Ladies and gentlemen, good day and welcome to the Senco Gold Limited Q4 FY 2026 earnings conference call hosted by Asian Markets Securities. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance there is a conference call please signal an operator, by pressing star then zero on your touchtone telephone. I now hand the conference over to Mr. Vikrant Kashyap from Asian Markets Securities. Thank you and over to you, sir. Thank you. Good morning, everyone. On behalf of Asian Markets Securities, I welcome you all to the Quarter four FY 2026 earnings conference call of Senco Gold Limited. Today on the call we have Mr. Suvankar Sen, MD, and Mr. Sanjay Banka, Group CFO. I now hand over the call to Mr. Suvankar Sen for his opening remarks. Thank you, and over to you, sir. Thank you very much. Good morning to all. It is really nice to come and this is the first conference that we are having, the investor call for the new financial year. We're very pleased to report a strong quarter four, crossing INR 1,997 crore revenue, with an EBITDA of INR 274 crore, and with a PAT of INR 157 crore for the quarter four FY 2026. We are very happy to let all of you know that financial year 2025-2026 has been a record-breaking year for Senco Gold and Diamonds from revenue perspective also, where we have recorded a sale of INR 8,430 crore, which is almost a 33% year-on-year growth, which is a great acceleration over last year. With this kind of a performance, yes, there are two, three factors that has led to the great performance in terms of growth in revenue. One is that the gold prices have moved up by almost 60% from the beginning of the year. In spite of the increase in gold price, our faith and the trust that the customers has posed on us, the new store openings that we have done, the continuous focus that we have done on innovating with new designs and creating jewelry, which will continue to be something that the customers can buy and afford, has been the crux of the matter. We have been continuously focusing on driving efficiencies, optimizing stocks, and ensuring that within the resources that we have in this uncertain overall price scenario, we should keep the products that the customer can buy within their budget, and that has led to this amazing performance by the team. From a macro standpoint, if you've seen that especially quarter four, the gold price and the silver price has been extremely volatile. There was a time in January when the international prices surged to all-time high of $5,600, again, within a few days it retracted back to $4,400- $4,500. It's been an uncertain time overall. If you look at from a INR point of view, the prices was average about INR 1.51 lakh. It's been itself a quarter with extreme price volatility. In that we have a balancing between the various kinds of risk, the risk of price going up or down, the risk of managing liquidity with the pressure on margin calls. We've kept a steady mind and a steady head and kept our hedging ratio at about 40%-50% to balance between all kinds of risk. We have seen that in spite the fact that the gold prices have been volatile, the wedding season was a big trigger, especially for January, February, March, which led to the kind of sales that we have seen. We had the occasion of Valentine's Day or Mother's Day, which drives the diamond jewelry sales for us. In this high gold price scenario, we have been focusing on 9 carat and 14 carat jewelry, whether it be in gold or in diamonds. I'm happy to let all of you know that Senco was one of the first players in the industry to have launched the 9 carat jewelry the moment government announced their permission for doing hallmarking of 9 carat. Because we firmly believe that jewelry is something that every consumer should be able to wear, and by making it much more affordable, it will only increase our customer base and make sure that the young generation, as well as those who come from various economic sections of the society, will continue to be able to buy gold and silver. In terms of the expansion, we have been expanding into new geographies. We've opened stores in Rajasthan, in central Maharashtra, in western U.P., whether it be with company-on-company operated stores or even franchisees. That will be the focus area. That one is that our core strength, East India and Bengal. We have seen that Bengal is going through a very positive change with the current scenario socioeconomically. We are very positive that Bengal will continue to be an engine of growth. Even in East India, we see that there is a huge potential. There's a lot of growth happening. We're focusing on tier 2, 3, 4 towns and cities and opening more franchises in the smaller towns. Along with that, our pan-India expansion with a focus on North India and Central, that will be the core focus. With these three planning, we will be able to continue to expand for the future. We have seen that this lightweight design portfolio that we are building up, creating almost more than 1.5 lakh designs for the year, has been one of the factors that has helped our customers who are our old customers, loyal customers, keep coming back to the stores. Usually in this particular financial year, what we have seen is that along with new customer acquisition, one of the reason for growth has been that our existing customers have kept coming back to us. We have worked on how to make our old dormant customers active through our various schemes, offers, and that has something that had worked us in Q3 also, where we had a phenomenal performance for our festive season for Dhanteras, and that was also a build-up that we did towards our Akshaya Tritiya season in the month of April as well. We also are extremely happy to discuss with the board and propose a final dividend of 20%, in addition to the earlier interim dividend of 15% that we had announced. Very important, currently, if you have seen our honorable Prime Minister, Shri Narendra Modi Ji, talking about how we need to make sure that we promote old gold exchange. We promote ways and means in which the consumption of the import. It's not really the consumption which is important, but the import of gold into our country should happen in a very rationalized manner. Towards that action, we have been, last four, five months itself, we've been promoting old gold exchange in a big way, coming up with new campaigns, giving benefit to the customers. In the last year itself, we have seen that our old gold exchange on the overall transaction has gone up to about 50% of the total revenue. That is what creates sustainability. There is an ESG aspect to it also that we are promoting recycled gold, and it will indirectly help the economy in reducing their import. We firmly believe that there is a lot of gold already imported and lying in the economy, and we just need to ensure that the household gold can be used in a very optimized manner and used for our exchange, and that will also drive our business. That is the reason why we have been able to have our diamond volume growth also increasing by 9% by ensuring that the consumers can also exchange their old gold to buy diamonds. We've seen about a 32% value growth in the diamond jewelry sales also. It is not only that people are exchanging old gold with new gold also, but we are also encouraging how they can exchange their old gold to buy diamonds. As far as the future is concerned, Senco Gold and Diamonds has always looked at every scenario and looked at the opportunities. We will continue to remain optimistic no matter what. I must tell all of you that in the month of April, we have seen a very strong, robust growth compared to last year's April of about close to 40%-50%. This particular May, after the announcement, there has been a little bit of a slowdown. Again, at the same time, for the whole year, we will continue to remain positive. This time it is Adhik Maas going on, which is an inauspicious season to buy gold. That could be another reason of the current slowdown. Our focus of 18%-20% growth for the whole year and working on an EBITDA of about 7.5% on an average and a PAT between 4%-4.5%, that will be the kind of guidance with which we will continue to look at the future. 