Ladies and gentlemen, good day and welcome to Q1 FY 2025 earnings conference call of Kalyan Jewellers India Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I hand the conference over to Mr. Rahul Agarwal. Thank you, and over to you, sir.
Thank you, Del. Good evening, everyone, and thank you for joining us on Kalyan Jewellers India Limited Q1 FY 2025 earnings conference call. On the call, we have with us Mr. Ramesh Kalyanaraman, Executive Director, Mr. Sanjay Raghuraman, CEO, Mr. V. Swaminathan, CFO, Mr. Sanjay Raghuraman, Head of Strategy and Corporate Affairs, and Mr. Abraham George, Head of Investor Relations and Treasury. I hope everyone got an opportunity to go through our financial results and investor presentation uploaded on the company's website and stock exchanges. We will begin the call with opening remarks from management, following which we'll open the forum for question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Mr.
Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers India Limited, to give his opening remarks. Thank you, and over to you, sir.
Thank you. Good afternoon, and let me welcome everyone to the call. There could be some disruption in the phone because Kerala is raining heavily, and you know about the Kerala flood. The quarter was a fantastic one, and we recorded consolidated revenue growth of around 27%, and standalone India revenue grew by around 29%. The SSGs were also very strong. We witnessed robust operating performance across all our markets in India and the Middle East, despite extreme volatility in gold prices and a strong base quarter. We continue to see encouraging trends around the share of new customers, which was in excess of 35% for the recently concluded quarter. Our share of revenue from the Non-South market is now at 49%, up from 44% in the prior year.
Gross margins at the showroom level improved marginally, driven largely by a higher share of studded jewelry in both South and Non-South markets. Advertisement spends during the recently concluded quarter have been higher to mitigate the impact of volatile gold prices and to drive market share in certain new markets. Our digital-first jewelry platform, Candere, recorded robust revenue growth in the recently concluded quarter. We have signed documentation to increase our stake in the business and convert Candere to a wholly-owned subsidiary of Kalyan Jewellers India Limited. Candere has added 13 showrooms in the financial year so far, out of the targeted 50 showrooms during the year. We are putting together a brand strategy for Candere, centered around communication and positioning, and expect to launch a nationwide campaign before the upcoming festive season. Let me give you an update about our international markets.
The Middle East recorded healthy SSGs during the recently concluded quarter. We plan to convert 4 showrooms in the region to franchised ones during the ongoing quarter and utilize the proceeds to reduce the debt in the region. The first showroom in the U.S. is expected to be launched before the Diwali. Talking about the ongoing quarter, we began the quarter on a very strong note, and the recent reduction in customs duty on gold has provided further fillip to demand on the ground. We are updated about the upcoming festive season across the country and are gearing up for the launch of such collections and campaigns. During the month of July, we opened 5 Kalyan and 2 Candere showrooms and are on track to launch another 35 Kalyan and 20 Candere showrooms before the Diwali. Now, I would invite Sanjay to give you a financial update.
Over to you, Sanjay.
Thank you, Ramesh. Hi, everybody, and good afternoon. I'm really happy to be talking to you all after a great start of 14-months here. In this just concluded quarter, the company reported a consolidated revenue of INR 5,535 crores, a 27% growth over the corresponding quarter in the previous year. Consolidated EBITDA came in at INR 376 crores versus INR 323 crores in the corresponding quarter of the previous year, and consolidated PAT, Profit After Tax, came in at INR 178 crores versus INR 144 crores in the corresponding quarter of the previous year. Moving now to talk of the breakup of the numbers between India and the Middle East. For the just concluded Q1, our India revenue was INR 4,687 crores versus INR 3,641 crores when compared to the corresponding quarter of the previous year.
