I am pleased to place before you the 24th Annual Report of Midas Infra Trade Limitedwith reflections on the year gone by and my thoughts on the journey ahead. The Company hasentered in to Jewellery Trade by acquiring the business of HDC Private Limited and openingchain of Showrooms of Jewellery under the franchisee of "SUNAR" in Delhi andNCR. The Business of the Company was outstanding and it recorded revenue of 4034.69 Lakhin this year.
It is an old saying that change is the only constant. Last few years have seen manyregulatory changes like:
Introduction and reversal of 80:20 ruling on gold imports
Introduction and reversal of abolition of gold on lease scheme
Jewellery purchase schemes falling under the ambit of Deposits
PAN Card requirement for any sales above 2 lakh
Imposition of excise duty for the first time on the jewellery industry
Announcement of demonetization.
Introduction Goods and Services Tax
The Company has remained on its toes throughout to comply with the new regulations andchanging business environment. At the sametime we welcome the new regulations as they willgo a long way in making the jewellery industry more transparent and increase the marketshare of the organized players. Increasing regulatory environment increases the compliancecosts for the unorganized players and thus creates a huge growth potential for theorganized players.
The Indian consumption story continued to gather momentum during the year. Buoyed by6.7% growth in GDP India's affluent middle class and aspirational youth are the keydrivers of the impressive and increasing Indian consumption trajectory. Long-term reformslike the implementation of the Goods and Services Tax (GST] are in line with formalisationof the economy as they create a unified marketplace for the first time The share of theorganized players had been increasing in any case as the consumers prefer to buy jewelleryfrom a branded showroom due to assurance of quality purity and availability of a widerdesign range. The imposition of Goods and Service Tax regime from 1st July2017 further shifts the balance in favour of the organized sector and we feel that thepace of this shift will only increase now.
Thus I see huge potential for growth not only for Midas but for other branded playersas well. The Indian jewellery market is huge and I feel that there is enough scope foranother 10 to 15 branded companies. However it is very important to have a first moveradvantage to acquire the maximum market share and midas's expansion policy is to achievethe same.
Though online channels are gaining transaction in our country especially in theyounger generation but for jewellery purchase touch and feel of the actual product stillremains a very important factor. I am now getting a lot of customers who have browsed ourproducts online liked them but come to our showrooms for purchasing the same. Hencehaving a physical presence on ground is a must for growth and customer acquisition. TheCompany would therefore continue to open showrooms for gaining access to the maximumnumber of consumers.
Some of the other ROE accretion steps being carried out by the Company include:
(1) Reduction in the quantum of inventory by digitising the same and making itavailable across all showrooms rather than physical inventory. This would be especiallyuseful for reducing the number of high value jewellery items which have a longerturnaround period.
(2) Leveraging technology to create virtual showrooms and thus minimize investment inphysical showrooms.
(3) Strengthening our online vertical enables us to target consumers across wide areaand achieve sales with a minimal capital investment. This also helps us to leverage on theonline offline synergies between the two verticals.
(4) Leverage in house designing and manufacturing strengths to create higher marginjewellery of the likes of Flexia etc.
(5) Helping margins by identifying inefficiencies and rationalizing costs across allthe operations and processes.
I would continue to invest on strengthening my manufacturing and designingcapabilities. I sincerely believe that this sector becomes more and more organized theonly differentiating factor between the two organized/branded players will be theavailability of maximum number of designs at all price points. Hence I am very passionateabout this point. Having strong manufacturing capabilities permits me to reduce productioncosts retain skilled workers shorten product development and develop capability tointroduce newer collections rapidly.
This will enable the Company to gain a sustainable competitive advantage over itscompetitors.
Acquisition of exclusive franchisee of premium Jewellery brand "SUNAR" by theCompany has given us a presence in the high premium Jewellery segment within the country.The Company is confident that it will play a significant role in its growth in the comingyears.
I take this opportunity to convey my thanks to all the stakeholders vendors bankersand customers for all their support and encouragement hroughout the year. I am alsothankful to all our employees who have continued to contribute to the Company's growthwith their exemplary performance and commitment.
With Regards Yours sincerely
Rajnish Chopra Managing Director