Senco Gold sees huge growth potential in Indian jewellery market

Senco Gold Limited is a pan-India jewellery retail player with a history of more than five decades and has a fourth-generation entrepreneur in the jewellery industry as the Promoter. It is the largest organised jewellery retail player in the eastern region of India based on number of stores and among eastern India based jewellery retailers, it has the widest geographical footprint in non-eastern states. Senco has been consistently in the league of most trusted jewellery brands and has improved its ranking from fourth most trusted jewellery brand by TRA’s Brand Trust Report 2017 to second most trusted jewellery brand by TRA’s Brand Trust Report 2020. Its strategy of operating through multiple channels enables it to allocate capital as required, as it continues to expand geographic presence and work towards an omni channel network. With a catalogue offering more than 122,000 designs for gold jewellery and more than 24,000 designs for diamond jewellery, it offers a large variety of designs of handcrafted jewellery, most of which are designed and manufactured in-house by its designers in close collaboration with skilled local craftsmen (generally termed Karigars) in Kolkata and across the country. Machine made light weight jewellery in gold and diamonds are also manufactured at its manufacturing facility based on designs prepared by its in-house designers and also sourced from third partner manufacturing vendors. Speaking to Bizz Buzz exclusively, Suvankar Sen, Managing Director and CEO, Senco Gold Ltd, delves at length on the Indian gems and jewellery market and SENCO’s growth plans

What would be the overall size of the jewellery market in India?

The Indian gems and jewellery market is roughly Rs 4,70,000 crore in fiscal 2023, which is likely to reach a height of Rs 650,000 crore by 2027. In this, diamond jewellery (referred as stud ratio) consists of 15 per cent of total sales. It is expected that the exports are to increase by Rs 2,00,000 crore, and to further grow to Rs 3,20,000 crore in the next 5-7 years. In this segment, primarily, the wedding jewellery accounts for almost 60 per cent, and non-wedding jewellery accounts for almost 40 per cent.

South India accounts for 40 per cent, North India accounts for 30 per cent, East and West India accounts for 15 per cent each of sales. The major sales happened, during the festive seasons in Akshay Tritiya, Poila Boishak, and Dhanteras. India imports around 1,000 tonnes annually, out of which nearly 60 per cent is used for jewellery industry.

What is the percentage wise breakup of organised and unorganised sector in this overall market?

The organised segment, which currently accounts for 33-38 per cent (FY22) of the overall market, that slated to grow further to 47 per cent by FY26, driven by an increasingly geographical diversification, BIS hallmarking, innovative and large collections of designs, customer loyalty etc.

At what rate this organised sector market is growing?

To our understanding, the market is growing at a rate of 12-15 per cent. As the regulations are becoming stringent in terms of hallmarking, anti-money laundering policy, income tax, GST, the organised market is likely to grow at a much faster rate.

What is Senco Gold Ltd’s current market share (pan India and in eastern India)?

We are the market leader in the East. The market is quite large, consisting of organised and un-organised segments. The proportion of unorganised market is not readily available. However, considering the fact, that out of 1000 tonne of gold, nearly 600 tonne are used for gold jewellery, and 40 per cent of that are from organised sector. Hence considering our sale of about 6 tonne, last year, the market share amongst the organised sector is about 3 per cent.

How many outlets do you have currently? How many of them are company-owned and how many are franchise-owned?

As of March 2023, we have 136 showrooms including 61, that are franchise operated. In the last quarter we have added 7 more stores, taking the total to 143 showrooms that include 62 franchise showrooms.

What is the number (of outlets) you are looking at, over the next two-three years?

We have raised IPO funds primarily for working capital and new store expansion. Thus, considering our past growth rate of around 10-12 showrooms, and based on our increased operating cash flow, as well as the IPO funds, we are likely to see the accelerated expansion.

How many designs do you have at present and how many more would you like to add?

Each and every jewellery that we make, is a piece of art, and the choices of our connoisseurs’ customers varying from region to region. As a pan India jeweller, and as a part of hyper local strategy, we have a large collection of designs. We have currently 1,22,000 gold jewellery designs, 24,000 of diamond jewellery, and we continue to delight our customers to win the market share. We have a skilled in-house design team and moreover our huge karigar base constantly adds to our design portfolio.

Out of all the sub-segments (gold, diamond, silver, precious stones), which is the fastest growing segment?

The fastest growing segment is diamond jewellery which has grown by over 37 per cent YoY, during last year, and over 100 per cent during the earlier five years. We are seeing a higher traction in North and West.

What is the most significant trend you are noticing in the retail jewellery sector?

The enhanced regulatory framework and increased competition, will further propel, movement from unorganised to organised sector, and this boost will for senco gold ltd, as a pan India Jeweller. Since we are present in tier1, 2 and 3 towns, we may be having a fast-mover advantage, to capture this movement from unorganised to organised. With regards to product demand, the future growth will be driven by the youth who are looking for cosmopolitan design, modern designs, the youth of today will also be looking at light-weight jewellery in which we have mastery and expertise. Moreover, with our Bharat Strategy, where we are supplying jewellery and providing jewellery, for the local taste, it will help us to get the markets here.

Any expansion plan into any new geography - within and outside the country?

We continue to remain focussed in the east, where we continue to be the market leader, as well as north which has huge growth potentials. In addition, as part of our Bharat Strategy, we will expand, strategically in west and south too, also focussing on our triple bottom line strategy.

How would you utilise the funds mobilised through IPO?

The IPO fund will be utilised as stated in the prospectus primarily towards working capital, inventory, new showroom roll-out, and other related general corporate purposes.