18-20 stores is what we would like to open. The focus for our team is that how we can open more and more franchises, because that will enable that our scalability and the penetration into the tier 2, 3, 4 towns and cities continues to grow. On the other aspect, I think that we've been doing a lot of data analysis. We've been using various tools and ensuring that how do we optimize our stocks at this high gold price scenario? It is getting the exact weights, exact designs, and exact products that the consumers will be buying is the key to success. That will give us the best return on capital profitability and the growth. We will continue to work towards optimization of stock and focusing on exactly the right thing and the right place at the right time. With this, I would like to end my introductory speech, and I would like to thank all of you, all the investors, for firmly believing in our company, on our performance, on our thought, on our vision. Jewellery making and building the brand is our passion and our love, and we will continue to work hard towards achieving our goals and aims and grow the business. Thank you very much. Thank you very much, sir. You briefed, I would like to quickly recapitulate that in Q4, we achieved revenue growth of 45% YOY, EBITDA growth of 116% YOY, and PAT growth of 151% YOY. In fact, gross margin and EBITDA were higher against our earlier guidance of 7.5%-7.8% for the quarter and guidance for the whole year, which we have explained earlier that this is due to the price rise in gold and silver as well. Part of it is also due to the improvement in the product mix, premiumization, our movement to north outside Bengal where our ASPs are very high. Basically, for FY 2026, we achieved highest ever top line with 33% YOY growth and 24% CAGR over. As you already said earlier, that coin and bullion sales, we were marginal at 6% only. Balance is entirely jewelry. Similarly, stock ratio was in the range of 11%, while we achieved the value and volume growth, which are explained in the presentation. Since the entire size itself had moved, that's why the stock ratio has not moved. On the working capital front, our total inventory increased 61% YOY, INR 5,296 crores. There are two, three reasons for this. One is that the gold price increased, and due to that, the GML and all those things increased. Similarly, there was increase of inventory for seven new showroom launch. We have increased the inventory at the existing store. Most of them is due in terms of value terms, not on volume terms. Our gross margin continues to be among the best in the industry earlier and even now on account of price rise. It is also due to our 75% handmade jewelry. While EBITDA, we have reported at 13.7% for the quarter and 11.5% for the whole year. We are still giving the guidance of 7.5%-7.8% for the future as well. Inventory days have increased to 186 days. Two reasons can be stated, as you said, our inventory we always build up during September and March. These are the two primary reasons. Extra reason is that for us in east, Poila Boishakh is one of the most important festivals. While Akshaya Tritiya is a pan-India phenomenon, but Poila Boishakh was one reason. Secondly, considering the elections and possible disruptions in the logistics, we have to build up extra inventory for the month of April, and that is reflected in the performance of April as well. In April, during the Akshaya Tritiya and Poila Boishakh, we grew by 67%. We achieved a very high sale. I'm saying at the primary level of around INR 1,600 crores. There was 67% growth in Akshaya Tritiya season. West Bengal was almost 69, East was 78, North was 75, Northeast is 64, Central 162. That explains the reason of the inventory buildup. Moreover, this stellar performance for the year, it has led to substantial improvement in ROE and ROCE to 25% and 22%. A word of caution that this is for the current year, as we are looking at the sustainable EBITDA of 7.5-7.8. Maybe in future, the ROE and ROCE may be in the range of around 15.5%-16% for the whole year. We remain very optimistic and confident about our target of 20 million, 20% growth, 7.5% EBITDA, 4.5% PAT. With that, I think we have given you broad guidance, and we welcome you to ask any question, and it will be our pleasure to respond to you. Thank you. Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Siddharth with NAFA. Please go ahead. Hello, sir. Congrats on the great set of numbers. I'd just like to get some light on what is the guided mix in the future towards the old jewelry mix that's currently going on. It's been phenomenal that you've been able to drive around 50% of the Q4 revenue from the old gold exchange program. If I could just get a light of how much mix would potentially come up in the future, and possibly if there could be a tentative margin for that segment, that would be really helpful. Thank you very much for the question. I think that old gold exchange of minimum 50% of the overall business to come from that, what we are seeing should be something that should be a benchmark, and we should work towards getting it. There are possibilities of increasing it maybe further, maybe to around 50%-55%, but I would say that 50%-55% is the range. We will closely monitor. We are all trying to create our campaigns, all our schemes, offers, reaching out to our customers with that in mind. As far as the impact on margin is concerned, I do not see that there will be such a straight direct impact on margins for now. Over a long period of time, yes. Initially, what used to happen is that as an industry, when you used to exchange old gold there was certain melting losses that we used to charge the customer. Currently, we are not charging any kind of melting losses or the whole cost of procuring the old gold from the customers for exchange purposes. There are small minor bits of maybe 0.1%, 0.2%, but I guess that in the overall scheme of things, we shall not be seeing much of an impact on the margin because of the exchange of old gold. Also one has to look at the broader picture. If you look at how the old gold exchange has been behaving over the last three