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TBZ is a well-known and trusted jewellery retailer in India with 14 showrooms
in 10 cities across five states, which have a total carpet area of
approximately 48,818 sq. ft. The company is engaged in retailing of gold
jewellery, diamond-studded jewellery, platinum and jadau jewellery. The
design and manufacture of its products is done either in-house or by third
parties. All of its showrooms, trade under the name of “Tribhovandas Bhimji
Zaveri”. Its flagship showroom in Zaveri Bazar, Mumbai was established in
1864. Since 2001, it has opened several showrooms, including opening seven
showrooms between August 2007 and October 2008. The company is
planning to add 43 new showrooms under the Tribhovandas Bhimji Zaveri
brand in the next three years, which is around three times of its current size.
TBZ has global presence too. It offers jewellery from various parts of the
world such as Italy, Turkey and Thailand. In Fiscal 2011, TBZ’s revenue from
operations stood at Rs. 11,939.3 mn on a consolidated basis, of which 72.51%
was from the sale of gold jewellery, 22.08% was from the sale of diamond –
studded jewellery and 5.41% was from the sale of other products.
At the upper band of the issue price, TBZ is valued at 13x - 9MFY12
Annualized EPS/share of Rs. 10.06/- at upper end of the price band. With due
consideration to factors like a) existence into business of gold since 1864,
well recognized and established brand, b) expertise in the business of
jewellery retailing, c) good demand for gold jewellery in India despite a
significant rise in gold prices by 28% in 2011 on yoy basis, d) diamond
jewellery business forming a part of revenue business which would lead to
improved margins, we believe the stock is priced reasonable. However,
concerns like possible decline in gold prices, higher working capital
requirement, and significant competition from unorganized and organized
players may affect the performance of the company. We recommend
investors to “SUBSCRIBE” the issue for listing gains as it is a proxy for India’s
consumer story
About the company
The Company is a well-known and trusted jewellery retailer in India with 14 showrooms in 10 cities across five states,
which have a total carpet area of approximately 48,818 sq. ft. It primarily sells gold jewellery and diamond-studded
jewellery. It also sells other products, including platinum jewellery and jadau jewellery. The design and manufacture
of its products is done either in-house or by third parties. All of its showrooms trade under the name of “Tribhovandas
Bhimji Zaveri”. The Company’s flagship showroom in Zaveri Bazar, Mumbai was established in 1864. Since 2001, it has
opened several showrooms, including opening seven showrooms between August 2007 and October 2008.
Out of its 14 showrooms, 11 are “large format” high street showrooms (carpet area of 3,000 sq. ft. or more) and three
are “small format” high street showrooms (carpet area of 1,000-3,000 sq. ft.). Four of its showrooms are in Mumbai,
Maharashtra; one is in Thane, Maharashtra; one is in Pune, Maharashtra; two are in Hyderabad, Andhra Pradesh;
one is in Vijayawada, Andhra Pradesh; one is in Ahmedabad, Gujarat; one is in Surat, Gujarat; one is in Rajkot,
Gujarat; one is in Indore, Madhya Pradesh; and one is in Kochi, Kerala. Effective June 1, 2011, the company
surrendered the lease for one showroom to the lessor and on July 27, 2011 the company opened a new showroom
in Rajkot, Gujarat. It closed one small format showroom in Pune on March 31, 2012 and opened a large format
showroom in Pune on April 1, 2012. It plans to open an additional 43 showrooms (25 large format high street
showrooms and 18 small format high street showrooms) by the end of Fiscal 2015, which would give the Company a
total of 57 showrooms (with a total carpet area of approximately 150,000 sq. ft.) in 43 cities across 14 states.
