Total integration helps pranda sparkle

Pranda Jewelry Plc was founded in 1973 as Pranda Design Company Limited and renamed Pranda Jewelry Limited on April 27, 1984. It listed its ordinary shares on the Stock Exchange of Thailand on July 6, 1990 and converted to a Public Company Limited on June 3, 1994. Pranda currently has registered capital of 410 million baht with 398.15 million baht paid-up. Executive director Chanat Sorakraikitikul discusses the company’s strategy and outlook.

What is Pranda’s business model?

Pranda has been in the jewellery making business for 40 years; this year is our 40th year anniversary. We have established ourselves as a well-recognised top producer of silver and gold jewellery in the world. Our core competency is to produce mass volumes of commercialised products that target the affordable luxury and “mass prestige” jewellery markets. Pranda is one of the few companies globally that has full integration of production, distribution and retailing to various markets. Currently we produce and manufacture in Thailand, Vietnam and Indonesia, for distribution mainly to the US, Europe and UK and retailing in Thailand, Vietnam and Indonesia.

Could you provide more information on Pranda’s distribution channels?

The majority of our distribution points are to Europe, specifically Germany, the UK, as well as the US, India and our own retail operations in Thailand, Vietnam and Indonesia. However to be more specific, 60% of our total group revenue comes from production, of which we supply 30-40% to our own distribution and retail channels with the remaining 60-70% supplied to third parties.

Pranda is looking to expand its retail business. How and why is this business strategy being pursued?

As a company we have done very well in proving our capability to produce and manufacture a wide variety of jewellery products on a mass scale. We have expanded our production facilities from Thailand to Vietnam and Indonesia, and we have also developed our own brand, Prima Gold, and established a strong retail presence in Thailand, Vietnam, Indonesia and India. Given that we already have a strong base for our business, we want to move forward in the industry by expanding our retail business as it will allow us to capture more in the value chain. All of the countries in which we are expanding have very large markets with growing consumer purchasing power, and importantly, an inherent cultural appreciation for jewellery.

What is Pranda’s total capacity and utilisation today?

There are seasonal factors within our industry, so at times our utilisation can be over 100% with workers’ overtime; other times it may be 50%. However, on a yearly average we are roughly at 60% utilisation which means that we have a lot of room for growth in the production business if we can manage our orders and customers better.

What differentiates Pranda from its competitors?

As a production company our reputation is second to none and that arises from our quality and ability to manufacture consistent quality products on a mass scale for our customers. In Thailand Pranda is regarded among the top jewellery company and we have been well recognised by government agencies here, also internationally at trade fairs, shows and conferences. We received an award for the manufacturer of the year in Hong Kong last year.

What impact has the increase in commodity prices had on the industry?

The key issues are how to manage the fluctuation of commodity prices and ensure that the end retail price is going to be stable for our brand partners and our retail shops. There are various methods that we use as a company, whether it be locking in commodity prices with futures contracts or utilising gold lease facilities. But in the end communication and understanding with our customers are the keys to ensuring that we can maintain our gross margin as we have done for the past several years.

What are the biggest risks facing your business?

The classic answer would be government policies and mega trends. However, with our business now at the turning point after 40 years, our group has to realise the potential of all the distribution and retail bases we have established. We have to think about the next step, expand our scope, manage our people across various countries and make them realise their importance in the company’s expansion. If we can ensure that our people can adapt and improve, our company can realise our potential and nothing else is more important than this.

What impact will the Asean Economic Community have on your business?

The AEC is a positive force for our company’s expansion as we have already established retail operations in three main countries: Vietnam, Indonesia and Thailand. Each of these countries has a large market, consumers with strong purchasing power and economies that will only expand and develop further. In both Indonesia and Vietnam we have aggressive growth plans in place, and with the AEC we believe that consumer consumption will grow strongly.

Where do you see Pranda in five years from now?

In five years, Pranda wants to be the leader in specialised jewellery retailing in the AEC with more than half of our revenue coming from retail. Our next five years will see the company focusing more on forward vertical integration, increasing our efficiency and ability to distribute to our retailers. We aim to capture more value within the industry chain and see the majority of our growth coming from our retailing points in Asia.

Source: Bangkok Post

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