P. N. Gadgil and Sons – Jewel of India

Tales of Expansion

After the demonetization and introduction of GST, jewellery industry is experienced radical changes due to higher level of compliances. These changes have made retail jewellery sector more attractive for organized jewellery players as compare to standalone and traditional ones. GST and demonetization opened tier two and tier three markets for reasonable – midsize brands to expand in these markets by replacing trade which was earlier concentrated in the hands of small jewellers.

GST introduction become highly challengeable and expensive affair for small size jewellers due to higher cost of compliance, stringent monetary penalties. In such conditions small players can’t be sustained with their traditional compliance levels and non availability of cost effective manpower. This situation created an opportunity for organized mid and large size jewellery brands to shift towards tier two and tier three markets. PNG Sons also has taken an advantage of this situation by opening its 17 showrooms out of 29 showrooms in tier two and tier three cities. All showrooms are company owned and operated. Company doesn’t have any plans for franchise as in jewellery business franchise model may affect the Brand Value.

Best in the Industry

Company’s fundamentals are very strong and they are best in the jewellery industry. Company’s 90% of the top line is coming from gold jewellery, 5% from silver and 4% from diamond/studded jewellery. This composition is giving a very good stock churning to company which is around five times of its inventory or 75 days stock churn & it is the best in the industry. In 2013 company had a turnover of about Rs.917 cr and it crossed Rs.2000 cr in FY 2019 which is showing average yearly 30% growth. At the same time PAT in FY 2019 touched to Rs.63.80 cr. Company’s PAT margin is consistently above 3% (PBT margin over 4%) for last 3 years. PNG Sons has EBITA over 6% for last 3 years. Company’s financials shows almost 4.5 times interest cover on PBT basis and debt stood at 1.6 times of networth which looks to be comfortable. Company has net worth of Rs.183 cr as on 31 March 2019. In current year, company has shifted borrowing limits more towards GML and same has resulted into decrease in interest cost. Current year November 2019 ended 8 months also shown reasonable performance. Conservative inventory valuation method adopted is at average purchase cost or net realizable value which is lower and hence can’t contribute to profits in case of upper spike in gold rates.

Long Terms Plans

Company’s (PNG Sons) long term plan has two main objectives and out of which primary objective is to reduce debt to Zero level and create cash surplus. Simultaneously reasonable speed of expansion will be maintained in which other than Maharashtra presence will also be considered.

Customers First

Company mainly caters to middle and higher middle class customer base. Being in the same business for a long has its own advantages. PNG Sons has a vast collection of in

house designs backed by skillful in house design team. Company has huge traditional and modern collection of the jewellery. Many jewellery items are exclusive and pioneered by company such as Warli and Colorful Mangalsutra. Company has also brought many new trends and introduced collection like Temple Motifs, Contemporary Jewellery designs. To connect with aspirations of customers company has also introduced Light Weight, Daily Wear and Designer Jewellery Collections in Gold and Diamond.

Bollywood & Digital Connect

PNG Sons has association with multiple production houses. Costume and Jewellery design teams are using our jewellery for their movies and television serial projects such as Bajirao Mastani, Mohenjo Daro, Panitpat & Serials such as Rama Madhav, Raja Shivchatrapati, Swarajya Rakshak Sambhaji, Swamini, Jijau etc.

Recognition

In year 2019 PNG Sons won Best Work Wear Jewellery award from Retail Jeweller India, which is prestigious in retail jewellery sector. Apart from this company got felicitated in 2018 by India Gold Convention as fastest growing retail chain in India.