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Silgo Retail Ltd Management Discussions

Jul 16, 2024|12:00:00 AM

Silgo Retail Ltd Share Price Management Discussions


The worldwide jewellery market is poised for significant expansion. This growth is primarily propelled by shifting consumer preferences towards unique jewellery designs, including oversized hoop earrings and geometric shapes like rectangles, spheres, and squares. The increasing fondness for personalized and environmentally sustainable jewellery amplifies this trend. Additionally, the global gold jewellery sector is expected to experience growth in the projected timeframe. This growth can be attributed to the upward trajectory of GDP per capita, the steady increase in consumer disposable income, and the enduring allure of gold as a viable long-term investment.

Distribution of the Global Jewellery Market By Product Type in 2022

? Necklace

? Ring

? Earring

? Bracelet

? Others


In the year 2022, the global market for gold jewelry, with a valuation of $193.3 billion, is expected to ascend to $304.2 billion by the year 2030. This projected growth signifies a Compound Annual Growth Rate (CAGR) of 5.8% spanning from 2022 to 2030, within the post-COVID-19 commercial environment. Gold, recognized for its enduring value, commands greater trust compared to the currencies of nations.

Retailers worldwide exhibit a significant level of trust in gold as opposed to conventional currencies, with 61% of them subscribing to this perspective.


The rapid increase in family members combined earnings is resulting in higher disposable income for consumers, significantly increasing their spending power. As a result, an increasing number of consumers nowadays are unwilling to compromise product quality regardless of cost and prefer to purchase various types of authentic gems and jewellery available in the market. Moreover, the rising disposable income levels have increased the purchasing power of consumers, which has resulted in an improved standard of living. Furthermore, the education levels of women have risen in India, leading to an increase in the ratio of women in the workforce and providing them more purchasing power. Such factors are positively influencing the gems and jewellery market of India.


India has emerged as the largest market for silver jewellery and silverware, experiencing substantial growth over the past few years. The countrys silver jewellery exports for the fiscal year 2022-23 exhibited an 8% year-on-year increase, reaching $2.93 billion. We spoke to two notable silver jewellery exporters to understand the reasons behind this upsurge in exports and to explore strategies for Indian manufacturers to tap into other markets and maintain this momentum.

Silver holds deep cultural and traditional significance in India. It plays a vital role in various important events and rituals. Whether in weddings or religious ceremonies, the exchange and gifting of silver items represent blessings, prosperity, and positive fortune.

While the cultural value of silver is undeniable, its price volatility can impact consumer behaviour. In times of uncertain prices, consumers might delay their silver-related purchases in hopes of more favourable market conditions before making decisions. Nonetheless, the enduring cultural importance of silver ensures that it remains a cherished and desired metal in India, regardless of short-term price fluctuations.

According to silver exporters, several factors have contributed to the recent surge in demand for Indian silver exports. Among these factors are innovative designs and the integration of technology. Krishna Goyal, Convener of the Silver Panel Committee at the GJEPC (Gem & Jewellery Export Promotion Council), attributes this growth to the global economys recovery from the pandemic, particularly in the United States, a major market for Indian silver jewellery. He notes that following the impact of Covid-19, consumers had reduced disposable income, and innovative designs provided them with the opportunity to attain personal adornment desires at affordable prices.


As of the year 2022, the Indian market had exported silver with an approximate value of ^16,300 Crores. Projections indicate that the Indian silver market is poised for a robust growth trajectory, projected to expand at a Compound Annual Growth Rate (CAGR) of 21.3%. This growth trend is anticipated to lead to a market valuation of $208.2 million by the year 2027.

India stands as one of the prominent global importers and consumers of silver, given its widespread utilization both domestically and industrially. The countrys demand for silver spans various sectors. Additionally, other countries that rank among the largest silver markets include China, Germany, the United Kingdom, Japan, and several others.

Rajasthan, Jharkhand, Karnataka, and Andhra Pradesh are the leading states in the Indian market for silver production. These states contribute significantly to the overall silver output within the country.

