Economic Review
Global
According to the International Monetary Fund (IMF), the global economy is estimated to
have grown at 3.4% in CY22. Global economic growth is expected to moderate further to 2.8%
in CY23 before slightly rebounding to 3.0% in CY24. Advanced economies witnessed
multi-decade high inflation due to continued supply chain constraints and elevated energy
and commodity prices. Emerging markets and developing economies, too, faced inflation.
World Economic Outlook Projections:
|
2022 |
2023 |
2024 |
| World Output |
3.4 |
2.8 |
3.0 |
Source: IMF
As the global economy prepared to leave the pandemic behind, the Russia-Ukraine
conflict delayed the normalisation of supply chains. At the same time, China adopted a
stringent zero-COVID policy for most of CY22. Central banks across major economies,
spearheaded by the US Federal Reserve, responded with synchronised rate hikes to tame
inflation. The weakness of the Chinese economy also weighed on global growth. However,
during the second half of the CY22, the economic growth rebounded, banking on crucial
factors such as easing inflation, robust labour markets, solid household consumption and
business investments. Moreover, China reopened in November 2022, adding to the upward
shift in global activity.
Outlook
Despite central banks raising interest rates and declining food and energy prices,
underlying price pressures remain stubborn, particularly due to tight labour markets in
several economies. The rapid increase in policy rates have led to visible side e_ects,
including highlighted vulnerabilities in the banking sector and growing concerns of
contagion across the broader financial industry, including non-banking financial
institutions. Despite declining headline inflation, core inflation has yet to reach its
peak. Owing to ongoing inflationary pressures, interest rates are expected to remain
elevated.
Source: IMF - World Economic Outlook, April 2023
India
The year 2022 was memorable for India as the nation celebrated its 75th year
of independence while claiming its place as the worlds fifth-largest economy, boasting a
nominal GDP of $3.5 trillion. According to CSO estimates, the Indian economy grew by 7.2%,
the fastest among major economies, driven by strong domestic private consumption,
government expenditure on infrastructure and a favourable investment climate. Although
India, too, faced high inflation, the Reserve Bank of India undertook a series of policy
rate hikes to bring it down within its comfort range. Despite the challenges of higher oil
prices leading to increased import bills and trade deficits, concerns about the current
account deficit and its financing has eased over time.
India GDP growth trend (%)
| FY21 |
FY22 |
FY23 |
FY24 |
| (6.6) |
8.7 |
7.2 |
6.5* |
Source: CSO Estimates and RBI*
Outlook
Indias economy has displayed remarkable resilience amidst global challenges,
positioning itself as the frontrunner in growth among major economies. The latest economic
survey anticipates a substantial GDP growth rate of 6.5% in FY24, further consolidating
Indias impressive growth trajectory.
Source: Economic Survey of India, 2022-2023
Global Jewellery Industry
The global jewellery market is expected to witness substantial growth. This growth is
primarily driven by evolving consumer preferences towards distinctive jewellery styles,
including oversized hoops and geometric shapes like rectangles, spheres, and squares. The
rising popularity of personalised and environmentally sustainable jewellery further fuels
this trend. The global gold jewellery market will grow during the forecasted period due to
rising GDP per capita, increasing consumer disposable income, and the appeal of gold as a
long-term investment.
Global Jewellery Market
Share by product type, 2022 (%)
Market Size
The global gold jewellery market, valued at $193.3 billion in 2022, is projected to
reach $304.2 billion by 2030, growing at a CAGR of 5.8% from 2022 through 2030 in the
post-COVID-19 business landscape. Gold is trusted more than the currency of the countries.
61%
RETAILERS GLOBALLY TRUSTS GOLD OVER CURRENCIES Sources: Retail Insights
Indian Gold Market Overview
Indian Gold Market Overview
Indias formidable position as the second-largest gold market, where an impressive 70%
of the demand is attributed to exquisite jewellery, underscores the immense growth
opportunities awaiting the organised retail segment. It is also the third-highest
component of retail consumption in India.