India Q1 EBITDA came in at INR 315 crores versus INR 269 crores when compared to the corresponding quarter of the previous year. India Q1 PAT came in at INR 165 crores compared to a PAT of INR 129 crores in the corresponding quarter of the previous year. Moving on to talk about the Middle East business. Revenue in the Middle East for the just concluded quarter came in at about INR 811 crores versus INR 700 crores when compared to the corresponding quarter of the previous year. And EBITDA in the Middle East came in at about INR 64 crores versus INR 55 crores for the same period of the previous year. The Middle East business reported a profit of INR 19 crores for the quarter compared to INR 17 crores in the corresponding quarter of the previous year.
Lastly, talking about our e-commerce business, Candere, we posted a revenue of INR 49 crores in the quarter versus INR 34 crores in the corresponding quarter of the previous year. This quarter recorded a loss of INR 2.2 crores, which is the same as what it was for the corresponding quarter of the previous year. With this, I'm done with the summary of the financials. We now open the floor for questions. Thank you.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Gaurav Jogani from Axis Capital. Please go ahead.
Thank you for the opportunity, sir, and congrats on a good set of numbers. Sir, my first question is actually a clarification. You said you opened 5 Kalyan stores in the month of July, and you expect to open 35 more showrooms before the quarter end. Did I hear that right?
No, before Diwali I meant.
35 before Diwali. Okay. And Candere, how many have you opened in July, and how many more are expected going ahead?
Candere, July we opened as we speak, 2, and we will open 20 more before Diwali.
Okay, 20 more before Diwali. Sure. And sir, with regards to the customs duty cut, I had actually two questions. One, how much of this has given you an advantage in terms of the footfalls? So for example, post 23rd of July, how much of an increase have you seen in footfalls in your showrooms? And second question related to customs duty is, what is the impact that you will see on your own inventory that is on gold only because of this customs duty cut?
Yeah, so first coming to footfalls, July itself started off very well. The first two, two and a half weeks was good. SSGs were very similar to what was in Q1. But post the duty cut, again, when the price comes down by 70%, customers who were waiting would have come in immediately. So the last 10 days have been very good, especially weekends. And it is stronger than Q1 in terms of SSG.
Sir, on the impact of the inventory because of this customs duty cut?
Approximately it will be in the range of INR 120 crores-INR 130 crores.
than 20% overall the impact. Okay.
Overall impact, yeah. It should come out, meaning in Q2 + Q3.
Q2 plus. But sir, this would be at your level impact, right? I mean, even these stocks that you like at the franchisee level also, I mean, that impact will not be accounted in this time, right?
No, no, that does not come because we have already sold it now and the price changed. So that will be only for them. And they are basically hedging their cash flow. So it's not an impact for us.
Got it, sir. Sir, and my second question also is with regards to, if you look at the revenue per showroom in the India business, I mean, that revenue per showroom has actually gone down to around, for the quarter I've seen, is around INR 22-odd crores versus INR 23.8-odd crores in the base quarter. Now, I understand that because we are opening a lot more franchisee-led showrooms, and that will be a smaller size that will be impacting this. But any other reason that you can help us to quantify this, and how should we look at the revenue first for going ahead? If anything, you can help us out with that.
Yeah, you yourself told the answer. Our own showrooms are at INR 90 crore+ when it comes to per showroom revenue. But when you come to franchisee new stores, the revenue will be only in the range of INR 50 crores. So the more number of new showrooms you open, the revenue per showroom will come down. It will keep coming down.
Sure. So it is expected to impact at least for this year, I think, because in the next year onwards, you will have a decent size of franchise stores already in the base, and that should not impact going ahead. Is that a right understanding?
So once you have a good number of owned showrooms where your revenue per showroom is INR 90 crore, all the additional new showrooms are coming at INR 50 crore. So since that owned store level is at 90, the more number of showrooms you open, the per showroom revenue will keep coming down.
Got it. Got it.
Even if you add a number of showrooms, that owned store is at 90, 100, no. So that will be still there.
Sure, sure, sure, sure. Sir, my third and the last question is with regards to the interest cost. So if you look at the interest cost, both at the standalone and the consolidated level, it seems to have gone up marginally. Ideally, because your debt is coming down, we were expecting this number to come down. So any reason for this increase?