The utmost level of silver purity is 99.9, denoting that the silver is exceedingly malleable and, consequently, not suitable for crafting ornaments or jewelry. Typically, silver items with the highest purity, such as coins and bars, are prevalent in the silver market due to their specific properties and purposes.

As reported by GlobalData, India secured the position of the eleventh-largest global producer of silver in the year 2022. However, the output experienced a decrease of 0.95% compared to the preceding year, 2021. Over the five-year period leading up to 2021, silver production in India demonstrated a Compound Annual Growth Rate (CAGR) of 7%. Looking ahead, it is projected that between the years 2022 and 2026, silver production is anticipated to experience a more modest CAGR of 0.11%.

Key Growth Drivers:

The fiscal year 2023 (FY23) marked an outstanding period for the jewellery market, with expectations of growth reaching up to $103.6 billion by the conclusion of this calendar year (CY). To gain a deeper insight into the market dynamics, lets delve into the factors propelling the growth within this sector.

The Hyperlocal Approach:

The demand for Indian jewellery is characterized by its diversity, which is influenced by regional preferences, income disparities, and cultural traditions. The jewellery demand in India is primarily driven by local tastes and customs, making it a hyperlocal phenomenon.

Silgo Retail Jewellers stands out in Indias Sliver jewellery market by adopting a hyperlocal strategy. Unlike its national competitors, Silgo operates at a micro-market level, tailoring its offerings to cater to specific regional requirements. This approach enables Silgo to establish strong connections with customers on a local level while leveraging the strengths of regional and smaller-scale players.

This hyperlocal approach not only recognizes and adapts to the varying preferences and traditions across different regions but also allows brands like Silgo Retail Jewellers to effectively connect with customers on a more personal and relatable level, fostering stronger customer relationships and engagement.












The demand for jewellery exhibits distinct patterns of seasonality, primarily influenced by weddings, festivals, and agricultural harvests in rural regions. These specific events hold significant importance in each locality and contribute significantly to driving growth. The distinctive seasonality of jewellery demand necessitates an in-depth comprehension of local consumer preferences. It also requires tailored marketing strategies to cater to diverse audiences, localized sourcing and product strategies, as well as a substantial working capital. As a result, only a select few local players have effectively transformed into regional contenders, and an even smaller number have successfully expanded on a national scale.

The hyperlocal nature of jewellery demand emphasizes the essential need for an astute and strategic approach to address the diverse array of markets. This approach recognizes the uniqueness of each market and the necessity for a nuanced strategy to engage with and cater to customers effectively. By adapting to local preferences and requirements, jewellery businesses can maximize their appeal and achieve success in a variety of regional markets.


At Silgo Jewellers, localization is at the heart of our approach. We prioritize tailoring our product offerings, brand messaging, showroom experiences, and grassroots engagement to resonate with local communities.

Weve designed state and city-specific campaigns and enlisted brand ambassadors who can connect with national, regional, and local audiences, ensuring our message reaches effectively.

Our product range is curated to align with local market preferences, and we collaborate closely with local artisans. Weve strategically established procurement centres in key jewellery manufacturing areas. Our showrooms are a reflection of local tastes, and our staff members are not only fluent in local languages but are also well-versed in local customs and traditions.

While we proudly position ourselves as hyperlocal jewellers through impactful national campaigns, we also present ourselves as a formidable upcoming national brand.

Organized retails growing share in the jewellery industry is anticipated to continue driving change:

The jewellery retail sector is undergoing a substantial transformation with the rise of organized players. This shift is driven by the urban populations expansion and the preferences of the younger generation. These discerning consumers prioritize brands and transparency in pricing, seeking quality similar to other branded products. Organized retailers excel in meeting these demands by ensuring purity, authenticity, and an enhanced shopping experience.

The Indian jewellery market is projected to expand at a Compound Annual Growth Rate (CAGR) of 5.54% from 2022 to 2027. This growth is expected to result in an increase of USD 21.54 billion in the market size.