Moreover, gold jewellery demand has experienced a steady and consistent upward trend
for several reasons. Firstly, most of the demand can be attributed to weddings, where gold
holds great cultural and sentimental value. As weddings remain an integral part of many
societies, the demand for gold jewellery continues to rise. Secondly, gold is considered a
reliable store of value, especially in times of economic uncertainty, making it an
attractive investment option for individuals. The growth in disposable income across
various regions has also played a crucial role in boosting demand, as people have more
financial capacity to invest in gold jewellery. Thirdly, gold jewellery holds strong
linkages to traditions and customs, further driving its popularity. Lastly, evolving
fashion trends and styles have increased the demand for gold jewellery as consumers seek
innovative and contemporary designs.
The jewellery market in India is a sizeable and attractive industry, propelled by
several favourable factors. These include shifting customer behaviours, superior
organisational capabilities, and supportive regulatory and legislative changes. These
combined elements create significant tailwinds for the growth and prosperity of the
jewellery sector in India.
Market Size
The Indian jewellery retail sector is currently valued at approximately $76.3 billion
in FY23 and is expected to grow substantially. This market is expected to grow at a CAGR
of 5.54% by 2027. This projection signifies the sectors potential for significant
expansion and economic impact in the coming years.
Source: Technavio Report
The organised retail segment currently holds a share of approximately 35%, featuring
prominent national and regional players. In contrast, the unorganised sector, comprising a
vast network of over 5,00,000 local goldsmiths and jewellers, dominates the remainder. The
organised sector displayed remarkable resilience, bouncing back swiftly and accelerating
after the pandemic. This revival was propelled by a combination of factors, spanning both
the supply side and the resurgence of consumer demand.
While India traditionally boasts a deep-rooted a_nity for gold jewellery, capturing a
substantial share of approximately 85% of the market, an intriguing trend is emerging.
With its sparkling allure, studded jewellery is gaining momentum and attracting growing
participation in the jewellery retail landscape. The prominence of gold jewellery stems
from its profound cultural and religious significance, intertwined with a legacy of trust
and reliability that gold embodies.
Gold jewellery demand in India is primarily driven by weddings significant role in the
culture. Weddings in India holds immense importance and is marked by grand celebrations
and traditions. Gold jewellery is essential to Indian weddings, representing prosperity,
blessings, and the eternal bond between couples. The demand for gold jewellery remains
resilient in India due to the enduring wedding demand. Families consider gold jewellery as
a valuable asset, both financially and emotionally, and often pass it down through
generations. This cultural significance and belief in the auspiciousness of gold ensure
its continued demand in the Indian market.
Key Growth Drivers
FY23 was an exceptional year for the jewellery market and is expected to expand to
$103.6 billion by the end of this CY. To understand the market better, let us look at the
sectors growth drivers.
The Hyperlocal Approach
The demand for Indian jewellery is diverse, influenced by regional preferences, income
di_erences, and cultural traditions. Indias jewellery demand is predominantly hyperlocal.
Kalyan stands out in Indias gold jewellery market by exhibiting a hyperlocal strategy.
Unlike national competitors, Kalyan operates on a micro-market level, catering to specific
regional needs. This approach allows Kalyan to connect with customers locally, leveraging
the strengths of regional and unorganised players. However, Kalyan has also successfully
established itself as a national brand, o_ering a blend of hyperlocal expertise and the
reputation of a large-scale enterprise.
The Southern states have a significant share of 40% in the Indian gold jewellery
market, where traditional gold jewellery holds a timeless appeal. There is a distinct
appreciation for jewellery in the enchanting Eastern states, accounting for 15%.
Meanwhile, the Northern and Western states showcase a fascinating blend, captivating
customers who embrace the allure of studded jewellery.
The Indian Jewellery Retail Market Break-up by Region:
Jewellery demand experiences pronounced seasonality, driven by weddings, festivals, and
agricultural harvests in rural areas. Specific to each region, these events play a pivotal
role in driving growth. The unique seasonality of jewellery demand necessitates a deep
understanding of local consumer preferences, tailored marketing approaches for diverse
audiences, localised sourcing and product strategies, and substantial working capital.
As a result, only a few local players have successfully transitioned into regional
players while even fewer have yet to achieve national expansion. The hyperlocal nature of
jewellery demand underscores the need for a nuanced and strategic approach to cater to
diverse markets.