years, four years. Three, four years back, the old gold exchange had been about 25%-30%, then it moved up to 35%-40%, and now it is about 50%. I guess that it really did not have such an impact in the margin. Yes, as an organization, I think we need to bring in more efficiency in terms of ensuring that the old gold is mobilized in a faster manner as much as possible, so that it can be used up, manufactured, and replenished into making jewelry as fast as possible. That is one aspect we'll all look at, but I do not see much of an impact on the margin. Thank you, sir. What's interesting is that the current scaling up that you're doing in this segment would be aligning well with the import restrictions that's been imposed by the government as well. I wish you the best. Thank you. Thank you very much. The next question comes from the line of Viraj with Enigma. Please go ahead. Hello, sir. Thank you so much. Sir, my first question is regarding the current inventory. With the customs duty hike that we have seen, what impact will it have on the inventory gain? I'm assuming there will be further inventory gains we'll have this quarter because the pricing of the same gold would have gone up. Is that correct understanding? What will be the quantum of that for us? Yes, sir. As far as the impact of customs duty it will have, there is an inventory gain that has happened because of the duty impact. We will keep getting the gain as and when that inventory will be sold. You will see the gains happening, maybe not in the full first quarter itself. You might see the gain happening maybe in two quarters. Because of the action taken by the government, just like there was a one-time kind of a loss, you might say, that had been taken when the duty was reduced in the previous times. Here again, there should be those kind of gains sitting on the inventory, and with the sales of inventory, we will be able to get some mileage out of it. Right. Sir, what I wanted to understand is, when you are saying you will have only 20% growth for the year, because we've already seen 50%, 60% growth this month, and for the quarter, whatever, 20%, 30%, 30-odd percent growth, that would mean that for the rest of the year, we are expecting a very low single-digit growth. That is very counterintuitive to what a lot of other jewellery players are talking about in terms of, we understand the volume de-growth, but the value de-growth we are talking about seems much higher than everyone else. Can you talk about the reason why you feel much less optimistic about the growth this year? Actually, I'll tell you, we've always taken a conservative approach. Even in the last financial year, we've been guiding the investors on around 20%-25% growth. By the end of the year, we have achieved a growth of 35%. This is something that while others are looking at the trend, there are logics also that today the gold prices are already, compared to last year average, is on the higher side. In a similar manner, we are guiding you and on a very conservative approach of about 20%-25% growth. Internally, we will all endeavor to overcome and have a higher growth rate. For you all, I would rather say that a 20%-25% growth for the business in terms of value. Yes, volumes will get impacted because of the higher gold price. We are seeing that the average weight range of the products that are being sold is lighter. That is there, and I think that's been how the consumers would behave. From a guidance perspective, we would like to give you a 20%-25% growth range. Right. You specifically mentioned that post the announcement by the Honorable Prime Minister, we have seen subdued demand. Can you quantify in terms, like what are the trends you are looking? In the sense, is May 4th, especially post the announcement, are we seeing a decline in revenue? Has the growth tapered down to 15%-20%? Just some ballpark understanding of how the impact has been. I'm not looking for exact number, I'm trying to understand how the impact has been on the consumer. See, it's been about seven to 10 days, consumers have taken our Honorable Prime Minister's announcement seriously, and they are actually looking at a more wait-and-watch situation. Along with that, the Adhik Maas inauspicious time to buy also started. If you look at it, as Banka Ji said, that we had a very good performance in terms of growth in April for Akshaya Tritiya. If you look at the month of May YTD, just to give you a perspective that in terms of performance of May of this year versus last year, it's the same performance as last year's May. All in all, YTD, you will still see a growth. In the last seven, 10 days, the footfalls at the stores have come down. We could also see the heatwave being a great impact in which the consumers are not getting much out of the house, and only in the evenings they're out. They are also thinking that, okay, let us not buy right now if there's no emergency. The wedding season is not right there. In June, July, we will again see the wedding season and the various gifting linked to weddings will start again. Again, I want to tell all of you that we need to look at the long term. Yes, last seven, 10 days has been a little bit of a slowness in the business, but our planning and our back-end tracking and designing and manufacturing and preparing for the future has not stopped because of that. We need to just make sure that we are ready with the product that the consumers will buy when they will decide to buy. Yes, we need to ensure that in that high gold price, what is the weight range? What is the product? What is the design that will sell? We are doing our homework in this time when things are a little slow. In the long run, again, I want to tell you that in a very optimistic manner, we should be able to see that consumers coming back and business will grow at around 20%-25%. That's how I would like to look at it. Sure. Sir, my last question is regarding margins. You mentioned that we have 25% growth. I am assuming we are opening only 10 stores, so there will be 5% growth due to stores. Majorly, I would say 18%-20% growth will be SSG-led growth. In an environment where your SSG is increasing, I'm assuming your gross margins remain the same, in that scenario, shouldn't your normalized margin range, if you take out inventory gains, even for last year, our margins would be higher than that. Like in an improving SSG, in a format like yours, we have generally seen margins always uptick. We are talking about the same margins that we had even when we had almost 40% lower revenue than what we will have this year. How does that work? Why will we not have any operating leverage? Siddharth ji, while we are certainly looking for operating leverage, if you look at the competition, the organized as well as unorganized, both. The organized players of South and West are entering into West. We are entering into West. There are local players who don't do hedging. If you look at the competition, go to any market, go to Borivali market, go to any Delhi Rajouri Garden market, there's one player in Delhi who are offering huge discounts. We have to work within the constraints of market, and hence we have to