Tuesday, April 24, 2012

>Tribhovandas Bhimji Zaveri: IPO FACTSHEET

Objects of the issue
The company is mobilising funds to establish new showrooms (with Rs19.2 crore), finance incremental working capital (with Rs160.5 crore) and for other general corporate purposes.

Company background
TBZ is a well-known and trusted jewellery retailer in India with 14 showrooms in nine cities across five states, with an aggregate carpet area of approximately 48,818 square feet (sq ft). The company primarily sells gold jewellery and diamond-studded jewellery. It also sells other products, including platinum jewellery, jadau jewellery and silverware. The design and manufacture of its products including silverware is done either in-house or by third parties. The company has its flagship showroom in Zaveri Bazaar, Mumbai, which has been in existence since 1864. Since 2001 it has opened 13 showrooms, including the seven showrooms opened between August 2007 and October 2008.

Investment positives
A play on the growing organised jewellery retailing in India: TBZ is a play on the growing organised jewellery retailing market in India. With volume of about 567 tonne, India is the largest gold jewellery market in the world with a 29% global demand for CY2011. The country’s investment-related gold demand in CY2011 was 366 tonne, which was 25% of the global demand at that time. According to the Centre for Monitoring Indian Economy (CMIE) estimates, the overall gold demand, including the demand for jewellery and investment, is likely to expand at 29% to 1,200 tonne in FY2021. With the exception of 2009, India has registered a strong value growth in the last decade despite an over 450% surge in the price of gold.

Strong brand equity and trust enjoyed in western India: TBZ has very strong presence in western India with its base in Mumbai, Maharashtra (it started its first showroom at Zaveri Bazaar, Mumbai, in 1864). The company has many firsts to its credit, like the introduction of 100% pre-hallmarking system and providing the 100% gold buy-back facility to customers. Around more than 50% of its stores (eight stores) are present in the western region, predominantly Mumbai where it has five stores. Owing to its strong heritage, the company enjoys strong brand equity, and trust and brand recall amongst its customers.

Balanced business model with sufficient back-end integration and complete control of front-end: TBZ’s business model is balanced on the back end as well as the front end. The company sells diamond as well as gold jewellery. In case of gold jewellery, it has over the years built strong relationships and repute with around 150 wholesalers and jewelers. Through them it procures gold on an outright sale basis which provides it economies of scale and reduces the making charges. In the diamond and studded jewellery segments, the company has its own manufacturing facility at Kandivali with capacity of around 1 lakh carat, enabling it to benefit in various ways, like saving on making charges and allowing it to charge a premium on superior designs. At the front end of the system, all its 14 retail showrooms are run and managed by the company itself with no franchisee involvement. This, the company believes, helps in maintaining the brand image and the trust of the consumer.

To read report in detail: TBZ