Gitanjali Gems lines up Rs 100 crore expansion

Gitanjali Gems has chalked out a mega investment plan for its units in Mumbai and Hyderabad at a combined investment of around Rs 100 crore.

The company plans to set up a new unit in Mumbai at an investment of Rs 23 crore and expand its existing unit at SEEPZ, Mumbai at a cost of Rs 24.7 crore, while investing another Rs 45.25 crore for its Hyderabad units.

In addition, the company has decided to invest Rs 18.52 crore to strengthen its subsidiaries, joint ventures and associate companies while setting aside Rs 6.7 crore for expanding its retail operations.

The company plans to go for an initial public offering (IPO) for raising capital for this purpose. This would be the company's first foray in the equity market.

The new unit in Mumbai is coming up near its existing unit in Andheri, while the Hyderabad units are coming up at the Gems and Jewellery Special Economic Zone. The company has already applied to the Andhra government for acquiring 200 acre for setting up two diamond and jewellery polishing factories at a cost of Rs 7 crore.

"Apart from diamond polishing, we are planning to set up a export-oriented jewellery manufacturing unit at a cost of Rs 1.5 crore. Rest of the planned investment will be done for a research and development and training centre," said Mehul Choksi, managing director, Gitanjali Gems.

The company has been sourcing rough diamonds from the primary and secondary suppliers in the international market. After cutting and polishing rough diamonds, it either exports these or sells through its retail operations in the domestic and international market.

"We have lined up some more investment in subsidiaries and announcement about these will be made after the issue price has been declared," Choksi added.

Gitanjali Gems also has plans to invest in subsidiaries, joint ventures and associate companies to the tune of Rs 18.52 crore and capital expenditure for expansion of retail operations Rs 6.72 crore.

"We export a significant part of our cut and polished diamonds and our branded and unbranded diamond and other jewellery products to various international markets in Europe including Antwerp and Italy, the US, the Middle East as well as to several diamond and jewellery markets in Asia including Japan, China, Hong Kong and Thailand," Choksi said.

In the first half of the current financial year, revenues from international market accounted for approximately 70 per cent. Through the current expansion also the company intends to strengthen its foreign customer base and exploit maximum benefits in the international market.

"Our diamond jewellery manufacturing facility at Surat and jewellery manufacturing facility at SEEPZ (Mumbai), a 100 per cent export-oriented unit, are dedicated to expand our international reach," Choksi said.