balance. Prima facie, we are not looking at any substantial, I would say, substantial improvement in margin year-on-year, despite operating leverage at full play. Let's say 10-15 basis points max, we are looking, as the competition will continue to intensify. To add to Sanjay Banka Ji's statement, that we need to balance between growth and profitability. Yes, while what you all are saying is a very logical way where things will move ahead for a profitable growth. At the same time, in the market forces scenario, we need to ensure that we keep acquiring new customers. We make sure that our customers keep coming back to us with not only new design offers, we provide value for money offerings to the customers. Balance between growth and profitability. It is a good thing to have a sustainable EBITDA and a sustainable profit, and keep investing for the future and keep growing. That's how one has to look at it. Right. Thank you so much. Essentially, I'll just end this conversation. You are saying we'll do anywhere between INR 10,000 crore-INR 10,500 crore revenue, and we're looking at 4.5% PAT margin. That's roughly where we'll end, and we'll grow post that 20%-25% next year. We'll see how it happens. Is that a fair understanding after all this conversation? Yeah, absolutely. That is what our guidance is doing, while internally we'll continue to target for more. I think these are the conservative estimate. Okay. Thank you so much, sir. Best of luck. Thank you. Thank you. Thank you. The next question comes from the line of Amish Kanani with Known Wise Investment Manager. Please go ahead. Hello. Can you hear me, sir? Hello? We can hear you. We can hear you, yeah. Yeah. Hi, sir. Congrats on a good set of numbers. Sir, growing within West Bengal in tier 3, tier 2, tier 4 towns as you mentioned, versus growing beyond West Bengal. How do you see opportunities and what are the priorities? Do you see deep within West Bengal, given the kind of political environment has been, do you see that as a more opportunity, say, on a 12-18 months basis? Or do you see diversifying business beyond West Bengal would be more important in terms of building a very strong and stable franchise, which you said North and Central? I think we need to understand where our strengths lie, and we need to understand that where is the opportunity for future growth. For being in Bengal and eastern part of India for more than 80, 85 years, there is a strong loyalty and there is a strong emotional connect with the consumers here. As a brand emerging out of this part of the country, we should continue to work towards how we can keep on penetrating into the smaller towns. I must tell you that considering the changing scenario, and I would say the positive growing scenario in Bengal and East India, our one core focus will be to continue to focus on growing in eastern part of the country and play to our strengths. That will be one area, and I would give it a weightage of almost 60%, 50%-60%. A weightage of 30%-40% I shall be giving towards the North and the Central, because we all know that the market size, the future growth opportunities, the growth and development in those consumer bases will be there. Our endeavor to increase our diamond jewellery sales and increasing our [charge ratio] shall also be achieved through our very strong brand presence and growth in those regions as well. One is to take the low-hanging fruits of where we are already strong, and one is to look a little into the future and grow for there. I would say a 60-40 weightage ratio is the optimum way to grow and put our energy towards. And to be- Sure. Just to complement what our MD has said, we have grown in last year into newer markets. We have gone into Rajasthan through the franchise route. That's opened immense opportunity. In Bikaner we've launched, in Madhya Pradesh we have a franchisee, in Maharashtra, Nagpur we've launched. Those opportunities we continue to explore. We have a very strong pipeline for FY 2027, which is skewed towards Bihar and U.P. Okay, sir. Okay. That's very heartening to note. Sir, normally, this wedding and festive season, you mentioned about Akshaya Tritiya and all. The question is, sir, this year vis-a-vis last year, any trends in terms of overall wedding dates cum festive season activity on an annual basis? If at all there are some variations that we need to keep in mind on a quarterly basis, which should impact either on the positive or negative side for us in the revenue growth outlook. Are we more heavy for wedding versus the festival and wedding plus festival put together versus normal business? Any things that we should know which gives us a better appreciation of a quarterly trend of the numbers? Thanks. Yeah. See, as you said, Akshaya Tritiya was extremely good for us, and despite the readiness for election, we achieved around 66% growth. The growth across all the zones. Let's say West Bengal, East, North, even Central has grown. We did not find any major variance in the trend while we have launched nine carats, but nine carats continues to get attraction. Obviously, there is a growing skewness towards the lightweight jewelry and a major part of our jewelry are anyway lightweight. Our diamond jewelry growth has been happening. We did not find any major change other than the movement towards the old gold. As you said, that as the custom duty has increased as appeal for PM for the old gold, I think that momentum of old gold is only going to increase along with the nine carat and lightweight jewelry. Yes. Just to define that lightweight jewelry would not only mean jewelry that you see people wearing every day, office or casual wear. Even when it comes to buying jewelry for traditional occasions and weddings, consumers are looking at how they can reduce the overall weightage, or they reduce the purity of the product from 22 karat hallmark to 18 karat hallmark and make it within their budget. Lower purity, making the weight light for even the heavier-looking product. We at Senco, since we are working with the karigars very closely, our effort is that how do we keep on making the product look heavy but weigh light. There is all ways that in which we are trying to provide the product and making the design. Sure, sir. One just as a follow-up, sir. Is there any trend in the ticket size? There's a lot of debate between price rise of 40%, but volume take growth and all. Should we be looking at a ticket size per customer or per footfall which we convert as a good proxy of growth, one, in terms of value growth, and second, within that, the expansion of stores as an additional kind of growth. If you can give us some sense there as a follow-up, that'll be helpful. Thanks. Our ATV, if you look at it, our average ticket size has grown by almost 30%. Consumers using either the money that they have or the old gold that they have, they are buying the jewelry based on their budget. The average ticket size has increased by 30%. That's the way to look at it. See, we are talking of now. We have seen it over 25, 30, 40 years that the gold prices were much lower then also people were buying jewelry. At these high levels, people will buy, but obviously