Tribhovandas Bhimji Zaveri Ltd Management Discussions.

GLOBAL ECONOMY

2018 was a tumultuous year for the global economy, marked by elevated trade tensions, policy uncertainty, geo-political risks and stressed financial conditions across many economies. The International Monetary Fund (IMF) estimates indicate that the global economy grew by 3.6% in 2018, as against 3.8% in 2017. Trade wars between the United States (US) and China, heightened uncertainty about the Brexit outcome and subdued performance across advanced and emerging economies were the major factors that dimmed economic growth.

The Emerging Market and Developing Economies (EMDEs) witnessed a sluggish environment, primarily due to mounting trade tensions, volatile oil prices and softening market sentiments. On the other hand, growing concerns about a no-deal Brexit, fiscal policy uncertainty and weakening consumer and investor confidence softened the growth momentum across the Euro zone. The US economy, however, posted a strong growth, led by fiscal stimulus and rise in consumption. IMF projects global economic growth to moderate further to 3.3% in 2019. Nonetheless, it is seen picking up and rising to 3.6% in 2020, aided by accommodative monetary policy in the US, ongoing fiscal stimulus in China, fading of temporary bottlenecks in the Euro zone and gradual stabilisation in stressed emerging economies.

(Source: IMF World Economic Outlook, April 2019)

INDIAN ECONOMY

On the domestic front, India recorded a growth of 6.8% in its Gross Domestic Product (GDP) during FY 2018-19 vis--vis 6.7% in FY 2017-18. However, it retained its spot as the fastest-growing major economy in the world. Its macroeconomic fundamentals continue to remain healthy. Foreign Direct Investment (FDI) inflows in India stood USD 42 billion in 2018, demonstrating the growing investor confidence in the Indian economy.

The most recent Ease of Doing Business Report released by the World Bank indicates India having leapfrogged to the 77th rank among a total of 190 countries. A jump of 23 notches from the previous year is significant and can be attributed to the implementation of bold and path-breaking reforms by the Government. Some of these include GST, Insolvency and Bankruptcy Code (IBC), FDI liberalisation norms, Real Estate (Regulatory and Development) Act (RERA), and bank recapitalisation programme, among others. These structural reforms have helped improve the business climate and boosted growth prospects.

Estimates from IMF suggest the Indian economy will grow by 7.3% in FY 2019-20 and 7.5% in FY 2020-21. The Government has been intensifying its efforts towards creating better infrastructure, enhancing rural incomes and easing the liquidity and banking sector concerns. Accelerated resolution of Non-Performing Assets (NPAs) and unshackling of balance sheets of banks and financial institutions will strengthen the pace of economic expansion. Further, private consumption and investment will strengthen on the back of systemic credit flow, moderate inflation and accommodative monetary policy. With key indicators on track, the roadmap has been laid to make India a USD 5 trillion economy by 2024.

INDIA – GEMS & JEWELLERY

The Gems and Jewellery industry plays a significant role in the Indian economy, contributing around 7% of the countrys GDP. One of the largest and fastest growing sectors in the world, the domestic industry contributes nearly 29% to the global jewellery consumption. Its market size of USD 75 billion in 2018 is poised to rise and reach a level of USD 100 billion by 2025. The domestic industry is home to over 3,00,000 players, and is widely recognised for providing employment opportunities to millions of people. The current recruitment of 4.64 million people in the industry is expected to almost double to 8.23 million by 2022. The sector also holds major significance, being a key foreign exchange earner for India and contributing nearly 15% to total merchandise exports.

(Source: IBEF Report on Gems & Jewellery Sector)

Demand for Gold

According to the World Gold Council (WGC), demand for gold in India stood at 760.4 tonnes in CY 2018, lower by 1% compared to 771.2 tonnes in CY 2017. The marginal decline in 2018 can be attributed to fewer auspicious wedding days, higher price volatility and various transparency measures implemented by the Government.