Yes, sir. V. Swaminathan.
Hello. So with regard to interest cost, the number increased lease interest, which definitely will go up as we increase the number of showrooms. If you remove lease interest, you can say Q1, it has come down by INR 3-4 crores, and year-on-year, it has come down by INR 11 crores.
You mean to say the interest on the debt, basically, largely because of the.
The number of showrooms and the impact in Ind AS 116 . So, notional interest, it is not bank loan interest.
Sir, because you are opening stores on franchise, but because the region, that is what is coming here, right? Is that a right understanding?
Yeah. So owned showrooms, I mean, franchisee showrooms also coming under Ind AS 116 , and there will be some setup because of franchisee owning the shop, but net to net, there will be increase in Ind AS 116 impact.
Sure. And sir, the last question actually is with regards to the newer showrooms that you are going to open on franchise basis. I think in those showrooms, the CapEx will also be incurred by the franchise partner only. Also, is there any change in the terms of the margin or anything that will be accruing to you because of this new arrangement?
Yeah. So out of the 80 showrooms which we are opening, 80 showrooms which we are opening for the financial year, the first 30-35 showrooms will be in our old model wherein the CapEx will be put by Kalyan. The rest of the showrooms, the franchisee partners will put the CapEx split out also. So that is the plan. And margin, as I indicated in the past, there will be an increment of, say, 0.25% on the gross level.
On the gross level?
Or gross directly comes to the net also. So 0.25% margin growth will be there.
Okay. Okay. Okay. Got it. Got it. That's all from me, sir. Thank you.
Yeah.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Manoj Menon from ICICI Securities. Please go ahead.
Hi, management team. Great performance, must say, in whichever context we look at it. Just one thing just wanted to understand from you and team is when I look at your same-store growth performance, which has been absolutely top of the street versus the other listed peers. So if you could just elaborate a bit about, and in fact, let's say the gap has accelerated, right, which is actually a very good sign. Would you just tell us about, let's say, what has been driving this, what are the interventions you would have done, let's say, versus competition in terms of the faster share gain for you versus other incumbents? Thank you.
Sure. So, SSG, as you are aware, we have been expanding our store network across the country for the last 2, 3 years, okay? And usually, year 2 and 3 have higher SSGs, and therefore, with every passing year, we should see an uptick on our SSG. Secondly, in SSG of our existing stores, the reason according to us is very simple: more number of showrooms, more expansion, thereby meaning more visibility for Kalyan, and thereby helping generate more footfalls on the website.
Understood. Network effect. Understood. Understood.
Yeah. And one more thing. While the above reasons help us to have a healthy SSG, when you compare with the existing players and us, there will be naturally a bigger difference since we would have gained market share from the existing players. So just to highlight our SSG in south, are marginally better than north.
Wow. Understood. Is it anything to do with any changes in assortment or marketing strategy, anything which you have done, which is, I mean, which is something which is already there in the market, if you could talk about?
So we were very active, especially because the prices were very volatile. So the campaigns were very active. And now the digital marketing also helps us to keep the noise level high in market where we require. And we can also check whether the competition is active in that region in terms of marketing. So we increase our marketing spend in that so-called store region. So all put together, we have been acting. Our team also has been doing a good job. So all put together, the numbers are good.
Thank you. Thank you.
And again, south in certain states, I just wanted to tell you that we are experiencing higher than usual SSGs. And that I have told you before also, majorly, we think that there has been a strategic misstep taken by a few players in south, especially in Tamil Nadu, where we actually are getting higher than usual SSGs.
Interesting. Interesting. Thank you.
Thank you. The next question is from the line of Darshan Jhaveri from Crown Capital. Please go ahead.