the quantities will differ. Yeah that's the way the volume has to be looked at, right? Got it, sir. That's very heartening to know. All the best, sir, and thanks a lot. Thank you. Thanks. The next question comes from the line of Kaushik Poddar with KB Capital Markets. Please go ahead. Can you give a sense of how Sennes is doing? I mean, with artificial diamond, that's a different vector altogether. Can you give a sense as to what was your initial aim for Sennes and how is it progressing on the goal you must have set for having a completely new brand and new setup? Right. Thank you. Thank you very much. See, Sennes was a brand that was created keeping the lifestyle changes of the consumer and it was also one of our strategies that how do we connect with the young consumer. While we are sitting on our strong loyal customer base. Our constant endeavor is that how do we keep on innovating ourselves and create new lines, new products to connect with the new generation consumer with their changing lifestyle. It is something that, along with Senco or compared to Senco, the volumes and the value is much lower. It is still in a state of getting invested, and we are building the brand. We all know that while diamond and increasing the stud ratio is one of the strategies that the jewelry industry has to work towards. Increasing the stud ratio will not only happen by increasing the share of diamond sales, but also other gemstones and lab-grown diamonds. We are putting our energy, effort. We've got now 11 to 12 stores right now. We are building the awareness levels of the consumers with regards to lab-grown diamonds and lifestyle products. The base is still very low. There is not much to talk about except the fact that we believe that in the future, this along with the other kind of jewelry that we sell. From a Senco perspective, we are selling gold, diamond, platinum. We are also selling silver and fashion jewelry. Along with that, this will be another line of business of selling lab-grown diamonds. Also the fact that consumers will look at other products complementing jewelry, and as a result, we had launched perfumes and leather bags and leather accessories. We will continue to work on building that base for the future. That's how I would like to share my thoughts with you. Just to complement. While we have 11-12 exclusive Sennes stores, we are also selling Sennes product from Senco stores, excluding the lab-grown diamond. If I look at the Sennes business as a whole, at EBITDA level, it is positive. Broadly, that's a great news because when you build a great brand, one can invest in brand up to anything up to INR 50-100 crores. Within the second year itself, Sennes business as a whole is EBITDA positive. There may be some impact for one or two years, but we are in a long-term journey in this Sennes brand as a house of the diamond. Okay. See, the point is, in order to grow the market, that 9 carat and 18 carat, how much percent of your sale comes from such kind of lower than 22 carat gold? As on today, I would say that it won't be the exact figure, but I would say anything between 15%-20%. 15% for sure, which will be lower. If you look at diamond jewelry and gold and everything put together, it will be around 13%, 14% or 15% approximately. That is quite a significant number. Are you doing something to promote that kind of thing? Because I don't see awareness being built up that this kind of jewelry is available. Are you doing something? What are the steps you have taken towards that end? I can only let you know that in all the various communication campaigns on our advertisement medium and digitally, we are continuously sharing to the consumers that 9 carat jewelry is available. Because even for traditional jewelry design, people are looking at 18 carat option and not just 22 carat option. Maybe we can take a point out of your suggestion that maybe we are doing and maybe we need to do more or make sure that people are more aware of it. The reality is that most of the diamond jewelry that we are selling, and even gradually the lightweight gold jewelry that we are selling, we are putting in 9 carat, 14 carat, and 18 carat jewelry. We might need to do a lot more, and we'll take your point and we'll keep that in mind. My last question. See Titan, the leader in your business, is operating, say, at 10%, 12% margin, and you are operating at 7.5%-7.8%, as you said. Why this difference? What will make you bridge that gap? One of the biggest reason for it is that their share of diamond and studded jewelry. Okay. You can analyze the data. It wouldn't be right from my side to say what it is, but that is the biggest difference. We are working towards increasing our sales of diamond jewelry. We are creating a lot of innovative designs in lightweight, or even for party wear cocktails, and we're trying to give a most value for money proposition to our customers. Sitting in Calcutta, we have the strength of karigari, of artisan ship of creating those designs. We are working towards this, and I guess that, see, they have been leaders and they have been established in the market for a long period of time, and we are also very respectful of the same, and we want to get inspiration and do the best that we can to keep on growing the way they have done. I also happen to be from Kolkata. I wish you all the best. Okay. Thank you. Thank you. The next question comes from the line of Pallavi Deshpande with Sameeksha. Please go ahead. Right. Just wanted to understand, in the 9 months we had said about the hedging gains contributing to 2.5% of the margin giving a boost. How much would it be for this 12 months? Second question would be GML, it's reduced also. Any particular reason for that? Hi, Pallavi. Good morning. Good morning. Thank you for asking this question. If you look at the number and the guidance which we are giving, it is partly self-explanatory. If you look at the gross EBITDA margin of 13.7% for the quarter and 11.5% for the whole year, and where I am saying that my margin guidance is 7.5%-7.8%. Broadly, at least in the range of 2.5%-3% is due to the price rise gain. Okay. While it cannot be exactly extrapolated, because it is simple to explain, but this is broadly in this range. There is a weighted average cost impact. There is silver also has increased. Premiumization you are seeing that the ASP and ATP has increased versus last year almost. It is impact of that. You can broadly take 2.5%-3% for the whole year. Right, sir. That extra 1% is because of our better product, more handmade and all that. That should continue, right? My point is this margin guidance seems conservative because 11.5 - 3 will give me 8.5. See, this is why we are still guiding, because it's a very dynamic market, and market to market, we have to see the competition and how they will behave in the next quarter, how the market will take up the PM's appeal, old gold. That's why it is so dynamic. It is fair for us not to give an aggressive. That's why we are still retaining a 7.5%. While as we have said, we will certainly aspire to increase the margin to bring in more operating leverage so that there's a balance between the brand building, serving the customer, and still taking the market share. What would be the target for marketing expense? Now 1.9% of revenue. Are we planning to increase that by 50 or 100 basis points next year? No, I think that the marketing expense 1.8%-2.2%, we will continue at that kind of a thing, that we will invest for the future. 