TBZ offers its customers a wide variety of jewellery from across India in order to cater to regional tastes. In addition, it
also offers jewellery from various parts of the world such as Italy, Turkey and Thailand. TBZ also customises jewellery
for individual needs. The company offers jewellery across different price points so as to maximise its potential
customer base. The Company believes that its more than 145-year old track-record signifies consumers’ trust in the
quality and purity of its products. This is enhanced by the fact that it offers a buy-back guarantee on its jewellery,
subject to certain conditions. TBZ began to offer this guarantee in 1931, and it believes that it was the first jewellery
retailer in India to do so.
Manufacturing activities, procurement and facilities
TBZ has its own manufacturing facilities for diamond-studded jewellery. In addition, it outsources the production of
jewellery as well as purchase jewellery from third parties. It procures jewellery from suppliers in different regions
across India, which it believes would help it gain an insight into differing regional preferences. It has a centralised
procurement policy and generally purchase in large volumes in order to stock its 14 showrooms. The Company
believes that by purchasing in large volumes, it is able to purchase inventory at lower prices than its competitors in
the unorganised sector, which enables the Company to sell its products at competitive prices.
The Company manufactures diamond-studded jewellery for sale in its showrooms at a facility in Kandivali, Mumbai,
which has a carpet area of 17,739 sq. ft. It has an annual production capacity (based on one eight-hour shift per
day) of approximately 100,000 cts. of diamond-studded jewellery, 4,000 kgs of gold refining and manufacturing
4,500 kgs of gold jewellery components. This facility was opened in Fiscal 2011. TBZ also has another manufacturing
facility in Kandivali, Mumbai, which has a carpet area of 5,755 sq. ft. Prior to the opening of the new facility, all of its
manufacturing was done at this facility. The company shifted the majority of its production activity to the new
facility during the third quarter of Fiscal 2011. It produced 35,509 cts. of diamond-studded jewellery in Fiscal 2011
and 37,402 cts. of diamond-studded jewellery in the nine months ended December 31, 2011.
Key Positives
Long Operating History and a Strong Brand Name
The Company believes the trade name “Tribhovandas Bhimji Zaveri” is trusted by consumers due to its more than
145-year history and the quality and purity of its products.
Design, Innovation and Product Range
It has a dedicated design team, currently comprising 25 designers, 10 of whom are skilled in computer-aided design
(CAD). All of its designers are focused on developing new products and designs. The design team works to
understand customer requirements through customer interactions, national and international jewellery trade shows
and trend forecasting reports so as to introduce new designs in line with customer expectations. It also offers its
customers a wide variety of jewellery from different regions in India in order to cater to regional tastes. Each
showroom has a portion of its inventory dedicated to local designs and preferences. The Company also offers
jewellery from various parts of the world such as Italy, Turkey and Thailand. In order to widen its customer base and
loyalty, it endeavors to provide individually customized designs and products when it is possible. It generally
introduces eight to 10 new lines of jewellery design every year.
Well-Established Systems and Procedures
The Company has established systems and procedures for staffing, management processes and the
implementation of current and long-term objectives. Its operational processes are set forth in an operating manual.
Efficient Inventory Management
The Company’s inventory is bar-coded and monitored and controlled through Oracle E-Business Suite software. The
Company’s inventory for each showroom is planned at the beginning of each year in amounts determined to
achieve the desired sales and inventory turnover. As part of its inventory management, it also rotates jewellery
between different showrooms in an effort to increase turnover. Some of the products obtained from third parties
that the company is unable to sell are either returned to the vendors or exchanged for other products.
Strong Technology Architecture
The Company has implemented Oracle E-Business Suite software across all showrooms and offices in order to
maintain greater control over business operations. The software allows for connectivity across all its showrooms and
offices and transfers data in real time, allowing its management team to obtain real-time information. Additionally, it
has implemented VMware infrastructure, which is a combination of server, storage and virtual network
technologies. It also has backup support for all systems, and the data is protected by security measures.
Comprehensive Corporate Planning and Budgeting
The Company has a well defined three-year corporate plan as well as an annual budgeting process. The annual
budgeting process is designed to achieve functional and divisional goals and profitability for the year. The
Company starts the budget preparation process by reviewing its past sales performance, competitors’ activities,
customer reactions to prior marketing campaigns and product category performances and estimated demand.