? Brand Equity: Silgo strong brand, scalable business model, efficient operations, and proven profitability enable it to leverage market opportunities in the organized jewelry sector.

? Pan-India Presence: With a nationwide network of showrooms, Silgo is a major player in the Indian jewelry market.

? Diversified Product Range: Emphasis on high-margin studded jewelry and sub-brands catering to specific customer segments enhances Silgo offerings.

? Market Opportunity: Positioned as a leading brand in a thriving market, Silgo Retail benefits from the growth of the organized sector.

? Extensive Network: Silgo Retail presence across 22 Indian states and four Middle Eastern nations, along with a stable expansion model, strengthens its reach.

? Strong Leadership: Visionary promoters and a capable management team have consistently delivered value.

? Robust Governance: A diverse and experienced Board of Directors and strong strategic leadership ensure effective governance.

? Effective Promotion: Silgo Retail balances local connections and national branding for a cohesive promotional strategy.

? Technology Focus: Investment in CRM, advanced campaigns, and cutting-edge technologies enhances customer relationships, retention, and sales.


While there are promising indications of the retail market progressing toward a more robust and organized ecosystem, there are still significant challenges that pose a threat to its growth. The Indian gem and jewelry industry faces difficulties in obtaining bank credit. Over 20% of loans extended to this sector have turned into non-performing assets (NPAs), leading to the gem and

jewelry industry receiving a mere 2.7% of Indias total credit allocation. Smaller independent jewelers face even more significant financing hurdles, often relying on monthly gold schemes for funding or functioning as money lenders.

The report concludes that national and regional chain stores are likely to continue expanding their market share due to their access to credit and their ability to maintain extensive inventories. Conversely, smaller players might encounter restricted access to credit if they fail to meet transparency standards. Banks and financial institutions remain cautious about lending to the gem and jewelry sector if transparency benchmarks are not met.

1) Overcoming Negative Perceptions about the Jewellery Industry with Regard to Ethics:

The jewelry industry faces the challenge of addressing negative perceptions related to ethical concerns. Efforts are needed to enhance transparency, responsible sourcing, and ethical practices to regain consumer trust.

2) A Need for Financial Transparency

Ensuring financial transparency within the jewelry industry is crucial. The sector must establish practices that provide clarity in pricing, cost structures, and value for customers, boosting confidence and loyalty.

3) A Need for Generic Promotion of Diamonds & Jewellery:

Theres a requirement for industry-wide efforts to promote diamonds and jewelry. Establishing a unified promotional strategy can raise awareness and drive demand, benefiting both consumers and businesses.


? Relatively long operating cycle and working capital intensive nature of the business is an inherent characteristic of the G&J industry.

? The rising inflation declined consumer income are other factors that could subdue the growth of the sector.

? The Company is also exposed to price risk movements both in silver as well as its forex exposure. However, it has put systems and procedures in place to take care of these concerns.

? Increasing competition from new entrants as well as existing ones.

? Sluggish sales of products due to seasonal changes may affect profitability of the Company. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate system of internal control. It has documented procedures covering all financial and operating functions. These controls have been designed to provide a reasonable assurance with regard to maintaining of proper accounting controls, monitoring of

operations, protecting assets from unauthorized use or losses, compliances with regulations and for ensuring reliability of financial reporting. The Company has continued its efforts to align all its processes and controls with global best practices in these areas as well.

Some significant features of the internal control systems are:

? Documenting Major Business Process including financial reporting, Computer Controlling, Security Checks and Top Committee level Plans

? A comprehensive information security policy and continuous upgrades to IT system

? Audit Committee of the Board of Directors, comprising independent directors, which is functional regularly reviews the audit plans, significant audit findings, adequacy of internal controls, compliance with Accounting Standards, as well as reasons for changes in accounting policies and practices, if any.