1.8% is something that will be needed for the future growth. I think that is how we will keep on growing. The new brands are coming up. We will keep focusing on the new brands, the lightweight jewelry, the various categories. Yeah, 1.8% is what we would like to look at. Right. Lastly, was about the GML portion, why we see a decline this year. GML, Pallavi Ji decline because of the huge gold price rise, which happened in the month of March. You are aware, in the month of March- Right the peak went up to almost INR 1,80,000. At that moment of time, there was a cash flow mismatch, and a lot of positions had to be squared up. Due to the hedging position taken through GML, the MCX had to be squared off, the GML had to be squared off, then the payment had to be done. That's why it has come down, and that is one of the reason for increase of the borrowing cost for the Q4 and maybe in Q1 also. Obviously, we intend to increase the GML portion to 50%+. We are short-term business dynamics. That's why we have to understand them. Intent remains to increase the GML because my borrowing cost on the GML is 3% to 3.5%. One good thing which I must highlight is that our rating has been upgraded one notch by CareEdge. The rating renewal is pending with ICRA. With the improved financials and the improved interest coverage ratio of four and a half, and the return on equity of 20% northwards, I mean plus 20%, I think we are expecting an improvement in the credit rating, which should reflect in the borrowing cost. Thank you, sir. This was very helpful. Thank you so much. Thank you. The next question comes from the line of Anushka Vora with Vimana Capital. Please go ahead. Yes, hi. Thank you for the opportunity. You said that around 50% of your sales in Q4 came from old gold exchange. I just wanted to understand how your order relationship with the manufacturers has been changing. Do you build more of advance gold now in respect to the traditional way of placing orders where they themselves buy the inventory, but has your portion of advance gold to them been increasing? Right. With the manufacturers, there are two parts. Almost 70%-75% of our work is done through job workers or our factories, and the manufacturing production is mostly finished goods purchased. Now, what we are also seeing is that diamond jewelry, where we used to do a lot of finished goods purchase, we are utilizing these kind of good advances, and this has started in the last I would say one or two months where we are giving them certain of the gold in advance for their manufacturing process. It's more gradual. It's not a very drastic situation right now. See, gold is equal to working capital in that manner, and we are utilizing this opportunity to give certain of that to the manufacturers. Against that, we'll also get some minor benefit in terms of getting better pricing also whenever we are doing it. It's a very gradual process. It's not been a very drastic process yet. Right. That's fair. How much of your overall production or volume would you say was through advance gold? We don't have the exact numbers right now. We will analyze and we'll get back on that. It won't be something very large number, but we'll get back to you. I think that you will not see the impact much happening in the previous financial year, but maybe in this current financial year, that could be one of the aspects that one has to look at. Got it. Thank you so much. Thank you. The next question comes from the line of Shubhanu with 3 Head Capital. Please go ahead. Yeah. Good morning, Banka Ji. Hello? Can you hear me? Yes, we can hear you. Yes. Okay. Can you tell me what kind of gold volume we currently keep ready? Sorry, I could not get you. Kindly repeat. What gold volume we currently keep in our gold inventory. See, I think gold volume, I think we should refer to the published number. We are saying my inventory days is 188 days. Effectively, the inventory days and what inventory days we are saying is blended. Gold volume approximately sell is around six tons. You can extrapolate from that how much is inventory. Yeah. Six ton is the total gold sales by us. You can extrapolate the number accordingly. Okay, understand. As you mentioned, we procured the gold due to political uncertainty in West Bengal. That time, what was the procurement cost? No, sorry. What we said is that we built up the inventory ahead of elections, right? The model was same. As we explained to the previous lady, we procure 50% from old gold, 20% from the readymade jewelry, balance from the traders. This is the mode of procurement of the gold. Secondly, we get it manufactured. 20% is readymade jewelry, which I explained, and balance the old gold or the GML which we procure from the bank, that is given to karigar. 20% traders, 70%-75% is Karigar, and balance 4% to 5% is our own factory, which will increase in future. We want to take the factory manufacturing to 10%. Let's say, today, if it is 5% of INR 8,000 crore, that is INR 400 crore. When it becomes INR 20,000 crore, 10%, it will become INR 2,000 crore. From 400 to 2,000, the size will increase, but percentage will be below, in the range of 8%-9% of total manufacturing. Yes. Understood. I don't know if you understand your Yeah, please go ahead. As you mentioned, we will be maintaining around 50% plus hedging. That means, going forward, if gold price increase further from here on, then we automatically gain margin from this inventory. What MD has said, that our policy is hedge up to 80%, right? It is your current scenario, while currently it is 50%-60%, it will be in this range. It can go up to 80% also. If the hedging increases, it is a good risk mitigation technique. If the hedging increases, your sustainable margin will come and the non-sustainable one-time gains will not come. As we've always said, the intent of the company is focused on sustainable margin, risk protection while managing the cash flow mismatch. The hedging percentage is linked to the cash flow mismatch. Okay. Understood. Thank you. Best of luck. Thank you. The next question comes from the line of Raj Saraf with Finvestors. Please go ahead. Hello, sir. Am I audible? Yes. Yes, you are audible Just wanted to understand, inventory must be repriced as the duties hike to 15% now. How much effect we are going to have this year apart from the guided EBITDA or any ballpark number if you can give? Sir, if you can just again rephrase the question, then I will attempt to answer you. Sure. The inventory must be repriced as the duty is hiked from 6%-15%. How much effect are we going to have this year apart from the guidance which you have provided? Any ballpark number if you can give, sir? Sir, I will say inventory is not repriced. If the inventory is valued at cost or net realizable, which is lower. Inventory is always valued at the cost. Cost means weighted average