The Company then analyzes the data in order to draw conclusions on its performance, and then it works out its sales
objectives for the next financial year with a focus on same store sales growth by increasing footfalls, increasing
footfall conversion and increasing average ticket size.
Thorough Review Procedures
The Company believes its review process is thorough, with all employees undergoing monthly, quarterly, and semiannual performance reviews. The Company’s business operations are reviewed and audited by both an in-house
audit team and a professionally appointed external team specializing in such audits. The organizational structure is
also being reviewed by a qualified external consulting firm.
Expansion Experience
The Company has substantial experience in expanding operations and managing the launches of new showrooms.
The Company opened seven new showrooms within a 15-month period from August 2007 to October 2008, which
gave it invaluable experience in selecting potential markets, real estate locations, training staff and undertaking the
marketing and advertising required to establish and support its newly launched showrooms. TBZ launched a new
showroom in Rajkot, Gujarat in July 2011 and launched a new large format showroom in Pune, Maharashtra on April
1, 2012. The Company believes that this experience will enable it to achieve its planned expansion of showrooms on
time and within budget.
Owned Manufacturing Facilities
The Company manufactures diamond-studded jewellery for sale in showrooms at a facility in Kandivali, Mumbai,
which has a carpet area of 17,739 sq. ft. It has an annual production capacity (based on one eight-hour shift per
day) of approximately 100,000 cts. of diamond-studded jewellery, 4,000 kgs of gold refining and manufacturing
4,500 kgs of gold jewellery components. This facility was opened in Fiscal 2011. It also has another manufacturing
facility in Kandivali, Mumbai, which has a carpet area of 5,755 sq. ft. Prior to the opening of the new facility, all of its
manufacturing was done at this facility. The Company shifted the majority of its production activity to the new
facility during the third quarter of Fiscal 2011.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
TBZ is a well-known and trusted jewellery retailer in India with 14 showrooms
in 10 cities across five states, which have a total carpet area of
approximately 48,818 sq. ft. The company is engaged in retailing of gold
jewellery, diamond-studded jewellery, platinum and jadau jewellery. The
design and manufacture of its products is done either in-house or by third
parties. All of its showrooms, trade under the name of “Tribhovandas Bhimji
Zaveri”. Its flagship showroom in Zaveri Bazar, Mumbai was established in
1864. Since 2001, it has opened several showrooms, including opening seven
showrooms between August 2007 and October 2008. The company is
planning to add 43 new showrooms under the Tribhovandas Bhimji Zaveri
brand in the next three years, which is around three times of its current size.
TBZ has global presence too. It offers jewellery from various parts of the
world such as Italy, Turkey and Thailand. In Fiscal 2011, TBZ’s revenue from
operations stood at Rs. 11,939.3 mn on a consolidated basis, of which 72.51%
was from the sale of gold jewellery, 22.08% was from the sale of diamond –
studded jewellery and 5.41% was from the sale of other products.
At the upper band of the issue price, TBZ is valued at 13x - 9MFY12
Annualized EPS/share of Rs. 10.06/- at upper end of the price band. With due
consideration to factors like a) existence into business of gold since 1864,
well recognized and established brand, b) expertise in the business of
jewellery retailing, c) good demand for gold jewellery in India despite a
significant rise in gold prices by 28% in 2011 on yoy basis, d) diamond
jewellery business forming a part of revenue business which would lead to
improved margins, we believe the stock is priced reasonable. However,
concerns like possible decline in gold prices, higher working capital
requirement, and significant competition from unorganized and organized
players may affect the performance of the company. We recommend
investors to “SUBSCRIBE” the issue for listing gains as it is a proxy for India’s
consumer story
About the company
The Company is a well-known and trusted jewellery retailer in India with 14 showrooms in 10 cities across five states,
which have a total carpet area of approximately 48,818 sq. ft. It primarily sells gold jewellery and diamond-studded
jewellery. It also sells other products, including platinum jewellery and jadau jewellery. The design and manufacture
of its products is done either in-house or by third parties. All of its showrooms trade under the name of “Tribhovandas
Bhimji Zaveri”. The Company’s flagship showroom in Zaveri Bazar, Mumbai was established in 1864. Since 2001, it has
opened several showrooms, including opening seven showrooms between August 2007 and October 2008.
