Discounts on Jewellery To Come Down: Tribhovandas Bhimji Zaveri

Jewellery maker Tribhovandas Bhimji Zaveri or TBZ says discounts offered to customers are going to dry up, as the industry is seeing a revival in demand after witnessing a dip in discretionary spending in the last two years. Discretionary spending of consumers - which is not essential for the operation of a home or a business - is proportional to a country's economic growth.
 
"With revival in demand, the discounting level will keep on reducing which will increase the Ebidta (earnings before interest, depreciation, taxes and amortisation) margin," Prem Hinduja, chief executive officer, TBZ told NDTV.
 
Jewellers had been offering heavy discounts to customers in a sluggish market which was eating into their margins. "Next quarter there will be Ebidta revival as discount levels should come back to normal," Mr Hinduja said.
 
The company hopes to return to its 2013-14 Ebidta levels of about 7.3 per cent from the current 5 per cent by the third quarter of the current fiscal (October-December) thanks to the demand uptick, TBZ said.
 
The jeweller plans to expand through franchisees and company stores by 20-25 per cent in the next three years, TBZ said. It currently has 28 stores across the country.
 
From 90,000 square feet of total store area the company will increase it to 150,000 square feet over the next three years, it said. "75 per cent of the growth will be through the franchisee route, balance through own stores," Mr Hinduja said.
 
"In the franchise model the capex and inventory both outlook of the franchisee so should not put pressure on our debt levels," he added.
 
TBZ will not need to raise any debt or equity for the expansion as it will do the same store expansion through internal accruals, it said.
 
The company on Tuesday reported a 58 per cent jump in net profit at Rs 18.49 crore for the January-March quarter, compared to the same period last year.

The TBZ stock ended nearly 2 per cent up at Rs 153.55 on Wednesday, outperforming the broader Nifty and the Sensex which closed 1.35 per cent higher.