cost. Weighted average cost is usually lower than the market cost. In the weighted average cost, hedging losses, the realized and unrealized losses, as well as the mark to market impact for the gold metal and MCX, both are added. I can only confirm to you, I'm reconfirming to you that inventory valuation is as per Ind AS 109. It is audited by the auditors thoroughly. They check the valuation and inventory valuation, which includes the realized and unrealized losses to the extent of inventory unsold, which will realize in future, it is lower than the net realizable value. If you are looking at a value of INR 5,200 crore of inventory, which is approximately INR 4,500 crore of gold and INR 500 crore of diamond and platinum and silver, the realization price is more in the month of April and May. If the realization prices, if the gold prices go up, which it has gone up in April and May and June, then the gain will come. Sir, just want to understand as a layman, when the duty was reduced from 14%-15% to 6%, we have an impact of INR 57 odd crore in our balance sheet or our P&L. Yes. Right now the scenario has been reversed. Definitely if you are not fully hedged, we are going to have a inventory gain. At that time, sir, we are having lesser inventory. Now we are having more inventory. What is the quantum of gain that is real, what you say realized gain or anything we will have this year? No, I've understood. See, I don't want to give ballpark number. I'm trying to tell you that this 9% gain, very simple, 6%-15% is 9%. 9% on the gold value of INR 4,500 crore. You can assume INR 450 crore or INR 400 crore. It is not that simple. From a rough out of envelope calculation, it will be 9% of INR 4,500 crore. Whatever is the gain, because it goes into weighted average cost on daily basis. The inventory is getting repriced on daily basis till 30th June and till 30th September. This inventory will get sold in quarter one and quarter two, but it should be in the range of, effectively, it should be at least 6%-7%, but we don't know what is going to happen in future. It will also depend upon how the market is giving discount on the gold price. Please understand, if I am selling gold at a certain price, and if in the market, the nearby market, my competition is giving that less, then I can't take that much gain. The gain will get reflected in quarter one and quarter two, and we'll disclose what gain has come due to custom duty impact. Sir, that we clearly understand, sir. The competition kicks in when the gain is so much. That I clearly understand. Just wanted to highlight this, sir. We have seen in the past that the negative impact of duty reduction, which will eventually come next year, as I guess. We have a negative duty impact of INR 57 crore, I think, in FY 2025. How are we preparing for next year if the duty is reduced from 15% to 6.5% in next year? Are we going to hedge our inventory more, or how to integrate these kind of scenarios going forward, sir? That is eventually going to affect us negatively coming year. You asked a wonderful question. What has come as a one-off gain, now we have to more cautious, normally for us, for the entire industry, to be cautious and whichever time it happens, it will be sudden. At that moment of time, the gain will convert into loss if the hedging is not done. Hedging can only be done through the MCX. Last year also, the price fell, the price fall, the impact could not be mitigated. Impact could have been mitigated only if the 100% of the position was covered through MCX. Slightly complex subject, because you'd read that the hedging is done through GML and MCX. In the GML, even in the current year, we will continue to pay custom duty at 15%. That means that risk is uncovered. If my 100 kg of inventory is there, and if I purchase 50% through GML, I would have paid the custom duty, which means that I have to take 150% hedging to cover the risk of gold price rise. Thank you for raising this question. You can ask me one to one. We are cognizant of that, but I don't think that it will be possible to cover the entire hedging position through MCX, because now MCX margin has increased to almost 25%, 26%. That is becoming a challenge. We'll issue more details on this during quarter one as to what actions we are taking for possible reduction in future. Yeah. That's exactly my point was, sir, the inventory hedging is now very important because, sir, eventually we are going to grow more in coming year also. Naturally, this INR 5,200 inventory is going to increase in coming years also. That time, having inventory hedged at an amount of 50% will cost us more in our balance sheet and our P&L going forward. That's my concern is. No. Rightly said, sir. We are certainly thankful to you, but we are aware about this risk, and we will take adequate measures so that the repeat of the previous custom duty fall does not happen. Fortunately, we have the gain, one-time gain. I think that a part of it will certainly have to be sacrificed, if I'm very plain and blunt. Okay, sir. Sir, how is the trend now in coins and gifting jewelry right now? Some of your peers have also mentioned that now the government has taken a duty hike, so the gold coins and any investment purpose buying is now being discouraged. Wanted to know the trends going forward in last 10 days also when the honorable Prime Minister announced that call-out, and even the going forward trend you have seen in the past with your experience. See, coins and bars is around 5%-6% of our overall business only. Previously it was about 2%-3%. It has gone up to 5%-6%. I think that we will see some amount of slowdown in coins and bars, and people will not invest as much. Again, from our business perspective, selling more coins and bars doesn't add much of margins to the business. This is more of a customer service that all the jewelers do and not really a margin-adding situation. We'll see, and we will be guided by what the government takes and the policies that are taken. Our focus is to drive more and more jewelry and designs and how do we fulfill that need of the customer, and we will focus more on that. That was your thing on the question on the impact of the current situation on coins and bars. As far as gifting is concerned, I think we need to look at the lower caratage jewelry, 9 carat, 14 carat, so that consumers can use it for gifting to their loved ones and make things within the budget. That is something that we'll keep looking at and keep creating new designs in that segment as well. My last question is, sir. Sorry. Sorry to interrupt. Mr. Raj Saraf, I would request you to please come back in the queue for further questions. Thank you. The next question comes from the line of Arvind Dureja, an individual investor. Please go ahead. Mr. Arvind, your line has been unmuted. Please go ahead with your question. Hi. Good morning. Am I audible? Yes. Am I audible? Okay. Thank you. Thank you for taking my question. Sir, my concern is related to the inventory buildup. If I look at your inventory turns, it has gone down from 2.6 or 2.7 to now less than two. What would be the steady state target for inventory turns? Because if the inventory keeps