 "India's gems and jewellery exports decline on a global economic slowdown")
The share price of jewellery manufacturer and exporter Gitanjali Gems hit 52-week high last week, before it saw profit booking this week, following the company’s ambitious plan to capture global recovery in diamond jewellery demand and other luxury items.
Gitanjali’s share price hit the lowest in many years at Rs 29.95 apiece on March 1 this year before recovering to hit the highest in one year at Rs 51.50 apiece on August 11. The stock closed unchanged at Rs 44.20 apiece on Thursday. Investors have lost over 93% in this stock since its peak of Rs 650 apiece on April 23, 2013.
The company has taken several measures in the last few years to restore investors’ confidence in the company.
Apart from diverting its focus from gold ornaments to diamond jewellery, Gitanjali introduced low-caratage of gold content in stone studded products.
In a fresh bid, the company plans to raise Rs 110 crore by issue of convertible warrants to promoter and promoter group or persons other than promoters through preferential allotment subject to the approval of shareholders. The company plans capital infusion for its proposed expansion plan in both domestic and global markets.
“The company is going in for diamond jewellery retailing all over the world and also basically for more profitable
items. The company plans to add 50 more stores in the United States to expand its presence by 50% in the world’s largest diamond jewellery consuming market. We are putting up distribution centre in China and the Middle East to increase our base there,” said Mehul Coksi, Managing Director, Gitanjali.
But the company eyes a turnaround with its ambitious expansion plan especially in the United States, the world’s largest market for luxury items including diamond jewellery with nearly 40% of global market share.
Apart from that, Gitanjali plans to increase its shop-in-shop model by 3000 all over the world to increase penetration. In the proposed investment, however, the promoter i.e. Choksi plans to infuse Rs 40 crore while private investors would bring in the remaining.
“While focusing on branding and retail, the company plans to increase its reach in shop-in-shop model. In the Unites States which performs the best in the world currently in terms of jewellery sales, we are planning to open at least 15-20 stores by November itself,” said Choksi.
After Unites States, Gitanjali plans to concentrate on Indian markets followed by China and the Middle East.
With this capital infusion, Gitanjali aims to add Rs 400-500 crore to its existing turnover by the end of the next financial year. Retail which contributes nearly 30% to Gitanjali’s turnover presently may see 15-20% jump in FY18.
Gitanjali posted a net loss of Rs 6.61 crore for the quarter ended March 31, 2016 on net sales of Rs 3148.53 crore. For the full FY’16, the company posted a net profit of Rs 48.76 crore on net sales of Rs 8603.63 crore.
It has taken several steps in the past to reduce its interest burden from a massive Rs 508.88 crore for FY’15.
