BlueStone manages growth in FY21 with improved unit economics

While India had witnessed a clutch of websites selling high quality jewellery during the 2012-16 period, only a handful of them survived as traditional players including Kalyan Jewellers and PC Jewellers took them head on.

One such online (with offline presence) jewellery company that made it is BlueStone which recently raised $30 million from Hero Enterprises after a gap of six years. The new funding came on the back of its stable collection in the pandemic-laden financial year: FY21.

Sales of products such as rings, pendants, chains, and earrings were the only source of operating revenue for BlueStone which grew 5.5% to Rs 269 crore in FY21 from Rs 255 crore in FY20. Interestingly, despite having a network of 70 offline stores, BlueStone managed to grow in FY21 which was marred with disruption due to the coronavirus pandemic.

The Bengaluru-based firm also made Rs 2.65 crore from finance income and provisions written back in FY21.

As the company manufactures and retails high value jewellery, cost of material consumed was the highest cost centre for the company contributing 68% of the overall cost. This cost shrank 5% to Rs 194.87 crore in FY21 from Rs 205.2 crore in FY20.

The pandemic had driven the majority of companies to reduce their workforce and cut costs. BlueStone also deployed austerity measures and it could be observed from its employee benefit expenses which diminished 15% to Rs 22.47 crore in FY21 from Rs 26.44 crore in FY20.

Meanwhile, cost of advertisement surged 53.7% to Rs 20.37 crore in FY21 from Rs 13.25 crore in FY20. BlueStone had opened many offline stores where it bears a minority investment during FY21. As a result, rental costs surged 42% and stood at Rs 9.59 crore.

Shipping, certification and hallmark charges cumulatively grew 10% to Rs 4.48 crore pushing total expenditure to Rs 285.5 crore in FY21.

Despite growth in scale, BlueStone had managed to control losses by 43% which stood at Rs 13.76 crore in FY21 against Rs 24.13 crore in FY20.

BlueStone also improved unit economics as it spent Rs 1.06 to earn a single unit of operating revenue in FY21.

The Ratan Tata-backed company has also been eyeing an initial public offering (IPO) with a plan to raise Rs 1,500 crore at a valuation of anywhere between Rs 12,000 to Rs 15,000. As per an ET report, the company also hired ICICI Securities, IIFL Securities, Jefferies and JM Financial as investment bankers. However, it has delayed its listing plan in the wake of the poor performance of several digital-first companies such as Paytm and Zomato.

The jewellery market has seen many firms pivot to target the new breed of buyers in the form of millennials and gen z customers who are not the kind of gold bugs their parents were. That means a shift to lower carat gold jewellery, besides a market for diamonds and other stones that outpaced the gold market easily in most years.  ‘Functional’ everyday jewellery wear has also been pushed in an effort to keep the party going. There is no doubt that Blue Stone has been among the savvier players to have carved out a space in this market, even as competition continues to be intense from both legacy incumbents and newer players who entered in the past decade or so. To its credit, it has built a national footprint and seems poised to grow well in the coming quarters.