It is always my pleasure and privilege to share performance highlights of your Companyand give you a glimpse of our strategic growth plans for the near and mid-term.
TBZ - The Original is one of those rare companies that has a unique combinationof rich legacy and contemporariness endearing it across generations as the most trustedbrand for jewellery. At the heart of our lasting success has been our deep understandingof our customers evolving aspirations ability to create designs that becometrendsetters and yet retain our core values of trust and -ne workmanship. It is thisuniqueness of heritage with contemporariness that makes us different.
We continue to expand our footprint in India with a presence across 23 cities in 10states. We have evolved an asset-light FOFO (franchisee owned franchiseeoperated) model requiring nominal capex that shall enable us to multiply our presencerapidly. Our franchisee model combines the entrepreneurial spirit of India with the TBZ -The Original experience and expertise creating an ideal platform that provides the TBZ -The Original brand experience and value to more customers. The year saw TBZ - The Originalsign four franchisee agreements for stores in Dhanbad Patna Ranchi and Jaipur. TheDhanbad store was our 30th opening in November 2015 shortly after theinauguration of our 29th company-ownedstoreinBandraMumbai.Itakethisopportunity to once again warmly welcome our business franchisee partners on board as wetraverse the path of value creation for our customers and stakeholders.
As the e-commerce space burgeons we have associated with Snapdeal Amazon and Flipkart- the leading online retailers. We have created a line of daily wear TBZ - The Originaldiamond jewellery exclusively for online consumers in addition to our TBZ - The Originalgold coins. With the TBZ - The Original certification backing every purchase we haveensured the same level of trust and faith for the online consumer that is associated withpurchase at a TBZ - The Original store.
The franchisee model and e-commerce foray have enabled your Company to target both thetraditionally high-spending elite as well as the rising a-uent classes willing to investin the best - another example of our constant endeavour to move ahead with time and yetretain timeless values.
FY2016 was a particularly challenging year for the Indian gems and jewellery industryof which your Company has been a pioneer and a leader for more than 150 years. Theindustry as you are well aware is a significant employment generator a leading foreignexchange earner for the country and contributes around 6-7% to the countrys GDP.
Macro-factors like sub-par monsoon volatile international prices of gold and weakIndian Rupee led to muted consumer sentiments that affected both demand as well as inputcosts. The imposition of 1% excise duty on non-silver jewellery led to a 42-day nationwidestrike that adversely affected customer walk-ins and revenues.
To counter these external challenges we recalibrated our operating strategies. Werationalised our diamond inventory reduced financing cost on a year-on-year basis andincreased our customer base through our loyalty program - the Kalpavruksha scheme. Welooked at every feasible opportunity to tighten overhead costs.
However the external environment had a cascading effect on our financial results. YourCompanys total operating revenue declined 14.45% from Rs. 193419.57 lakh in FY2015to Rs. 165477.72 lakh in FY2016. Same store sales declined by 16.5% during the year. Theaverage ticket size was almost the same as in FY 2015 (Rs. 84000 compared to Rs.85000) and only marginally lower for diamond Rs. ( 132000 compared to Rs.139000). Though store footfalls dropped by about 10 per cent the conversion rate wasnearly the same year-on-year (79 per cent in FY2015 and 78 per cent in FY2016).
However your Company has the correct fundamentals in place design orientationand design differentiation from the rest of the competition managed by state-of-the-artdesign studio and an established and well-managed supply chain and manufacturing units;brand appeal to buyers across generations; pricing that makes TBZ - The Originalaccessible to aspiring collectors of precious jewellery; sales personnel trained to ensurea high degree of customer delight; and a national presence. Above all the brand equity ofTBZ - The Original is our biggest asset.
The appetite for gold has been growing. According to the World Gold Council despite a400% rise in Rupee gold price in the past decade demand has gone up. The Councilpredicts 15 million weddings every year in India over the next decade due to therelatively young population. It is estimated that the jewellery market in Indiawill grow at a CAGR of about 16% over the period 2014-19. The monsoons are also predictedto be normal this year leading to an all-round rise in demand.
In light of this we remain cautiously optimistic of a recovery in the short term whilebeing confident of a healthy demand over the long term. We have all the building blocks inplace for an exciting journey as the Indian economy powers ahead as the fastest growingeconomy in the world. We are poised and prepared.
My sincere gratitude to all our stakeholders for the faith and trust reposed in us. Aspecial thanks to all our employees who are our most visible brand ambassadors.Since becoming a listed entity we have enjoyed the unstinted support of our esteemedshareholders lenders and stakeholders for which we are immensely grateful.
Chairman & Managing Director