yeah.. that point is correct..
My concern here is that other companies are showing better growth in the quarter devoid of festive seasons…
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That’s an incorrect comparison as the product-line as well as target market (with some overlap) is different. This segment follows the discretionary spending patterns rather than the customary and consistent gold buying patterns in our country.
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Tu put things in perspective, the volume sales have rather decreased for these companies YoY, most the gold companies sales is derived from commodity price increase, which are not sustainable
PNGS Gargi:
• Festive seasons shifted to Q3 as July to September this year there was not a single day festive season. Whereas in the corresponding quarter previous year there was 9 days of Navratri..
• There is strategic shift towards EBOs. Almost 75 percent of sales currently derived from SIS outlets within PN Gadgil. The very same model which enabled Gargi to grow faster now becoming hindrance. PN Gadgil stores restricts Gargi from selling higher value premium products/ higher caratage gold or diamond jewellery because of conflict of interest with the host PN Gadgil Ltd as host also sells such premium products.
• Gargi has therefore, now shifted its focus towards EBOs, providing greater control over its product mix. Gargi is now working to build its own identity and strengthen its presence outside the state. More EBO will enable Gargi to launch more premium products.
• This strategic shift, inventory realignment and expenditure on new stores have impacted the performance over the past two to three quarters. New stores initially incur costs before contributing meaningfully to profits.