Our Response
At Kalyan Jewellers, we prioritise localisation in our product portfolio, brand
communication, showroom experiences, and grassroots outreach. Our state and city-specific
campaigns and brand ambassadors appealing to national, regional, and local audiences,
ensure e_ective communication. We curate our product portfolio based on local market
preferences, collaborate with local artisans and have procurement centres strategically
placed across jewellery manufacturing regions. Our showrooms reflect local tastes, and our
sta_ members are fluent in local languages and knowledgeable about the local culture.
While we position ourselves as hyperlocal jewellers through e_ective national-level
campaigns, we also create the persona of a large national brand. Our dedicated ‘My
Kalyan network engages in door-to-door and direct marketing to connect with local
communities e_ectively.
The Rise of E-commerce
The rapid growth of Indian e-commerce has profoundly impacted various industries,
including the gold jewellery sector. Traditionally, Indians have purchased their favourite
gold jewellery items, such as necklaces, bangles, earrings, and more, from local jewellery
shops. However, the landscape is evolving. This shift reflects the changing preferences
and convenience-seeking behaviour of Indian consumers in the digital age.
Our Response
Candere.com, our online platform, has established a strong presence and garnered user
loyalty over the last several years. The brands online marketplace presence, showrooms,
and user loyalty contribute to its success in the industry.
Candere.com has achieved notable scale, with revenue of H1,567 million in FY23. Apart
from its strong online presence, Candere.com also operates two physical showrooms in
India, o_ering customers the opportunity for in-person shopping. This combination of an
online marketplace and brick-and-mortar showrooms has contributed to the brands overall
success. In line with their commitment to providing a seamless customer experience,
Candere.com has plans to launch 25-30 new physical showrooms during FY24. This expansion
aims to enhance its omnichannel approach, allowing customers to enjoy an even better
shopping experience across multiple touchpoints.
Organised Retail All the Way
The jewellery retail landscape is transforming significantly as organised players gain
prominence. The growing urban population and the preferences of the younger generation
drive this shift. These discerning consumers prioritise brands, seeking transparency in
pricing and uncompromising quality akin to their expectations for other branded products.
Organised retailers excel in meeting these demands by providing reassurance of purity,
authenticity, and an elevated shopping experience.
The remarkable rise of organised retail in the jewellery sector can be attributed to
the sustained e_orts of retailers in building robust brands over the past two decades.
This strategic brand-building has paved the way for the transition towards organised
retailing. Moreover, the increasing demand for a diverse range of ready-made jewellery and
comprehensive after-sales services have further propelled the growth of organised
retailers. This transformative shift reflects the changing preferences of consumers and
their desire for an exceptional and trustworthy jewellery shopping experience.
Our Response
The hyperlocal strategy has served us in good stead as we have managed to extend our
customer base in the last couple of years. To learn more about our hyperlocal strategy,
please read page 27.
Focus on Rural/Semi-Urban Markets
The heart of gold jewellery demand lies in the vibrant rural and semi-urban markets,
accounting for more than 50% of the total. In these regions, the deep-rooted cultural
a_nity towards gold creates a fertile ground for growth.
Notably, government initiatives aimed at revitalising the rural economy through
investments in infrastructure, agriculture and livelihoods will serve as a catalyst,
further stimulating jewellery demand.
However, it is important to acknowledge that organised retailers in the rural jewellery
segment still needs to be expanded. This segments predominant challenge entails the
higher costs associated with retailing in these areas. Nonetheless, as we embrace the
opportunity to unlock the potential of rural India, we strive to overcome these barriers
and bring the glamour of exquisite jewellery closer to every corner of the nation.
Our Response
We are embarking on an exciting journey to extend the reach of the Kalyan brand. We aim
to capitalise on their existing infrastructure through strategic partnerships with
franchise owners in critical metropolitan areas and across Tier - I, II, and III cities,
primarily in non-Southern regions. This approach allows us to expand much faster without
significant capital expenditure and inventory investment, as the franchisees will shoulder
these responsibilities.
