Risks & Concern


The Risk management process at TMJL revolves around identification of all risks of internal and external and undertaking risk mitigation measures so that monitoring their impact would be process driven with a view to take corrective course of actions.

Industry Risk

Jewellery industry dominated by gold metal in India and is going through a shrinking phase in the discretionary context of customers priorities for purchases together with wide gold price movements. Business is shifting from unorganized sector to corporate with deep pockets of resources to sustain the cyclical risk impact.
Your company enlarged its wings in semi and rural areas where the existing business is shifting to organized players like us. The shrinking size risk is mitigated by adding value added products in the portfolio and also by selling other popular brands under our umbrella.

Regulatory Risk

Those risks associated with the need to comply with laws and regulations. They also apply to the need to act in a manner which stakeholders and customers expect.

Operational risk

The Government has implemented stringent regulatory measures in all aspects of the trade starting from compliances under various acts and customer friendly hallmarking, etc., in a speedier manner.
Your company has already adapted to the changes in the trade requirements and in fact would be a beneficiary under GST regulations.

Commodity Risk

Gold being a commodity, price is influenced by various factors including demand and supply. Even though we buy gold we sell on the same day, in order not to carry the risk of price fluctuations, the underlying stock on a given date certainly affected by the price movement. The impact of it either positive or negative often shadowed the real operating capabilities of the company. Your company has an inbuilt hedging mechanism to mitigate the extreme fluctuations in gold price movement. Currently we maintain 63:37 ratio between hedged and un-hedged closing stock inventory on any given date. This strategy helped us to maintain our performance, besides ensuring liquidity in the system.
Every aspect, of the risks components mentioned in the earlier paras, were carefully evaluated by the respective teams and reported to Board at intervals to reset the strategies and policies that may tend to be appropriate and re-assuring in the changed realities.

Cost Risk

The brand building and establishment cost increased in recent years due to growth aspirations. New business can be identified by enhancing the visibility of the Brand. It involves a huge cost on a recurring basis even though the positive impact could be seen in later years.
Your Company by taking advantage of low cost retailer tag has already spent larger sums for advertisement and publicity. This will go a long way in expanding the retail outlets in larger parts of Tamilnadu and the cost currently incurred would be amortized among larger number of retail outlets in the days to come.

Growth Risk

The industry suffers from the introduction of sovereign gold bond and also by the penetration of “E-commerce” activity in the trade. New territorial expansion often results in burning cash in the form of excessive fixed cost in the earlier years anticipating a sustainable business later that is not guaranteed.
Your Company though strategically decided to grow but restricted its inroads into current territorial places in a deeper and concentrated manner so that fixed cost impact will not be felt by the company as an adverse factor. We opt for Asset less model and therefore the risk of growth in unknown places is mitigated to that extent.

Financial risk

Stretched financials could hamper business sustainability. The Company’s gearing as at 31/03/21 stood at 1.54 times which is among one of the best in the target corporate of the industry.
The company is consistently reducing its high-cost debts and leverage only when it is self liquidating in nature. All the financial indicators are improving including risk weighted Return on Equity.
However, all our retail outlets expansion plan is going forward smoothly. Our learning out of first wave has helped us to rearrange resources and improve our operating efficiencies.

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