes around 5% of the total sales.

The next question comes from the line of [ Sahil Patani with Strokes Capital ].

So I wanted to know that this role of CFO that you've taken over, obviously, it's interim. So is there any time line that you're looking for 3 months, 6 months when you'll be hiring like another professionals? The reason I ask is that, obviously, your role in the company is more about product development, business development, and you don't want that to really impact that part of the business. So just trying to understand what sort of time lines are you looking at to hire the CFO?

Yes. So the time lines to hire a CFO, see, once the internal financial control position has been there, we will be looking at, let's say, 1 year or 1.5 years, and then we'll be promoting from that position to a CFO position.

So for the next 12 to 18 months, you will be the interim CFO?

Correct.

But do you foresee that kind of role impacting your role within like what you do today, which is business development and product development. Do you think that it could impact or not really, you don't foresee that?

IFC will already be there to look after the business. My role would be more on the -- we both will be there on the same pace to connect on the strategic level. And I have already been taking reports of CFO. And to take the designation, yes, there will be addition of responsibilities, but also a dilution of responsibilities. IFC role is a new role which will be taken up. And in the course of time, we will also want to hand over more of the responsibilities. And once he is there with us for a decent period of time, we'll be promoting him to the role of CFO.

The next question comes from the line of [ Deepesh Sancheti with Manya Finance ].

Harit, just a few questions regarding what you said. You said that the debt was INR 100 crores short term, and you have already paid off long-term INR 18 crores. So is there any long-term debt which is standing on your books?

As of now, there is no long-term debt standing on the books.

And we are planning to again increase the working capital by around INR 50 crores to INR 70 crores?

Yes, correct.

Now we are not going for a Gold Metal Loan. We are only getting via working capital because I don't know what is the cost of your debt right now?

Cost of debt would be around 9% to 10%.

9% to 10%. So why aren't we going for a Gold Metal Loan, which will be a cheaper option?

Gold Metal Loan, see, right now, the business or the inventory levels are already too small. And once the moving average price is very comfortable to absorb any of the ups and downs or volatility in the gold. Let's say, if the gold prices goes less than the book value of gold, at that time, we are still hedging in that case. But as far as -- and the business model right now, we are in 50% is job. So we are getting gold to gold. As of now, yes, we are not into the Gold Metal Loan business as we are not a prominent retailer. In retail model, it is still much more expectable, but wholesale also deals with [indiscernible]. So to hedge it again in the MCX and all, it is better that whatever goal that we have sold, we just buy it and it's a simple routing model for us. It is working well with us. Other than that, what will happen if we are going into GML, once there is a fluctuation of, let's say, let's say, right now, the goal has got up from INR 75,000 to INR 87,000, we have to support it with an additional limit to banks, additional margins to banks, and that will create a very different kind of a scenario because we will have to dilute stock and then we have to convert that stock into currency for just providing the margins to banks. That is not advisable at the interest that we have in the company as of now.

And you also don't get the benefit of increasing gold prices, right? Is that a sign?

I think that is also -- see, increase in gold prices should happen beyond 6%, right, to just actually, if you say. But the higher problem is, let's say, if the gold prices tomorrow gets to INR 1 lakh, okay? And if we are in Gold Metal Loan, then if we are taking 100 kg loan at right now, INR 87 crores, if it goes to INR 1 lakh, we have to provide an additional limit of INR 13 crores just to sustain the volume of gold that we have. That is the challenge.

So as investors, we would be very happy if it goes to INR 1 lakh and if RBZ jewelry has more than 500 kg with its inventory, our book value will increase. But coming back to the working capital, the entire working capital will be used in terms of bullion only? We'll be taking a bullion? Where is this working capital being used?

From raw material or we are doing retail purchase of credit goods also.

Okay. How big is your manufacturing space? And how big is your retail space in terms of square feet?

Manufacturing space is around 24,000 square feet. The retail space is around 11,000 square feet, 10,000 square feet is pure retail plus 3,000 square feet is the admin work. So overall, again, 4,000 square feet is the additional lease space that we have taken for admin work. So the pure manufacturing space is 24,000 square feet.

24,000 square feet. And right now, you are comfortable that in this 24,000 square feet, you'll be able to go to 2,000 kg, right?

Correct.

And what is the book value as of 9 months because we had that conversation blocked as well.

Yes. So I mean, when you consider the book value, you're talking about the result and surplus plus equity, right?

Yes.

That would be around INR 235 crores.

INR 235 crores divided by equity, so INR 4 crores. So around INR 58 crores or INR 59 crores, right? Because your equity is around -- number of shares is INR 4 crores.

INR 4 crores, correct.

Right. And you said that your -- I mean, reserve and surplus, everything is around INR 234 crores.

Yes, INR 234 crores, INR 235 crores, yes.

INR 235 crores. That includes your inventory, that includes everything else, right?

Everything.

Perfect -- and...

Going forward, when we increase our debt to, let's say, to the ratio of 1:1, which was before the IPO, it was -- the equity was INR 100 crores and the debt was INR 100 crores. And we could have got an ROE of 20% to 25%. But similarly, there is an instant push of IPO funds into equity. So from INR 100 crores, this has gone to, let's say, INR 200 crores or INR 235 crores this fiscal year. Once we are increasing the debt proportion to, let's say, 1:1, let's say, additional it was INR 70 crores this year, plus, let's say, next year, there is some fueling of debt happening. That will -- eventually, the profit has to go from INR 35 crores to INR 45 crores and then eventually INR 55 crores or INR 60 crores. So in that space, in the coming 2 years, the addition of debt and whatever the earnings that we are inculcating from the debt that will be flowing the return on equity. So that is how the return on equity will be generated at 20% to 25%. As of now, yes, the return on equity for the next financial year will also not be at that level. But in the long run, coming -- after the 2 years, yes, that will be the case that, if we are able to generate debt at 1:1, the return on equity will be maintained at 20% to 25%.

I have to give it to you that you have a good hold on your numbers. I mean, because your suggestion didn't show that that's -- I mean it was mentioned something. So I mean, it's really good that -- I mean you should be the CFO, you should remain the CFO. That's really good. Congratulations again. Great talking to you, Harit. And hope to see you in one of the IIJS.

Sure. That can happen any time. We can 100% meet at IIJS.

You always there at IIJS?

Yes, I'm always there at IIJS.

As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

So RBZ has successfully completed its quarter 3 and numbers are in line with the expectations that we had. Going forward also, I think the plan is to sustain growth on fundamental levels. And there will be expansion in retail as well as we are already having a very strong quantum of capacity, which is already there in wholesale and job work. The next year will also be continued with the same revenue contribution and the volume contribution. We have got a warm response of investors today, making sure that whatever we have told and promised, it is an ethical responsibility on our side that we will be working hard and toward the numbers that we have projected INR 44 crores, INR 45 crores by next year, yes, there will be a raise of debt. Only by the raise of debt, there will be a return on equity that will be generated at 20%, 25%. We'll be maintaining that. There are times when there are good questions that comes in and -- but it's always nice. Actually, we are not on the 2 sides of table. The table is just one, and we are all investors to it. And I hope that my efforts gets into the right quality of results, and we all enjoy the fruits of it.

On behalf of RBZ Jewellers Limited, that concludes the conference call. Thank you for joining us and you may now disconnect your lines.