Kalyan Jewellers has introduced the ‘My Kalyan initiative to establish a personal
connection with customers. Through this programme, we o_er tailored value propositions at
customers doorsteps, building brand awareness and rapport. ‘My Kalyan helps us
understand unique customer requirements, especially in rural and semi-urban markets. The
initiative enables targeted marketing strategies, meeting latent demand and competing
e_ectively. ‘My Kalyan centres act as touchpoints for data collection and customer
engagement, benefiting the local economy through job creation. Insights from ‘My
Kalyan refine our o_erings, enhance satisfaction, and expand our reach, delivering value
to customers and stakeholders.
Performance in FY23
ICRA, a leading rating agency, predicted a promising future for Indias organised
jewellery retailers. With an estimated average revenue growth of 20% in FY23 and a steady
10% growth in FY24, the organised sector is poised to outperform the industry in the
medium-term. This positive outlook reflects the resilience and potential of organised
jewellery retailers in Indias dynamic market. This industry is projected to maintain a
stable outlook, with ICRA forecasting year-on-year growth of approximately 15% for this
fiscal year. This optimistic projection highlights the industrys resilience and indicates
favourable conditions for growth and expansion. As the demand for gold jewellery continues
to thrive, the industry is expected to capitalise on emerging opportunities and sustain
its upward trajectory.
Outlook
Organised jewellery retailers are expected to achieve strong revenue growth of 23-25%
this fiscal. This growth is driven by pent-up demand and a recovery in discretionary
spending, following a 36% increase in the previous fiscal. The sales volume is expected to
rise, reflecting the release of pent-up demand and renewed consumer confidence. This
positive trend underscores the resilience and potential of the organised gold jewellery
retail sector.
Company Overview
Established in 1993 under the visionary leadership of Mr. T.S. Kalyanaraman, Kalyan
Jewellers has emerged as a formidable force in the Indian jewellery industry. With
deep-rooted family values and extensive industry experience, we have achieved remarkable
success.
6%
SHARE OF THE ORGANISED JEWELLERY MARKET
Our commitment to core values like trust and transparency has earned us our customers
trust, establishing Kalyan Jewellers as a reputable name in India. Our diverse range of
jewellery o_erings, including gold, studded, and other exquisite pieces, caters to the
varied preferences of our esteemed clientele. Whether for special occasions or everyday
wear, we have a wide selection to meet every need.
In addition to our strong presence across India, we have expanded our footprint in the
Middle East, further cementing our global reach. Our business model is built on the
foundation of hyper-localisation, enabling us to cater to each regions specific demands
e_ectively. The ‘My Kalyan network, deeply embedded in communities, empowers us to
connect with customers personally and ensure seamless distribution.
As an established brand, we emphasise exceeding customer expectations and delivering
unparalleled satisfaction. With our legacy of trust and a commitment to excellence, Kalyan
Jewellers remains the epitome of Indias trusted jewellery destination, o_ering timeless
beauty that captures the hearts of our valued customers.
SWOT Analysis Strengths
• Brand Equity: The combination of a strong brand, scalable business model,
effective operational processes and proven track record of profitable expansion makes
Kalyan well-placed to capitalise on the market opportunities arising from the continued
shift in demand in favour of organised jewellery companies.
• Pan-India Player: Kalyan Jewellers is one of Indias largest jewellery
companies with a pan-India network of showrooms.
• Diversified Product Range: Kalyan Jewellers continue to increase their
focus on higher-margin studded jewellery and explore opportunities to expand the range of
sub-brands to introduce new branded jewellery lines targeted at specific customer niches
and the mass market.
• Significant Market Opportunity: Kalyan Jewellers is a leading brand in a
thriving and expansive market where the organised sector is rapidly gaining momentum. With
strong growth tailwinds propelling the brand forward, Kalyan Jewellers is poised to
capitalise on the immense opportunities.
• Solid Network: Kalyan Jewellers is present across 22 key states/UTs in
India and four nations in the Middle East via a growing network of showrooms, MyKalyan,
purchase ecosystem and mid-senior level management. Kalyan Jewellers also stabilised the
FOCO model and the existing network to propel the expansion over the next several years.
• Strong Management Leadership: Under the guidance of visionary promoters
and with the support of a strong management team, Kalyan Jewellers has consistently
delivered value, showcasing a proven track record of success.