During the January-March quarter of 2019, gold demand rose 5% to 159 tonnes as a firmer rupee, decline in local gold prices, ongoing festivals and the wedding season boosted sentiment. Demand rose 13% to 213.2 tonnes during the April-June period in 2019, compared to 189.2 tonnes in the correspondent period in 2018. Indias gold demand could rebound in 2019, rising above the 10-year average, as the Government seeks to bolster consumer confidence and spending.

Gold consumption in 2019 is likely to be 750-850 tonnes, as compared to 760.4 tonnes in 2018. Indian demand has averaged at 838 tonnes over the last 10 years. Expectations of a normal monsoon and landmark reform initiatives by the Government are expected to augur well for the rural economy and augment spending. Going forward, demand will be high on the back of the forthcoming wedding and festive season, easing banking concerns and higher income levels.

Gems & Jewellery Imports

Indias total gems and jewellery imports stood at USD 26.4 billion, registering a 17% decline from the previous fiscal. Imports of rough diamonds also contracted 17% to USD 15.72 billion, indicating subdued demand for cut and polished diamonds. During the same period, gold imports dropped by a meagre 3% to USD 32.8 billion due to softening prices of gold in the global markets.

Organised Jewellery Market - India

The share of organised jewellery market in India is estimated to have increased from 5% in 2000 to 23% in 2015, and is expected to touch 35% to 40% by 2020. According to a CRISIL Report, the organised jewellery segment grew 11.9% from 2016 to 2019. Going ahead, it is expected to continue to grow at a rate of 10% to 11% until 2022, maintaining its current growth rate, on estimates of increase in wedding and festival sales to drive volumes. Organised jewellery retailers are likely to see an improvement in EBITDA margins on the back of an increased share of high margin diamond jewellery and higher gold prices.

Gold and diamonds are the primary segments and account for the highest share in the market. The industry is witnessing changes in preferences, with consumers increasingly demanding unique designs and branded jewellery, driven by rising disposable incomes and evolving aspirations. This has led to organised players rapidly expanding their footprint to strengthen their reach and enhance market share. Rising penetration of organised players reflects a wider collection of exquisite and differentiated products. As a consequence, the share of organised segment has been growing substantially. It is expected to grow strongly, aided by the emergence of organised jewellery manufacturers serving the rapidly growing organised retail industry.

Growth Potential in Tier 2&3 cities

Branded jewellery retailers are tapping the growing demand in Tier 2&3 cities for higher volume growth. There has been a tectonic shift in consumer behaviour in these cities as they are increasingly moving from traditional and small jewellery retailers to organised retailers. Consumers in smaller cities and rural markets are increasingly opting for organised jewellery chains due to trendy gold and diamond designs, rising spending capacities, quality assurance certificates and celebrity brand ambassadors who make the products aspirational. Localisation in terms of design and customer service play a big role in attracting consumers from these cities.

Domestic Regulatory Scenario

Recent Reform Measures:

January 2018 Revision of BIS Hallmarking Scheme
August 2018 Proposal to set up Gold Spot Exchange
September 2018 Hike in import duty on cut and polished diamonds, gemstones and jewellery
September 2018 Declaration of constitutional validity of Aadhaar scheme by the Supreme Court
February 2019 Announcement of tax rebates and income package scheme for middle class and farmers

OPPORTUNITIES

Demand for gold and diamond jewellery has been steadily rising, driven by a combination of factors, including expanding urbanisation, higher afluence, growing aspirations and burgeoning income levels. Gold jewellery has been a central part of the Indian culture, and is considered a store of value, a symbol of wealth and status and a fundamental part of several rituals and festivals.

Key Emerging Trends: Women Empowerment

Increasing awareness and education among women has increased the percentage of female workforce in India, resulting in higher incomes and spending. Women are becoming more a_uent and aspirational. Young working women, modern housewives and rural Indian women are increasingly demanding branded and modern jewellery appropriate for the workplace, regular lives, social occasions and other festivals.