on inching up and if there are no inventory gains, then our ROCE will keep on declining. There is also market skepticism because of the past accidents in the jewellery sectors. I am not implying that this is the case with us, but this is something that makes the investor worried. Yeah. Thank you. If you look at the inventory days in the previous year, it was around 166 days. This year, since we had to build up the inventory for the festive season of April, it is looking a little on the higher side. The gold prices that has moved up so much has made us look at what is the exact kind of inventory that is selling and gradually changing from a heavier weight to lighter weight to make sure that the consumers can continue to buy. These have been the cases. If you look at a bench of inventory days, I would think that anything around 150-160 days is a great inventory days and inventory turns that will look good and is good for the business. As far as the working towards that is concerned, I think that we all need to look at how the market stabilizes, the gold price stabilizes, the consumers also get more comfort with stable gold prices and not so much volatility. We are anyway doing a lot of data analysis and producing products, making it lightweight, selling what exactly the consumers want. Together, I think from our side and consumer side, we'll be able to move towards a lower inventory days and make it more efficient. Again, I want to assure you that gold is something that is very much fungible and easily can be manufactured back. The only risk is your manufacturing cost, which is a very low single-digit manufacturing cost on an average. On the broader perspective, unlike other materials, it is not that it will lose its value that way. Again, at the same time, we don't want to lose sales. For the purpose of sales, we need to make sure that the designs are correct and as per the budget of the consumer. We are working towards the same. The last point I would like to make is just to get the inventory days right as a brand, as we are building the brand for the long run. We are also a little conscious of the fact that we don't want to discount ourselves too much to dilute the brand strength just to make the sales happen. It's a lot of balancing that we need to do and ultimately work towards a 150-160 days inventory. Can we expect this to be the bottom? I mean, it will not go beyond what you have already reported, and ultimately, it's going to improve from here on? Yes. Obviously, that should be our effort and endeavor. We know that we are focusing on building diamond jewelry, increasing the sales of that. This should be on the higher side, and we don't want to increase it more than that. This is how we can let you know for now. We don't want to do it more. Yes. And sir- If I compliment it. Yeah. I mean, if I compliment it, if I do the benchmarking within the industry. Yeah It goes up to 220 days also, where the stock will stay high. At a lower value at 160 days. Our intent would be to keep it between 160- 180. Some specific actions, we have closed some stores. Right. One is that we are using technology. We are shifting the inventory from intra-zone, inter-zone, own to franchisee to inter, all those things we are doing. Yes, we'll explore all possible options to ensure that inventory days is in the range of 165-180. So, 165-180. Yeah. Okay. Sir, you said that the sustainable PAT margin is 4%-4.5%. Right? In the presentation and also the press release. If I look at the past three, four financial years, you have never touched the target. What gives you the confidence that the margin at 4% is sustainable without any inventory gains? No, because 4% margin will happen as we keep on increasing our diamond sales. We are charging whatever making charges that we are charging to the customers for the designs and the lightweight jewelry that we are selling. I would suggest that this 4%-4.5% margin. This year, our margins are looking higher because of the inventory gains. In general, it's been in the range of 3.5%-4%. I am confident that with the gold prices going up, there will be more increase of sales of 9 karat, 14 karat jewelry. With the gold prices going up, there will be more sales happening of jewelry with stones to make it much more affordable for the customers at lower purity. With that thought in mind, I'm being a little confident that we should be able to achieve the 4% margin. Okay, thank you. My final question is, what is the sustainable ROE and ROCE targets? Even earlier we have said that it should be north of 16%. Right? What you are seeing for the current year is primarily due to price rise. If the price rise does not happen, incidentally, once again this year, custom duty impact will come. If the custom duty impact is not negated or if the risk is not mitigated, it may still be high. I think that we have earlier guided it should be, we will try to reach to 20% over two, three years. North of 16%, 17% is a good target. Without any inventory gains. Without any inventory gain, of course. Yeah. Okay. Thank you. Sir, final question. Sorry, final question. I mean, I understand that free cash flows have been negative because of the inventory build-up and the rise in gold prices. Any guidance? Some of the peers are very close to positive cash flows. Yours is, of course, significantly negative. I'm not able to give comment on this. We have debated a lot on this, and the numbers are there. To me, it does not seem to be easy. That's all I can say. While we are cognizant and when we see the free cash flow of others, at least for- We are not able to give a guidance on this that will become positive in next one or two years. See, the dynamics of the price rise impacting things hugely, even without disclosing the number. Yeah If I say that my inventory per kg at a store has come down. Be a front-end inventory, be a back-end inventory, what you look at is the financially total inventory. We'll try to work on it. We are aware about this issue for three, four years. Okay. Thank you very much, and all the best. Right. Thank you very much. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Suvankar Sen for closing comments. Yes. No, thank you very much. It's been wonderful talking to all of you and answering to all your queries. We want to, on behalf of the team, Senco would like to assure you that we shall keep working towards growing our business, working on ensuring that we work towards increasing the profitability and getting the best return on capital that we would be employing in our business. We know that the world is in a little bit of an uncertain situation. There are a lot of events happening. Again, as long as we can keep on continuing and focusing on the fundamental aspects of the business in terms of design and in terms of customers, I'm sure that as a brand, we will keep growing and increasing the business and the brand in the long run. With that aspect, we want to thank all of you and look forward to interacting with all of you again in the future. Thank you. Thank you, everybody. Thank you very much. Thank you. On behalf of Asian Markets Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.