Hi, sir. Thank you so much for taking my question. Congratulations on such a great set of results, sir. So, sir, I just wanted to know, we've been growing at such a great rate right now, both on SSG and new front, consolidated, we're doing 27%-30% growth. So will we be able to sustain this for a longer period of time? What kind of revenue guidance would we have maybe FY 2025, 2026?
Yeah, so I will not be able to give a guidance, but what we will say is that, you know, the store expansion plan which we have in place. SSGs for year two, year three are usually higher than usual. And again, July, if you see, the SSGs are even stronger than in Q1, okay? So all put together, I think this will be the range where we could target for our SSG, for our revenue growth.
Oh, thank you a lot, sir. Sir, I just wanted to also know, now as we maybe add more stores or we are growing, so the margins, like PBT margins, could we reach the 5% PBT margin that we were maybe trying?
Yeah, ideally, we should. But Q1 also, we missed because, as I mentioned now, the marketing spend was a bit on a higher note than it should have been, especially because of the high gold prices and competition by the local players. Regional players were very high in certain markets. So we did not want to lose market share. So again, the operating leverage we thought would come from marketing did not come. And that is why the PBT did not grow more than our revenue. But Q2, I think we should because the revenue growth which we see now on ground, I think possibly it should happen. So the competition, if competition reacts, then we have to react in terms of marketing. That's why we are not able to do it. But I think on a yearly basis, the objective will be achieved.
In India, we are already at 4.8% PBT.
Yes, to your view.
Yeah. So for the full year, maybe we can see the PBT target.
Yeah. That's great to hear, sir. I just wanted to know on a more broad base, just maybe questions have already been repeated in the past. Do we see some competition from fast jewelry or how now then the lab-grown diamonds or something? Will that overall impact in a longer term or how are we just seeing it in these two or two different markets? Just some color on that.
So, lab-grown, we have not seen any demand so far in the store level. There is literally zero demand at our store level. Customer inquiries are very minimalistic. We are surely looking into what is happening on the ground. Once there is demand, we supply. So that we are iterative. If there is demand, then we should supply. But why we are not promoting lab-grown diamonds is that the price has not been stabilized. So if the price crashes for the lab-grown diamonds, customers are buying those diamonds because they trust Kalyan as a brand. So if the price goes down, they will feel very offended. So that's why we are not encouraging lab diamonds, but we are closely watching.
Oh, okay. Okay. Fair enough, sir. Just my last question, sir. I just want to clarify the impact of the duty cut you're saying, it would be around INR 120-INR 130 crores. That would be the impact on profitability.
Yeah, that would be the range. That would be the range.
Yeah. Okay. Okay. Fair enough, sir. Yeah. I think that answers all my questions. So all the best. Thank you so much, sir.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Vikrant Kashyap from Asian Market Securities. Please go ahead.
Good evening, sir. Congrats on a very good set of numbers. First question is on the performance of mature businesses. Your revenue growth has been 16%, but EBITDA growth has been 11%.
You have already given it, sir. I think it is something I missed because I told you that there's a disturbance in the line because of the flood.
Okay. Okay. Now I will repeat the question.
Yeah, yeah. I will repeat again. So my question is pertaining to the mid-year performance. Our revenue growth has been very strong at 16%, SSG at 10%, but EBITDA growth is 11%. You have elevated 2 points towards that FOCO showroom expansion has impacted some of the gross margin and also in pricing with finance cost. Sir, my question is, how are you going to address this? Because if you continue to grow at a higher level, but bottom line is not expanding related to top line, it will going to impact your overall performance. So what are the steps you are taking to improve the bottom line in the business?
Yeah. So finance cost will be taken care because we told you when we convert stores, that money is going to reduce our debt. Okay. And again, FOCO, when you do FOCO showroom, the margins will come down. And surely that will have an impact on the gross margin, okay? And interest, if you look at, actually, the interest rates started going up last year, okay? So next year, that will be the base, right? So then again, we will not have this kind of issue is what we feel. So interest rates have been going up for the past year, one year in that region. And we are also beginning to repay loans now because of conversion. So all put together, interest part will be taken care. But the other area where FOCO showrooms will surely reduce our margin. No, we cannot have the own store margin.