High Cultural Value

In India, gold has been a vital ingredient for celebrations, weddings and festivals in India. Also, gifting of gold is a deeply ingrained part of marriage rituals in the Indian culture. Gold also provides a tangible way of preserving wealth, while at the same time serving the cultural function of displaying wealth. Further, gold jewellery is also popular amongst the rural populace and a demand upsurge is likely with good monsoon and a spike in farm income.

Stable Asset-Class

Gold has historically proved to be a safe haven and a stable asset-class, providing maximum returns over the long term, despite investing not leading to steady income generation.

Rising Demand for Diamond Jewellery

Demand for diamond jewellery is increasing, particularly during the festival season, due to its increasing popularity and growing disposable incomes in India. Young consumers are also driving demand for diamond jewellery, and emerge as the largest group of diamond consumers. The opportunity is huge as only 10% of Indian women own a diamond, as against 20% in China and 70% in US. As the middle-class grows, India will become a major diamond jewellery market.

Growing Demand

India is poised for robust economic growth and is home to one of the worlds youngest populations. Increasing aspirations and changing preferences of young demographics, coupled with rising disposable incomes, will propel demand for fashion jewellery.

E-Commerce

Rapid internet penetration and availability of multiple online platforms has expanded the presence of e-commerce in India. Consumers are increasingly opting to buy jewellery online with access to a wide range of designs, attractive discounts, quality assurance, several payment options and a hassle-free experience.

Government Support

Given its immense potential, the Government has identified Gems & Jewellery as a focus area for export promotion. It is making proactive strides to accelerate investments and upgrade technology. An ambitious target of USD 100 billion has been set under Vision 2025 programme. Measures like Make in India, Brand India, and establishment of Common Facility Centres (CFCs) and the largest jewellery park in Mumbai are seen pushing the sector growth.

THREATS

Liquidity Constraints

The jewellery industry is highly capital intensive due to its long working capital and realisation cycle. A few recent incidents of financial defaults have created a liquidity squeeze in the industry, prompting banks and financial institutions to reduce their exposure to industry players.

This liquidity crunch has caused a blip in profitability and growth of the jewellery industry.

Highly Regulated Industry

The jewellery industry is susceptible to continuous changes in the regulatory framework and market conditions. Adverse economic factors, regulatory upheavals and unfavourable Government policies can lead to disruptions in the industry performance.

Synthetic Diamonds

Increasing proliferation of synthetic and laboratory-made diamonds is creating a parallel market for such products. However, it hasnt led to any shift of consumer demand for natural diamonds.

Rising Customer Preferences

Today, jewellery is considered as a fashion accessory and a style statement with changing fashion trends and growing preferences for unique and appealing designs, rather than conventional products. Consumers are willing to spend more on modern fashion jewellery to fulfil their emotional, aspirational and social needs. Thus, it is extremely important for the industry players to keep revamping the business and be more responsive towards evolving customer demands and aspirations.

INDUSTRY OUTLOOK

Growth is estimated to be largely contributed by large retailers and established brands guiding the organised market and opening opportunities to grow. Online sales are expected to account for 1-2% of the _ne jewellery segment by FY2021-22. Increasing penetration in Tier 2&3 cities and rural markets have been driving scale amidst the bulk of growth for luxury jewellery brands. Another key focus is the industrys export potential. With India being a cutting and polishing hub for diamonds, the Government aims to make India a preferred destination for diamond manufacturing too and an international diamond trading hub.

(Source: IBEF Report on Gems & Jewellery Industry)

COMPANY OVERVIEW

Tribhovandas Bhimji Zaveri Ltd (TBZ - The Original, hereinafter also referred to as the Company or TBZ) is a leading player in the organised jewellery market. With a legacy spread over 150 years, it has established a unique reputation of delivering innovative and exemplary quality jewellery.

Founded and professionally led by a strong management, the Company is currently spearheaded by the fifth generation of the family. It has a strong pan-India retail presence. The Company has positioned itself as one of the leading jewellery players in India. It emphasises on good corporate governance which encompasses ethical business practices, better value for stakeholders and maximum transparency in its business operations.