? A well-established multi-disciplinary Internal Audit team, which reviews and reports to management and the Audit Committee about the compliance with internal controls and the efficiency and effectiveness of operations and the key process risks

? Monthly meeting of the top management committee to review operations and plans in key business areas

? Corporate policies on accounting and major processes.

? Well-defined processes for formulating and reviewing annual and long-term business plans.

? Preparation and monitoring of annual budgets for all trading activities.

? Having introduced and continually upgraded, improved and fine-tuned state of the art Enterprise Resource Planning (ERP) since August 2008, supplier Relations Management and Customer Relations Management, to connect its different locations, dealers and vendors


The Companys Human Resources philosophy is to establish and build a strong performance and competency driven culture with greater sense of accountability and responsibility. The Company has taken pragmatic steps for strengthening organizational competency through involvement and development of employees as well as installing effective systems for improving the productivity, equality and accountability at functional levels.

With the changing and turbulent business scenario, the Companys basic focus is to upgrade the skill and knowledge level of the existing human assets to the required level by providing appropriate leadership at all levels motivating them to face the hard facts of business, inculcating the attitude for speed of action and taking responsibilities.

In order to keep the employees skill, knowledge and business facilities updated, ongoing in house and external training is provided to the employees at all levels. The effort to rationalize and streamline the work force is a continuous process. The industrial relations scenario remained harmonious throughout the year.

Note: Forward looking statements embedded in the Management Discussion and Analysis above is based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events.


Profit & Loss Summary

(Rs. in Lakhs)


2023 2022 Growth(%)

Revenue from operations

3407.08 3510.40 (2.94)%


319.48 315.75 1.18%

Profit Before Tax

319.48 315.75 1.18%

Profit/(loss) After Tax

235.18 230.57 1.99%

Balance Sheet Summary

(Rs. In Lakhs)


As on 31 March As on 31 March
2023 2022

Equity & Liabilities

Equity Share Capital

1027.00 1027.00

Other Equity

2046.75 1812.62

Non-current liabilities

309.67 412.54

Current liabilities

1827.87 1866.55


5211.29 5118.71


Non-current assets

26.78 29.65

Fixed assets

- -

Current assets

5184.51 5089.07


5211.29 5118.71

Equity Share Capital:

The equity share capital of the company has not changed during the year under review. Debt:

(Rs. In Lakhs)


2023 2022

Long term Borrowings

295.70 403.89

Short Term Borrowings

1576.10 1515.21


1871.18 1919.10

Changes in Key Financial Ratios:

Pursuant to provisions of Regulation34 (3) of SEBI (LODR) Regulation, 2015 read with Schedule V part B(1) details of changes in Key Financial Ratios is given hereunder:

Key Financial Ratio

F.Y. 2022-23 F.Y. 2021-22

1 Debtors Turnover Ratio

2.14 2.40

2 Inventory Turnover Ratio

1.39 1.17

3 Interest Coverage Ratio

2.69 3.47

4 Current Ratio

20.59 14.02

5 Debt Equity Ratio

0.61 0.61

6 Operating Profit Margin (%)

18.23 18.24

7 Net Profit Margin (%)

9.21 9.20

8 Return on Capital Employed

15.77 15.84

*Previous years Figures have been regrouped / rearranged wherever necessary.


The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 read with Section 133 of the Companies Act, 2013.


The financial statements appearing above are in conformity with the accounting principles generally accepted in India. The statements in the Management Discussion and Analysis Report, which may be

considered forward-looking statements, within the meaning of applicable laws and regulations, have been based on current expectations and projections about future events. The actual results could differ from those expressed or implied. Important factors that could influence the Companys operations include global geopolitical shifts, economic developments within the country, demand and supply conditions in the industry, input prices, changes in Government regulations, tax laws and other factors, such as industrial relations. The Management cannot, however, guarantee that these forward-looking statements will be realised or achieved.

For and on behalf of the Board of Directors SILGO RETAIL LIMITED


Place: Jaipur

Managing Director Whole-time Director

Date: August 28, 2023

DIN:00935911 DIN:01874461

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