Thangamayil Jewellery Ltd

BALARAMA GOVINDA DAS

Dear Shareholders,

I am indeed pleased to place before you financial results for the year ended 31 st March 2024. The year witnessed progressive gold price increase that started with '5,560/- per gram (916) and ended with '6,275/- per gram.

We could do a yet another record turnover of '3,82,678 lakhs with an all-time high EBITDA profit of well over '21,777 lakhs. Apart from the price increase impact on gross realisation positively we could see a retail volume growth in gold jewellery by 11%. In fact, a record 5604 kgs were sold in this year. The existing same store sales (SSS) increased by 23.49% in value that contributed significantly to overall retail reported turnover with 28% increase in value terms.

The profit after tax (PAT) was at '12,324 lakhs as against '7,974 lakhs in the previous year. The increase is apart from better realisation contributed by cost optimisation and synergy maximisation in all aspects of business.

Ultimately with a lot of price fluctuations in between periods witnessed, the overall performance was highly satisfactory. Almost all records were broken in the areas of Turnover, EBITDA and PAT in the history of the company since inception. What is heartening to note that this performance was achieved in the background of acute competition and on uncertainties prevailed in the eco system.

I am happy to report that your company in spite of constraints could make so many "Firsts" in achievement apart from as we mentioned in "Key operating Parameters" even on retail outlets, customer base, ticket size, floor space yield, improved yield on sales on marketing efforts improved productivity of capital, elevated margin of safety for operating profits, etc.

It is heartening to note in spite of 8% gold price increase in the first 48 days of the current year ( FY 25) , I don't see any perceptible drop in sales. Even the disturbances caused by General Election 2024 processes, had not affected the normal operations, that is contrary to earlier experiences.

Of late, the jewellery industry is facing a lot of litigation caused by tax activisation particularly in Income tax assessment proceedings. The company felt that the tax administration should be trained to note the customary practices of a specific trade to assess the corporates in order to avoid financial hardships unwittingly made due to misunderstanding or lack of knowledge of a specific industry profile, particularly of our own gold jewellery business. This change in attitude for fair assessment will go a long way in creating a positive tax environment without unnecessarily engaging the resources of the company on extended litigation processes.

Going forward, in 2024-25, I wish to state that the year had begun well. I hope that the first quarter operatively could be promising as per the current indications for multiple reasons namely better realisation on gold price increase, additions of new outlets made in 23-24 and "Akshaya Thrithiyai" event and improved number of wedding events. This year Akshaya Thrithiyai resulted in retail sale of '15,728 lakhs as against '10,848 lakhs in previous year resulting in an increase by 45%. This augurs well for the company particularly in the background of escalation in gold price witnessed so far in this year.

In this background, your company is well placed to repeat or even better performance in 2024-25 for the following reasons: -

a) Elevated gold price will act as a catalyst both for savings and also as a safe heaven bet in an inflated economy to our customers.

b) The reasonable improvement in SSS performance coupled with fuller contribution from the recently opened retail outlets will ensure more than normal GDP growth in turnover.

c) Likely contribution from our geographical expansi?n upto 8 additional outlets and one major "flagship" outlet in Chennai, may also contribute to the growth in turnover and profits, in parts of the year.

d) Sizeable cost-effective customer advances portfolio will ensure incremental revenue at the time of redemption.

e) Improved volume offtake in higher gross profit product -mix items will ensure a better bottom-line performance.

f) A quantum jump in customers tally in 23-24 and consequent improvement in visibility in "Brand Recall" will support the sales momentum continuity.

g) Polarisation aspect of business will result in better overall performance on the shift in business moved from unorganized to organized.

At the same time, your company should find a lasting solution to challenges faced by the retail trade:

a) Persistent elevated gold price prevalence that may affect the demand at some point in time as we cater to the limited income customers in the lower end of the pyramid.

b) Extra ordinary shift is taking place among younger population for other discretionary spending.

c) Continued unhealthy competition prevailing both in unorganised and organised players.

d) Tax activisation causing unwanted litigation expenses and uncertainties; unless speedy remedies are in place,

some of the tax demands to be funded materially affecting the liquidity of business though it is fully unwarranted.

In this context, your management has taken the following pro-active steps to mitigate the adverse impact.

1) Concentrate on better yielding product-mix composition.

2) Improved capital productivity by ensuring better inventory rotation.

3) Maintaining the competitive price advantage to retain & improve the customer base.

4) Use our retail outlets & visibility to market other branded jewellery products.

5) Use the technology to improve the quality of merchandise for improved results.

6) Increase the geographical expansion in an orderly manner but maintaining the margin of safety criterion.

7) Continue to optimize cost parameters as in the past to gain sustainable profits requirements.

Our financial position continues to be good. Our overall cost of funding is also under control. We strictly adhere to capital allocation policy approved by your Board. To avoid extreme gold price fluctuations adverse impact on operations, we continue to hedge our inventory judiciously. Currently, our hedging of gold inventory is at 89%. The company is mostly protected from any adverse price impact of gold so that the core financial stability is sustained in any eventualities. We have ' 25,100 lakhs surplus liquidity in the system inclusive of undrawn eligible bank working capital facilities.

As regards geographical expansion plan, we continue to mine the opportunities available within the state of Tamilnadu for some more years in order to get the tag of dominant "regional players" status. Your Board has given approval to open new branches on mid & small size upto 8 outlets and one "flagship" outlet in Chennai for the year 2024-25.

The initial capital outlay including working capital requirements in case all the 9 outlets to be opened in the current year in a phased manner, we may require up to '40,000 lakhs incrementally to be met by

a) Undrawn eligible working capital borrowings up to '17,500 lakhs

(b) Incremental customer advances up to '12,500 lakhs and

(c) Infusion of '10,000 lakhs from system generated cash profits, as per capital allocation plan aggregating to '40,000 lakhs as sources to meet the said expansion plan.

You are aware that the company paid an interim dividend of ' 4/- on the expanded capital resulted on account of 1:1 bonus issued last year to shareholders of the company in 2023-24 on a face value of Rs.10/- per share. Your Board after considering the funding requirements for 2024-25 both for capex and enlarged working capital requirements due to gold price increase by 12%, has recommended a final dividend of ' 6/- per share of face value of Rs.10/- aggregating to Rs.10/- per share as total distribution of dividend for the financial year 2023-24 on the doubled equity capital. This is in line with the dividend distribution policy of the company and in accordance with the allocation of capital philosophy of the company.

We have completed 14 financial years after IPO listed in Jan 2010. I am extremely happy to share that the shareholders "market cap" as at 31/03/2024 multi fold increased from '10,300 lakhs to '353,400 lakhs . A continuing shareholder who invested in your company at the time of public issue for 100 shares at a cost of '7,500/- is now bestowed with both direct dividends distributed and on the current market price basis a sum of '266,750/- It translates into 30% CAGR on his initial fund outlay.

Before I conclude, I would like to place on record, my heartful gratitude to all our employees. Thanks to our bankers under multiple banking system and to all our beloved shareholders, who have extended "support and trust" to the management at all points of time.

Looking forward for yet another rewarding & fruitful year 2024-25.