Our Retail Architecture

The Company has developed an endearing relationship of trust with its customers and skilled craftsmen over the years. It was the first jeweller in India to offer buyback guarantees for jewellery purchased through its stores in 1938. Its dedicated team places a sharp focus on brand building and marketing activities.

The Company aims to maximise its retail revenue with increased footfalls of customers at its stores. The retail staff serve as trained goodwill ambassadors who are inspired to always remain sensitive to the buying needs and habits of the customers. They ensure that, at TBZ, each visit is a memorable experience for the customer. As a result, the Company records healthy sales productivity from a high footfall conversion rate of 80%.

PRODUCT PORTFOLIO

The design team of the Company has a sound understanding of the changing preferences of the customers as well as market forces, resulting in creation of new trends and styles. Being thoroughly aware of global trends, the intricately crafted designs find the perfect infusion of contemporary and traditional tastes. Thus, TBZ - The Original has become a trendsetter in jewellery designing. The jewellery designed by the brand transcends to the hearts of customers and enables them to develop a long-lasting and emotional bond with them, which has proved to be valuable for the Company.

KEY STRENGTHS Strong Brand Recall

With its rich legacy spanning over one-and-a-half centuries, the Company has become one of the most trusted names in the Indian jewellery space. The brands identity has been strengthened by its pan-India network, which has made it a household name. The right branding and marketing efforts coupled with positive customer engagement activities has taken the brand closer to its customers and helped it build intimate trust-based relationships.

The Company is undertaking targeted digital media campaigns to expand its reach beyond the traditional households to the youth and millennials on social media. Sustained investments in marketing and brand building initiatives and recent appointment of the Bollywood actress Sara Ali Khan as TBZs brand ambassador are expected to further strengthen brand recall and presence.

Exquisite Designs and Focus on Quality

TBZ - The Original brand stands for exclusivity and uniqueness in its designs. Its fundamental policies are focussed on customer-centricity, the basis of which is precision, perfection and skilled craftsmanship in designs. The Company has earned its name for creating eye-catching, beautiful and delicately crafted designs, which suit the diverse social and cultural preferences across different parts of the nation.

• An efficient team of 29 highly experienced and skilled designers, including 14 exclusive CAD designers

• 8-10 new jewellery lines launched each year in line with changing contemporary tastes

• Exclusive collection of gold, diamond and jadau jewellery in contemporary and affordable segments

• Recent launches of innovative jewellery for millennials has been widely accepted

• Stringent quality methods and standards to monitor purity, value and finish of each product

• High value diamond jewellery production done in- house with global benchmarks and highest quality standards

Wedding Jewellery

Indian weddings are known for their scale and grandeur and are incomplete without jewellery. Wedding jewellery purchases made by Indians are non-discretionary in nature. For generations, TBZ has earned the trust of such families who have been patronising it. Approximately, 65% of the total revenue of the Company is generated from wedding jewellery sales.

Discretionary Purchases

Jewellery is high on customers discretionary spending ladder. Spending on jewellery continues to increase due to discretionary spends by affluent and aspirational consumers.

Affordable Jewellery

Increasing demand for affordable jewellery and fascination for innovative jewellery designs is attracting todays youth.

Manufacturing Capabilities

The Company has a state-of-the-art manufacturing facility at Kandivali in Mumbai spread over 24,000 sq. ft. It has an annual production capacity of 2,00,000 carats of diamond jewellery on a dual-shift basis, enabling it to lower operational costs and enhance margins. The facility is also equipped to refine 4,000 kg of gold and manufacture 4,500 kg of gold jewellery components. Apart from this, a major portion of gold jewellery manufacturing is outsourced to around 150 trusted and loyal vendors, who have been associated with the Company for decades. These vendors are known for their expertise in crafting regional handmade jewellery designs.