That should be the way we should look at it.
Okay. So have you been able to reduce any debt in quarter one in Middle East and India?
So, India, we have not reduced, but the cash balance has been increased by around INR 25 crores. But we have not reduced any debt in Q1 in India and Middle East because in the Middle East, we have not converted any showroom in Q1.
Yeah. Okay. And your presentation also mentioned that you have converted three showrooms in South markets. So could you please discuss the model and how you are dealing with franchising? Is it similar to Non-South, or it is different from Non-South markets? What are the terms and conditions?
Yeah. So I told you, in south itself, each state behaves differently. So we are still doing a pilot. So very tough for us to give clarity on the numbers and the working. But we know that the margins are lesser in south. Sovereigns are a bit more than Non-South. And the expectation for the brand is also lesser than Non-South in terms of margin. Franchisee partner also expects lesser than a Non-South. So that is the model where we are looking at. And maybe in a couple of quarters, we can give you an idea of the model.
Okay. One question on competitive intensity. So in the recent, the last week even, one of the big players has given a signal that they are entering into a jewelry retailing business. And they have given a guidance of investing INR 5,000 crore. And most of the showrooms that they're targeting in the Non-South markets, where you have been also expanding your showroom base. So given this increasing competitive intensity, how do you place Kalyan going ahead?
The first thing is that even now we are talking about a 35%-40% of our vendor segment, right? So there is an easy vacuum or the easy space for at least three or four more players in the sector. That is the first thing which we have to understand. Second thing is that if a good player comes, it is good for all organized players, and market is also big enough. And if you look at to comment on one particular brand, it's too early to comment because each brand will have their own strategy. And the strategy has not been revealed yet because it's too early for us to understand the strategy of the brand which launched recently. But Kalyan, you know, it's a very unique kind of strategy which we have, wherein it's a hyperlocal brand.
Each region, we behave in such a way that it's a part of that region. It takes time even for a new brand to come and do the same. It takes a good number of years to do the same if they intend to replicate. We don't see any immediate competition coming in. Of course, there will be new stores of the brands coming here to us. They will also be catering a different segment of customers.
Okay. Great. I have one last question related to recent increased footfall in post-duty cut. So sir, could you elaborate on this? Are these pre-wedding buying because of the price cuts, or do you see that it is only daily wear products have been selling at a much higher pace?
Both are there. Both are there. But again, one thing I will tell you, the demand increase which we see over the past 10 days is not going to stay very long. So it might end up any time as we speak because people would have been waiting for many reasons because they would have thought that the gold prices were high according to their estimates. Suddenly, when 78% came down, people came and bought. It can be a wedding purchase again. They would have preponed their purchase. A lot of occasional purchases which was pending because of the high gold prices would have come back immediately. So both are there. And we also believe that it cannot last too long. It can be maybe one week, 10 days, or 15 days. That is what we also think will be the case.
Okay. Great. Thank you for answering my question. This is just a flood.
Yeah. Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Ashish Kanodia from Citi. Please go ahead.
Yeah. Hi, team. Congrats on a good set of numbers. The first question was on the operating leverage. So I understand that ad spend was higher because of volatility in gold price. But if I just look at the employee cost and other expenses, I think that has also kind of increased on a YY basis. So is it more to do with the fact that some of the expenses have been kind of front-loaded because we plan to open 35 stores over the next, say, two months or so? And maybe in the second half, we will see a much higher operating leverage with the gold price cost and other expenses, right?
Yeah. That's what we are also that's what I told you before because we are employee cost, we are, of course, adding a lot of employees for showrooms which have to come in the Q2 because we want to add as many showrooms possible before the festive Diwali. So there are competitive expenses. And advertisement, it is related to the local competition activity about, I mean, their noise level all put together. So it can vary. Wherein in Q2, as we speak, we think that this is going to come out because of the revenue growth which we have. And expenses about employees, surely there are some front-ended expenses. Because ad spend, very, very simple is that our expenses are in the range of 20%-30%, but our ad spend increase are in the range of 20%. So that is the gap which we see mainly.
