Shrenuj's 2Q Sales +7%, Profit -2%

Shrenuj & Co. Ltd. reported that group sales rose 7 percent year on year to $151.5 million (INR 8.24 billion) during the second fiscal quarter that ended on September 30, 2012. Profit, however, declined 2 percent to $3.5 million (INR 190 million) as expenses and financing costs rose, Rapaport reported.
“We have been experiencing economic uncertainty in most of our major markets," said Shreyas Doshi, the chairman of Shrenuj. "The danger of yet another recession and the resulting changes in consumer sentiment led to slower inventory turns."
Doshi noted that rough diamond prices softened during the quarter, providing a much needed relief to manufacturers. The diamond and jewelry manufacturer's diamond segment sales rose 11 percent year on year to $119.7 million (INR 6.51 billion), while sales at its studded jewelry business declined 14 percent to $33.7 million (INR 1.83 billion).
Group expenditures rose 7 percent to $141.4 million (INR 7.69 billion), while finance costs jumped 51 percent to $6.9 million (INR 374.7 million) during the quarter.
Doshi reported that India's festive season began on a positive note, while the company has maintained a cautiously optimistic outlook for Christmas sales in western markets. Still, he said that India and China continue to drive the company's revenue growth, albeit at a lower level than before.
Vishal Doshi, the executive director at Shrenuj, added that the company has been focusing on sales of its value added and branded products in stable markets such as the U.S. He noted that the company's diamond business is focusing on high margin yielding products such as Forevermark and certified solitaires. “This strategy has helped us safeguard our margins,” Doshi said. "We are well placed to benefit from this strategy once the economic upturn starts."
During the fiscal first half, Shrenuj’s net sales rose 7 percent year on year to $282.7 million (INR 15.37 billion), while  profit fell 18 percent to $5.8 million (INR 317.2 million).
Shrenuj operates in India through its Diti retail venture and plans to increase the ‎number of its points of sale to 225 in 33 Indian cities by the end of this year. The company also has a presence in Hong Kong through its Joliesse brand retail stores. It has manufacturing units in India, Botswana and Israel and the bulk of its revenues are derived from its diamond sales.