Sourcing of Gold and Diamonds

The Company procures diamonds from conflict-free and ethical sources only such as DTC (Diamond Trading Company) and ensures adherence to Responsible Jewellery Council (RJC) guidelines. Gold is obtained in the form of bullion from bullion dealers, banks and through purchase and exchange of old jewellery.

Pleasant Shopping Experience

Besides the aesthetically appealing, brilliant and premium quality jewellery offerings, its large and modern stores are instrumental in enhancing the buying experience of customers. The jewellery is effectively put on display in stores to appeal to the customers senses. Personalised attention is given to each customer as the Company appreciates the value of their time and investment. The Company is steadfast on its commitment to follow a customer-centric business philosophy to generate the highest value for its stakeholders.

Judicious Inventory Management

As an important component in the supply chain, a constant focus is given on efficient inventory management to manage its working capital requirement. The Company has been making concerted efforts to right size the inventory for both gold and diamond segments and promote fresh designs which are new and match the expectations of customers.

Research & Development

The Company puts a strong emphasis on R&D to constantly innovate its offerings and keep up with the changing trends. Its in-house R&D centre gives the Company a competitive edge in terms of design, service and quality in the highly competitive jewellery industry. Developing and constantly leveraging new and advanced technology into manufacturing and refining processes is a differentiating factor for the Company.

OPERATIONAL HIGHLIGHTS

• Added 5 new stores during the year, taking total store count to 42 in 30 cities across 14 states

• Added new stores at Lucknow, Bengaluru, Ludhiana, Pune-Aundh and Noida

• Operational area increased from 1,10,666 sq. ft. to 1,23,219 sq. ft.

• Appointed Bollywood actress Sara Ali Khan as its new brand ambassador to feature in several brand campaigns endorsing "TBZ - The Original" brand across India

• Launched Sitara, an affordable diamond jewellery collection range, with Sara Ali Khan

• Launched Tatva, an affordable gold jewellery collection with Sara Ali Khan

GROWTH STRATEGY

The Company consistently endeavours to expand its retail footprint and attract customers beyond just the metros and Tier I cities. Its current strategy is to increase sales by generating a higher footfall and translating the same into higher wallet share. A key focus is also on augmenting revenue from the fast-growing diamond jewellery segment.

The Companys expansion policy will see a mix of its own stores as well as franchisee stores. The Companys recent venture into North and South India, with the addition of its own stores at Noida, Ludhiana, Lucknow, Bengaluru and Pune, indicates the rising demand for its jewellery brand in these regions.

Strong thrust on sustainable high-margin products

High margin products which constantly deliver better results remain a prime focus area. An increased focus on enhancing margins is being given through cost optimisation and increased productivity.

Inventory Rationalisation

The strategy of optimal use and rationalisation of inventories is adopted to enhance the profitability of the Company through improved working capital.

‘Kalpavruksha Easy Pay Plan

One of the most successful strategies of the Company has been the ‘Kalpavruksha policy for its customers. The policy not only ensures purchases in the form of redemption, but upscales the value of purchases by around 50% to 60% from the base value. Customers can avail the benefit offered and can effectively plan their purchases in advance, getting a better value for money.

MANAGEMENT OUTLOOK

The Indian economy is the worlds fastest-growing major economy. With a stable government, focus will continue to be on sustainable economic expansion through dynamic reform policy measures. Consumption growth will be supported by a mammoth population, rising purchasing power, improved rural spending coupled with strong macro-economic fundamentals of the country. Post GST, the Company is confident about the immense opportunities in organised jewellery retailing. Demand for branded jewellery among aspirational and young population in emerging Tier II and III markets has been steadily increasing, which the Company is focussing on.

Going ahead, demand is likely to improve on the back of rapidly-evolving consumer behaviour and expenditure patterns. The Company aims to capture the growing opportunities by widening retail presence and attracting higher store footfalls, focussing on same-store sales growth, increasing share of studded gold and diamond jewellery in its revenue mix and investing strategically in marketing and branding campaigns.