Sure. Sure. And the second question is on the My Kalyan front. So has there been any change in strategy? Because when I look at the number of employees under My Kalyan, that has declined for the first time in the last few quarters. So has there been any change in that?
No. So what will happen usually, My Kalyan also, we keep a lot of front-ended staff because we keep on growing that My Kalyan network, okay? But now it is the franchisee's call whether they need a My Kalyan or local marketing. So we give them two options. Whether they want local marketing to be done in that region or they want a My Kalyan infrastructure. So as we speak now, people have started coming back because it's all one year, one and a half year showroom, almost a year done. So now they are enough of local marketing, and they want us to open My Kalyan. So now you should ideally see ramp up of My Kalyan and employees also.
Sure. Sure. And lastly, on the procurement center, in addition, you have added two new procurement centers. So where are these located? And maybe if you can also just help us understand from a procurement center perspective, what is the kind of CapEx which was done for these two centers?
Yeah. So CapEx will be very minimal. So it's not about CapEx. It's more about networking of local artisans and what we call vendor ecosystem, more than a CapEx. So majorly, the new offices were started in regions where we expanded heavily, like Bihar and UP.
Sure. Sure. Okay. That's all from my side. Thank you, and all the best to all future.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Karan Mehra from Mehta Investments. Please go ahead.
Hello, sir. Thank you for the opportunity. A couple of questions. Sir, what is the update on Candere expansion? And how many store openings can you expect before Diwali?
Candere, this year, we opened 11 Q1, 2 in July. We should open 20 more before Diwali.
50 was our target for the year.
Sorry?
50 is the target for the year.
Understood. Sir, the Non-South share in overall revenue has increased to 49%, whereas the credit share has inched up to 30%. Where do you see the credit mix going ahead given that now even consumer behavior in the southern market is increasing in credit jewelry?
I think this is settling down in this level for some time because the expansion now, the 80 showrooms which we are opening in the financial year, are predominantly in Non-South, tier 2, tier 3 markets where credit ratio cannot be like tier 1 or metro. Major showroom network expansion is happening in that area. I think mid- to late-20s credit ratio will be the ideal number for maybe the next couple of years. Next couple of quarters, sorry.
Understood. Sir, that answers my question. Thank you, and all the very best.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Jainam Joshi from Kriis Portfolio. Please go ahead.
Yeah. My questions have been answered. Thank you so much, sir.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead.
Thank you for the opportunity and congrats on a good set of performance. The first question is really on the margins, which seems to have been elusive. I mean, looking at the company for the last two years, we seem to be executing quite well in terms of store expansions and revenue growth and clearly delivering higher than expected there. But margin expansion just has been completely elusive. And I find it surprising your comment that while growing at 30% growth and 12% SSG, I mean, which is quite healthy, you're still talking about high competitive intensity, kind of quite contradictory that with such high growth rates, we have to invest so high. So can you talk about this a bit more? I mean, we don't expect with lower revenue growth rates that you would not have to invest in business.
It's only during a high revenue growth that you expect a margin expansion.
Yeah. No, you are right. I mean, somewhere we have missed out on the operating leverage for advertisements. And that's why I told you that we want Q1 to do a summary. Regarding competition, I will tell you where in new markets where we assume that we will not spend too much because the brand is already aware and the location is the only thing which has to be communicated. When you see the local players, regional players, or the micro market players there becoming extremely active because of our showroom launch, then we will have to increase the noise level there. Otherwise, we will lose our market share. Existing local players, they increase their activity around our launch time.
So that is where we also put more money so that we don't end up losing the market share or we don't end up taking out lesser from the competition.