• Robust Governance Framework: Kalyan Jewellers distinguished Board of
Directors comprises individuals from diverse backgrounds, bringing a wealth of experience
and expertise. Kalyan Jewellers takes pride in having an independent director as the
Chairman of the Company, ensuring strong governance and strategic leadership.
• Farsighted Promotional Strategy: Kalyan Jewellers strategic approach
focuses on combining the essence of the local touch with the nation-wide brand presence,
ensuring a harmonious blend of localised connections and consistent brand messaging.
• Best-in-class Technology: Kalyan Jewellers invested in a cutting-edge CRM
framework, undertook tactical campaigns, and operationalised state-of-the-art technologies
to analyse and manage customer interactions and related data throughout the customer
lifecycle. The aim was to create long-term customer relationships, build retention, and
drive sales.
Challenges
• The competitive intensity is much higher in this industry due to challenges from
unorganised players who do not follow the law of the land in the true spirit, thereby
gaining an unfair advantage.
• Kalyan Jewellers continues to face sti_ competition across most regions of the
country from strong organised regional players within such regions as well as from other
national players.
Opportunities
• The market for organised jewellery retailing in India is projected to grow at
14%.
• Kalyan Jewellers intends to aggressively foray into the non-South Indian markets
and Middle Eastern countries by unveiling capital-e_cient franchised showrooms to enhance
the profile of the business.
• Kalyan Jewellers aims to increase its presence in the SURU areas which report
low penetration of organised jewellery retailing.
• Kalyan Jewellers will utilise omnichannel retailing to improve customer
conversion rates and drive revenue growth.
• Kalyan Jewellers will employ analytics for driving customer footfall and
engagement.
Threats
• Volatile gold prices impact consumer demand, resulting in short-term
fluctuations, which can get pushed to the succeeding quarters.
• Disrupted retail operations due to the pandemic, among others.
Operational Performance
In the dynamic business landscape of India, Kalyan Jewellers has achieved remarkable
success, witnessing strong growth in footfalls, revenue, and profitability across all
markets. Despite the challenges posed by the pandemic, Kalyan Jewellers experienced a
significant increase in return ratios, showcasing resilience and adaptability. Indias
standalone revenue grew substantially, reaching Rs. 115,840 million in FY23 from H90,561
million in FY22. This growth is complemented by an improved EBITDA, which rose from H6,915
million in FY22 to H9,331 million in FY23.
Kalyan Jewellers has successfully opened over 28 net showrooms (including Candere)
across India and in the Middle East in FY23, with confirmed plans for additional showrooms
in FY24. The franchise-owned showrooms have also shown promising progress, with the
signing of all LOIs for all showrooms in FY24. Kalyan Jewellers has ambitious plans to
open over 50 showrooms in FY24. Kalyan Jewellers established a strong foothold in the
Middle East and expanded the global presence with 18% of the showrooms being opened in
this region across a cumulative retail space of approximately 42,000 square feet. Kalyan
Jewellers has adopted a strategic approach that includes reducing capital investment in
the Middle East by converting owned showrooms to the franchise model. Our digital business
platform, Candere, reported a revenue of H1,567 million for FY23. With a focus on
franchise-driven network expansion in the coming years, Kalyan Jewellers is poised to
achieve continued growth and success.
Financial Performance
Summary of consolidated profit and loss
(in Rs. million)
| Particulars |
FY23 |
FY22 |
YoY |
| Revenue |
1,40,714 |
1,08,179 |
30% |
| Gross Profit |
21,992 |
16,916 |
30% |
| Gross Profit Margins (%) |
15.6% |
15.6% |
|
| Total Operational Expenses |
10,852 |
8,771 |
24% |
| Advertisement and Promotion Expenses |
2,881 |
2,324 |
24% |
| Other Operational Expenses |
7,971 |
6,448 |
24% |
| EBITDA |
11,140 |
8,145 |
37% |
| EBITDA Margin (%) |
7.9% |
7.5% |
|
| Depreciation |
2,446 |
2,316 |
6% |
| EBIT |
8,694 |
5,829 |
49% |
| EBIT Margin (%) |
6.2% |
5.4% |
|
| Finance Costs |
3,026 |
3,224 |
(6)% |
| Other Income |
379 |
383 |
(1)% |
| Profit before exceptional items & tax |
6,048 |
2,989 |
102% |
| Profit before exceptional items & tax margin (%) |
4.3% |
2.8% |
- |
| Exceptional Items |
333 |
- |
- |
| PBT |
5,715 |
2,989 |
91% |
| PBT Margin (%) |
4.1% |
2.8% |
|
| PAT |
4,319 |
2,240 |
93% |
| PAT Margin (%) |
3.1% |
2.1% |
- |
Revenue from Operations
This increase was driven by robust growth in same store revenue and as well as
significant expansion in the showroom network. Disruption in revenue during the first
quarter of the base financial year also contributed to the growth in the revenue from
operations during FY23.