The Company remains confident that its strong capabilities will enable it to garner a higher market share across all product categories and ranges. Apart from its forte in wedding jewellery, the Company aims to proliferate significantly into the lightweight a_ordable jewellery section. Towards this end, it has been launching exquisite designs and collections to target the countrys youth. The Company plans to strategically open new stores in an asset-light manner in newer markets and also penetrate deeper into the existing markets to ensure a greater pan-India presence. This will facilitate better cost optimisation and enhanced productivity. As newer stores enter the phase of settlement and stability in new markets, they are expected to drive growth, improved margins and profitability in the coming years.

OPERATING REVENUE

The Companys total operating revenue in FY 2019 stood at Rs. 1,76,382.65 lacs as against Rs. 1,75,568.51 lacs in FY 2018, higher by 0.5%.

Rs. in Lacs FY 2019 FY 2018
Net Sales 1,76,358.11 1,75,507.20
Total Income from Operations 1,76,382.65 1,75,568.51
Gross Profit 24,892.68 24,609.98
EBITDA 7,380.03 7,309.87
Depreciation 991.91 849.35
Finance Costs 4,637.20 3,974.34
PBT 2,311.40 3,190.45
Tax 780.82 1,084.97
PAT 1,530.58 2,105.48
Gross Margin 14.11% 14.02%
EBITDA Margin 4.18% 4.16%
Basic Earnings Per Share (EPS) 2.29 3.16
Dividend Per Share (Rs.) 0.75 0.75
Net Worth 49,413.87 48,667.11
Short-Term Borrowings (including working capital loans) 60,542.73 56,856.88
Borrowings 60,544.08 56,864.78
Inventory 1,18,692.91 1,02,180.79
Debtors 2,586.18 2,296.19
Net Block 10,752.55 10,009.07
Cash and Bank Balance 3,971.85 3,742.34

Gross Profit

The Companys Gross Profit increased by 1% from Rs. 24,609.98 lacs in FY 2018 to Rs. 24,892.68 lacs in FY 2019. The Company was able to retain its margins at 14%, the same level as last year despite a challenging environment. The marginal rise was due to better margins for diamond jewellery.

EBITDA

The EBITDA margin of the Company was the same as last year at 4.2%. Overall EBITDA of the Company stood at Rs. 7,380.02 lacs as against Rs. 7,309.87 lacs in the previous year.

Profit After Tax (PAT)

Profit After Tax (PAT) dropped by 27% to Rs. 1,530.58 lacs in FY 2019 compared to Rs. 2,105.48 lacs in FY 2018 primarily on account of increase in finance cost by 16.7% to Rs. 4,637.20 lacs compared to Rs. 3,974.34 lacs in the previous year.

Net Worth

The Companys Net Worth stood at Rs. 49,413.87 lacs as on 31st March, 2019, as against Rs. 48,667.11 lacs as on 31st March, 2018, reflecting a growth of 2%.

Reserves

Total Reserves of the Company grew from Rs. 41,994.05 lacs as on 31st March, 2018 to Rs. 42,740.81 lacs as on 31st March, 2019.

Borrowings

The Companys Total Debt stood at Rs. 60,550.16 lacs as on 31st March, 2019, as against Rs. 56,854.91 lacs as on 31st March, 2018. Net Debt/Equity Ratio increased from 1.15 times as at 31st March, 2018 to 1.21 times as at 31st March, 2019.

Significant Changes in Key Financial Ratios

Key Financial Ratios Formula used FY 2018-19 FY 2017-18 Reason
Debtors Turnover Ratio Sale of products/Trade receivables 136 153 No Significant change
Inventory Turnover Ratio COGS/Inventory 2.55 2.95 No Significant change
Interest Coverage Ratio EBIT/Finance Cost 1.50 1.80 No Significant change
Current Ratio Current Assets/Current Liabilities 1.40 1.51 No Significant change
Debt Equity Ratio Net Debt/Total Equity 1.21 1.15 No Significant change
Return on Net Worth (%) PAT/Net Worth 3.10% 4.33% Lower RONW attributed to
lower PAT for the current year
Operating Profit Margin (%) (EBIT) EBIT/Revenue from operations 3.94% 4.08% No Significant change
Net Profit Margin (%) (PBT) PAT/Revenue from operations 0.87% 1.20% Lower PAT margin during
current year due to higher
borrowing cost

RISKS AND CONCERNS

Economic Risk

Volatile economic environment and firming of interest rates may affect consumer sentiment and impact the jewellery industry.