Out of its 14 showrooms, 11 are “large format” high street showrooms (carpet area of 3,000 sq. ft. or more) and three
are “small format” high street showrooms (carpet area of 1,000-3,000 sq. ft.). Four of its showrooms are in Mumbai,
Maharashtra; one is in Thane, Maharashtra; one is in Pune, Maharashtra; two are in Hyderabad, Andhra Pradesh;
one is in Vijayawada, Andhra Pradesh; one is in Ahmedabad, Gujarat; one is in Surat, Gujarat; one is in Rajkot,
Gujarat; one is in Indore, Madhya Pradesh; and one is in Kochi, Kerala. Effective June 1, 2011, the company
surrendered the lease for one showroom to the lessor and on July 27, 2011 the company opened a new showroom
in Rajkot, Gujarat. It closed one small format showroom in Pune on March 31, 2012 and opened a large format
showroom in Pune on April 1, 2012. It plans to open an additional 43 showrooms (25 large format high street
showrooms and 18 small format high street showrooms) by the end of Fiscal 2015, which would give the Company a
total of 57 showrooms (with a total carpet area of approximately 150,000 sq. ft.) in 43 cities across 14 states.
TBZ offers its customers a wide variety of jewellery from across India in order to cater to regional tastes. In addition, it
also offers jewellery from various parts of the world such as Italy, Turkey and Thailand. TBZ also customises jewellery
for individual needs. The company offers jewellery across different price points so as to maximise its potential
customer base. The Company believes that its more than 145-year old track-record signifies consumers’ trust in the
quality and purity of its products. This is enhanced by the fact that it offers a buy-back guarantee on its jewellery,
subject to certain conditions. TBZ began to offer this guarantee in 1931, and it believes that it was the first jewellery
retailer in India to do so.
Manufacturing activities, procurement and facilities
TBZ has its own manufacturing facilities for diamond-studded jewellery. In addition, it outsources the production of
jewellery as well as purchase jewellery from third parties. It procures jewellery from suppliers in different regions
across India, which it believes would help it gain an insight into differing regional preferences. It has a centralised
procurement policy and generally purchase in large volumes in order to stock its 14 showrooms. The Company
believes that by purchasing in large volumes, it is able to purchase inventory at lower prices than its competitors in
the unorganised sector, which enables the Company to sell its products at competitive prices.
The Company manufactures diamond-studded jewellery for sale in its showrooms at a facility in Kandivali, Mumbai,
which has a carpet area of 17,739 sq. ft. It has an annual production capacity (based on one eight-hour shift per
day) of approximately 100,000 cts. of diamond-studded jewellery, 4,000 kgs of gold refining and manufacturing
4,500 kgs of gold jewellery components. This facility was opened in Fiscal 2011. TBZ also has another manufacturing
facility in Kandivali, Mumbai, which has a carpet area of 5,755 sq. ft. Prior to the opening of the new facility, all of its
manufacturing was done at this facility. The company shifted the majority of its production activity to the new
facility during the third quarter of Fiscal 2011. It produced 35,509 cts. of diamond-studded jewellery in Fiscal 2011
and 37,402 cts. of diamond-studded jewellery in the nine months ended December 31, 2011.
Key Positives
Long Operating History and a Strong Brand Name
The Company believes the trade name “Tribhovandas Bhimji Zaveri” is trusted by consumers due to its more than
145-year history and the quality and purity of its products.