Okay. So how do you see this play out on next? So I mean, to that extent, you have to keep investing in the business to just continue the revenue growth momentum, which is a great strategy. But I think, is that the thought process that let's keep margins stable and grow revenue growth at a healthy rate?
I think we should take the decision after a couple of quarters because with the time, we should be able to optimize this, especially when it comes to, as we speak, Q2, which we see it's going to happen. And maybe a couple of quarters, we will decide.
Okay. Secondly, I mean, of this customs requirement.
If you ask me, I am still confident of margin expansion for the financial year. That's why I'm asking for a 2-quarter wait to decide whether we should forecast number that.
Yeah. So just showing what your strategy is. I mean, either strategy, I mean, it's long-term story. If you're deciding on market share, that's your call. But it would be good to just know as to how you think about things. But secondly, on terms of customs duty cut, I mean, given the kind of competition you face, do you think this gives you an edge now, therefore going ahead, that where your ability to compete gets a lot higher?
Yeah. Two ways we think that customs duty reduction is going to help us. First thing is that this will push the unorganized players to buy with invoice . If they buy with invoice , then they will have to sell with invoice . That is one advantage. Second is that if you look at the last two, three years, the unorganized segment, because they do a cash flow hedge usually, okay, they don't reduce their volume inventory even if the price goes up. But because we are not a cash flow hedge, we are a P&L hedge company, we will have to decrease the volume of inventory, not exactly by the way of gold price increase, which gold price increase is, say, 15%. We would at least bring down the inventory by volume by around 10%, right? So this has been the case over the last two, three years.
But now, if you see, we are on the other side, wherein they will maintain the same volume at the store. We will be able to increase the volume at the store, meaning inventory level by volume can be increased without further investment, which we think that is going to help to gain more market share for unorganized players. So it's a two-way help, technically.
So actually, the question so that's interesting to know. The question also was to try to see if the people you are competing with are actually having that Customs Duty arbitrage, which was allowing them to be profitable, etc., and now that arbitrage goes away from them.
So because of this customs duty, high customs duty, it is always an incentive to do it without invoice and buying without invoice and stuff for unorganized players, right? That can be an incentive for the customer also because they can tell the customer that the price can be lesser or the GST will not be paid and stuff. But now things are becoming more transparent because the margins are lesser. No. Hope you understood.
Yeah. So as they get to do, I mean, if the customer has to invoice, then he doesn't necessarily need to now deal with them. I mean, he might as well deal with a branded player.
Yeah. Correct. That's right.
Understood. Great. Thank you and all the best.
Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.
Yeah. Hi, Ramesh. Good evening. I joined the call late. Maybe if you can share your thoughts on the thought process, do we stick to the store guidance and can see that now we are following.
Yeah. So I'm not able to hear you, but I don't know whether my line hasn't changed.
Sorry, Mr. Pardeshi, I request you to come a bit close to your handset and ask the question.
What I was asking on the Candere, if you have already covered. I just joined the call.
Yeah. Candere, you can give it. Candere, number of showrooms, right?
Yeah. What is the throughput you are getting now? What is the run rate? What's happening now?
So Candere was trying to tell you about the store expansion wherein we opened 11 store rooms in Q1 and 2 in July. We will be opening 20 more before Diwali. And now, Candere, the throughput of the store level is not great because we have not started any campaigning around Candere. We are waiting for Candere to have a minimal number of stores so that we can start our campaigns on an action level. So that is what we think we are going to do for meaning that's what our plan is for Candere.
Okay. Thank you and all the best.
Thank you. A reminder to all the participants that you may press star and one to ask a question. A reminder to all the participants that you may press star and one to ask a question. Ladies and gentlemen, as there are no further questions, we have reached the end of our question and answer session. I would now like to hand the conference over to Mr. Ramesh Kalyanaraman for closing comments.
Thank you very much, everyone, and hope to see you again soon. Thank you.
Thank you. On behalf of Kalyan Jewellers India Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.