PC Jeweller Wednesday reported a 37.76 per cent drop in standalone net profit at Rs 93.72 crore during the second quarter of 2018-19 due to sluggish sales. The company had clocked a net profit of Rs 150.59 crore in the same quarter of2017-18. Net revenue declined to Rs 1,635.08 crore during the July-September this year from Rs 2,622.32 crore in the year-ago quarter, according to a BSE filing by the company.

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The revenue from domestic sales dropped to Rs 1,550.36 crore during the quarter under review from Rs 1,850.96 crore in the year-ago period.

Similarly, revenue from exports declined to Rs 84.72 crore in the period from Rs 771.36 crore last year. On the performance, P C Jeweller said, "Q2 FY'19 was a period of consolidation for the company amidst a subdued market environment in the jewellery sector."

The company utilised the second quarter to rationalise inventory, exports business and consequently reduce overall bank exposure on the balance sheet, it said.

Overall banking exposure has come down by Rs 805 crores in the first six months of FY'19 and total cash on books as on September 30, 2018, was Rs 804 crore. "The company proposes to utilise approximately Rs 500 crore of cash and internal accruals for further reduction of bank exposure in second half of the current fiscal."

On domestic sales, P C Jeweller said that the company did not offer any promotional schemes during the second quarter and instead concentrated on margins. The domestic gross margins improved from 14.7 per cent to 17.2 per cent.

"Domestic sales contributed 95 per cent of overall business. Domestic sales however witnessed degrowth of 16 per cent over Q2 of FY'2018," the company said adding that Bangalore and Kolkata stores were closed during the quarter as part of the continuing process of rationalisation.

Since export is a credit based business, the company said it wants to rationalise exports business as the credit availability is getting squeezed. "Exports contributed to only 5 per cent of overall sales. The company is therefore targeting to limit the export sales to Rs 2,000 crore in FY'19 as against Rs 2,690 crore in the last fiscal," it added.

The company is into the business of manufacturing and sale of gold jewellery, diamond studded jewellery and silver articles. Its shares settled down by 3.78 per cent at Rs 86.55 apiece on BSE.