Gitanjali Gems plans Rs 300 crore IPO

Gitanjali Gems, owner of jewellery brands D'damas, Asmi, Nakshatra and Gili, plans to enter the capital market to raise Rs 300 crore to increase its retail presence.

Mehul Choksi, chairman, said, "At present, about 15 per cent of our diamonds are used for jewellery. making. We intend to increase this to 50 per cent soon."

The company plans to increase presence of all its brands through brand zones or standalone stores, shops in malls and in association with traditional jewellers.

"In six months, we will be opening 25 shop-in-shops for D'damas as well as increase the number of our exclusive brand stores from the existing nine," said Choksi, adding, "Through franchisee expansion, we will open 12 stores in three months in Delhi, Hyderabad, Vizag and Kolkata."

Choksi is also keen on increasing presence in the traditional and branded jewellery stores such as Oyzterbay and Pallazio as sales through these stores tend to be much higher than sales through malls with the break up being almost 75:25.

While part of the initial public offering proceeds would go into funding expansion, the company also plans to increase capacity at its existing plant and will be setting up two new plants in the Mumbai and Hyderabad special economic zones.

The company posted a net profit of Rs 8.71 crore for the six months ended September 2005, with net sales at Rs 1,352.09 crore.

The company, which also has a presence in the branded gold jewellery market through its Gili brand, sees tremendous potential in this segment as less that 1 per cent of the market is in the organised sector.

"At present, gold forms 20 per cent of our branded business, which we intend to take to 40 per cent by the end of this year," said Choksi.

Meanwhile, the company will continue to introduce new brands under its existing brands which will be anchored around different themes. Some of these include a Graduation Day range and a motherhood collection under the Asmi collection.

It is also testing water in Japan, China, Thailand and the Middle East for its finished diamond jewellery. It will start full scale exports only by 2007-08.

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Twelve stores would be opened in three months at Delhi, Hyderabad, Vizag and Kolkata

25 D'damas shop-in-shops to be opened in six months

Two new plants in Mumbai and Hyderabad SEZs would come up and existing plants would be expanded