Cost of Sales
Cost of sales increased by 30% to Rs. 118,722 million as compared with the previous
financial year, in line with the increase in revenue.
Employee Expenses
Employee expenses increased from Rs. 3,543 million in FY22, to Rs. 4,406 million in
FY23 driven primarily by the significant increase in the employee base during FY23 to take
care of the showroom network expansion. We added 1,784 employees during FY23. In addition
to the above, a portion of our employee remuneration is in the nature of sales incentive
and as the revenue increased, there was a commensurate increase in the employee
incentives. Employee expenses as a percentage of revenue have decreased from 3.8% in FY22
to 3.1% in FY23.
Other Expenses
Other expenses include advertisement, sales promotion and other administrative expenses
which stood at Rs. 6,446 million in FY23 against Rs. 5,229 million in the previous year
FY22. As a percentage of revenue, other expenses are at 4.6% of revenue, as compared to
4.8% in previous year.
EBITDA
EBITDA increased by 37% to H11,140 million on account of higher revenue from new
showrooms as well as operating leverage led by same-store-sales growth.
Net Profit
Net profit stood at Rs. 4,319 million compared to Rs. 2,240 million in FY22 majorly due
to increased revenues, operating leverage and savings in interest expenses.
| Particulars |
FY23 |
FY22 |
| Equity Share Capital |
10,301 |
10,301 |
| Other Equity |
26,047 |
21,070 |
| Non-controlling Interests |
(2) |
9 |
| Non-current Liabilities |
7,097 |
6,253 |
| Current Liabilities |
63,687 |
51,818 |
| Total |
107,129 |
89,451 |
Assets
Particulars FY23 FY22
Non-current Assets 21,971 21,038 Current Assets 83,819 68,414 Assets held-for-sale
1,339 -
Total 1,07,129 89,451
Key Ratios
| Particulars |
FY23 |
FY22 |
| Gross Profit Margin |
15.6% |
15.6% |
| EBITDA Margin |
7.9% |
7.5% |
| EBIT Margin |
6.2% |
5.4% |
| Profit before exceptional item & tax Margin |
4.3% |
2.8% |
| PBT Margin |
4.1% |
2.8% |
| PAT Margin |
3.1% |
2.1% |
| Inventory Turnover |
1.85 |
1.64 |
| Interest Coverage Ratio |
3.68 |
2.53 |
| Current Ratio |
1.32 |
1.32 |
| Net Debt to Equity Ratio |
0.70 |
0.82 |
| ROE |
12.8% |
7.5% |
| ROCE |
20.0% |
15.5% |
Gross profit margin = Gross profit/Revenue from operations
EBITDA Margin = Earning before interest, tax, depreciation and amortisation
(EBITDA)/Revenue from operations EBIT Margin = Earning before interest and tax
(EBIT)/Revenue from operations Profit before exceptional item & tax margin = Profit
before exceptional item & tax/Revenue from operations Profit before tax margin =
Profit before tax (PBT)/Revenue from operations Profit after tax margin = Profit after tax
(PAT)/Revenue from operations
Inventory turnover = (Cost of materials consumed+Changes in inventories of finished
goods and work-in-progress)/Average Inventory Interest coverage ratio = Earning before
interest, tax, depreciation and amortisation (EBITDA)/Finance cost Current ratio = Current
Assets/Current Liabilities Net debt to equity ratio = Net Debt (including GML)/Total
Equity Return on equity = Net Profit after tax/ Average Total Equity.
Return on capital employed = Earning before Interest and tax (EBIT) /(Total Equity +
Non-current liabilities).
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