Mitigation

The Indian economy is on a high growth trajectory, with several favourable macroeconomic indicators supporting the growth momentum. The jewellery industry is expected to benefit from the recent developments in the economy. Higher income in the hands of farmers and rural population, driven by normal monsoon forecast, will translate into robust spending and consumption, thus fuelling the demand for jewellery.

Margin Risk

Frequent regulatory changes and fluctuations in gold and commodity prices may pose a challenge to the Companys margins.

Mitigation

The Company strongly focusses on optimising overhead expenses and resources, procuring inventory through higher utilisation of gold loan schemes and maintaining relationships with suppliers for bulk purchases. This robust strategy enables the Company to mitigate the risk of margin pressure due to a volatile market.

Competition Risk

Presence of unorganised players and expansion of regional players results in intense competition in the jewellery industry.

Mitigation

Over the years, the Company has emerged as a leading and trusted jewellery brand in India. Its distinctive product portfolio, rich legacy, customer-centric philosophy and quality consciousness have enabled it to build a strong brand equity in the industry. Besides, sustained investments in marketing and branding activities has been augmenting its brand visibility, attracting the uninitiated customers, offering a highly rewarding experience to the first-time TBZ customers, and deepening the connect with existing customers.

Raw Material Risk

Instances, if any, of difficulty to procure raw materials at lower rates may have an impact on the Companys production capability and profitability.

Mitigation

The Companys highly skilled professional team, along with a well-structured central procurement policy, ensures judicious inventory management. Establishing long-term relationships with leading suppliers and leveraging the gold loan scheme facilitates the Company to source inventory at competitive rates.

HUMAN RESOURCES

The ability of the Company to create innovative and exemplary designs is credited to the creative excellence and technical proficiency of its diverse workforce. Its rich talent pool enables the Company to cater to the evolving customer aspirations and maintain a competitive edge in the marketplace.

Development of human resources is crucial for the Company as it is engaged in the business of jewellery retailing, which includes dealing with diverse and affluent customers visiting its stores with an intent to make high-end and lavish jewellery purchases. Consequently, the employees, particularly the retail teams, are constantly trained and upskilled to engage with customers in a professional and cordial manner so as to enrich the experience of every customer visiting their stores.

Human capital is the most important asset of the Company. Its HR strategy is aimed towards fostering a safe, friendly and conducive work environment, and thereby encouraging personal and professional growth of its workforce. Regular learning and development programmes, trainings and workshops are conducted by the Company to boost employee morale and enhance their skills and capabilities. A steadfast focus is provided on creating opportunities for employees to learn, innovate and provide them job security and stability. As on 31st March, 2019, the Company had a total of 1,264 employees.

INTERNAL CONTROLS

The Company has adequate internal control systems in place commensurate with the size, nature and complexity of its business operations. This internal control framework ensures efficient utilisation of resources, proper and accurate recording of transactions, compliance with the applicable laws and statutes and safeguarding of assets and interests of the Company. The Company has appointed a reputed audit firm to conduct its internal audit. The audit firm periodically reviews the internal controls, monitors operations and suggests measures for strengthening the internal controls. Any observations or deviations are reported to the Management and Audit Committee for their necessary action. Moreover, the Company continuously invests in best-in-class information technology system in order to maintain data integrity and confidentiality.

Cautionary Statement

This document contains forward-looking statements about expected future events, financial and operating results of the Company. These forward-looking statements are based on assumptions and the Company does not guarantee the fulfilment of the same. These statements may be subject to risks and uncertainties. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of TBZ Limiteds Annual Report 2018-19.