Design, Innovation and Product Range
It has a dedicated design team, currently comprising 25 designers, 10 of whom are skilled in computer-aided design
(CAD). All of its designers are focused on developing new products and designs. The design team works to
understand customer requirements through customer interactions, national and international jewellery trade shows
and trend forecasting reports so as to introduce new designs in line with customer expectations. It also offers its
customers a wide variety of jewellery from different regions in India in order to cater to regional tastes. Each
showroom has a portion of its inventory dedicated to local designs and preferences. The Company also offers
jewellery from various parts of the world such as Italy, Turkey and Thailand. In order to widen its customer base and
loyalty, it endeavors to provide individually customized designs and products when it is possible. It generally
introduces eight to 10 new lines of jewellery design every year.
Well-Established Systems and Procedures
The Company has established systems and procedures for staffing, management processes and the
implementation of current and long-term objectives. Its operational processes are set forth in an operating manual.
Efficient Inventory Management
The Company’s inventory is bar-coded and monitored and controlled through Oracle E-Business Suite software. The
Company’s inventory for each showroom is planned at the beginning of each year in amounts determined to
achieve the desired sales and inventory turnover. As part of its inventory management, it also rotates jewellery
between different showrooms in an effort to increase turnover. Some of the products obtained from third parties
that the company is unable to sell are either returned to the vendors or exchanged for other products.
Strong Technology Architecture
The Company has implemented Oracle E-Business Suite software across all showrooms and offices in order to
maintain greater control over business operations. The software allows for connectivity across all its showrooms and
offices and transfers data in real time, allowing its management team to obtain real-time information. Additionally, it
has implemented VMware infrastructure, which is a combination of server, storage and virtual network
technologies. It also has backup support for all systems, and the data is protected by security measures.
Comprehensive Corporate Planning and Budgeting
The Company has a well defined three-year corporate plan as well as an annual budgeting process. The annual
budgeting process is designed to achieve functional and divisional goals and profitability for the year. The
Company starts the budget preparation process by reviewing its past sales performance, competitors’ activities,
customer reactions to prior marketing campaigns and product category performances and estimated demand.
The Company then analyzes the data in order to draw conclusions on its performance, and then it works out its sales
objectives for the next financial year with a focus on same store sales growth by increasing footfalls, increasing
footfall conversion and increasing average ticket size.
Thorough Review Procedures
The Company believes its review process is thorough, with all employees undergoing monthly, quarterly, and semiannual performance reviews. The Company’s business operations are reviewed and audited by both an in-house
audit team and a professionally appointed external team specializing in such audits. The organizational structure is
also being reviewed by a qualified external consulting firm.
Expansion Experience
The Company has substantial experience in expanding operations and managing the launches of new showrooms.
The Company opened seven new showrooms within a 15-month period from August 2007 to October 2008, which
gave it invaluable experience in selecting potential markets, real estate locations, training staff and undertaking the
marketing and advertising required to establish and support its newly launched showrooms. TBZ launched a new
showroom in Rajkot, Gujarat in July 2011 and launched a new large format showroom in Pune, Maharashtra on April
1, 2012. The Company believes that this experience will enable it to achieve its planned expansion of showrooms on
time and within budget.
Owned Manufacturing Facilities
The Company manufactures diamond-studded jewellery for sale in showrooms at a facility in Kandivali, Mumbai,
which has a carpet area of 17,739 sq. ft. It has an annual production capacity (based on one eight-hour shift per
day) of approximately 100,000 cts. of diamond-studded jewellery, 4,000 kgs of gold refining and manufacturing
4,500 kgs of gold jewellery components. This facility was opened in Fiscal 2011. It also has another manufacturing
facility in Kandivali, Mumbai, which has a carpet area of 5,755 sq. ft. Prior to the opening of the new facility, all of its
manufacturing was done at this facility. The Company shifted the majority of its production activity to the new
facility during the third quarter of Fiscal 2011.
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