26 October 2015

Flipkart has joined hands with Malabar Gold & Diamonds

Ecommerce marketplace Flipkart has joined hands with Malabar Gold & Diamonds to offer a range of gold, diamond and platinum jewellery. Flipkart has priced the product between Rs 3,000–Rs 50,000 across 1,300 new designs for this festive season.
From rings to traditional earrings to pendants, Flipkart says customers are virtually spoilt for choice by this elaborate collection from Malabar Gold & Diamonds.
Rishi Vasudev, VP-Fashion, Flipkart, said, “Jewellery forms a very important part of every Indian’s shopping list during festive season. With this launch, we will be offering our customers a whole new range of precious jewellery to shop from. We strongly believe that this partnership will add a whole new dimension to our precious jewellery segment. This partnership will add to our customer experience as we work towards creating a game-changing platform for online jewellery shopping.”
Overall, partnership between established jewellers and e-commerce marketplaces will offer a big push for online jewellery sales, especially in the festival season.
MP Ahammed, Chairman, Malabar Gold & Diamonds, said, “With around 140 stores across 9 countries we have a very strong presence in the brick and mortar businesses. We had entered the e-commerce domain, 2 years ago with our online store – www.malabargoldanddiamonds.com and are now expanding our e-commerce presence by partnering with India’s largest e-commerce marketplace Flipkart. Flipkart’s access to the country’s largest customer base is the key reason we chose them as our first e-commerce market place partner. Our strong brand value, unique designs, customer friendly policies combined with Flipkart’s efficient and unmatchable delivery strength will make our jewellery accessible to millions of people across India.”
Source: http://www.financialexpress.com/article/industry/companies/flipkart-launches-malabar-gold-price-starts-rs-3000/155533/

09 September 2015

Kalyan Jewellers

Kalyan Jewellers: From a textile store to a jewellery chain

A business that began from a single store in Thrissur, Kerala, has now crossed the seas and attracted big PE investment

TS Kalyanaraman, chairman and MD, Kalyan Jewellers

 T.S.Kalyanaraman, chairman and managing director of Kalyan Jewellers, was not exactly born with a silver spoon in his mouth. The only business asset he inherited from his father, TK Seetharam Iyer, was a textile store in Kerala’s Thrissur district. Starting out as an apparel store in the ’90s, Kalyan’s entrepreneurial journey has made it one of India’s largest jewellery chains.

The shift to jewellery from textile was triggered by customers. “A lot of our customers did their wedding shopping from our textile store. At one point, some of them suggested we start a jewellery showroom, too. By then, my family had earned the trust of a lot of customers, while in jewellery retail there was no standard for purity,” recounts Kalyanaraman. Inspired by his customers’ goodwill, he opened his first jewellery store, Kalyan Jewellers, in 1993, in Thrissur, and redefined the way ornaments were sold.

At 4,000 square feet, the store was about 10 times the size of an average jeweller back then. But, more importantly, it stocked readymade ornaments. “In the early ’90s, jewellery was a made-to-order business. Since I began in the textile business, I asked myself: ‘If a shirt or a saree can be sold readymade, why not jewellery?’” says Kalyanaraman.

The retailer operated just that one store for the next seven years. But by 2011, Kalyan Jewellers was in every major South Indian city, with the exception of Chennai. “For Chennai, I wanted to do what I had done in 1993—the store had to be done in a certain style and scale,” says Kalyanaraman. In April this year, Kalyan finally opened a store in the southern metropolis. Spread across 40,000 square feet, the showroom stocks about 600 kg of jewellery at any point and registers a footfall of 700 on weekdays and 1,200 on weekends. Kalyanaraman claims it is the largest jewellery store in Asia, adding that Chennai is touted to be the world’s biggest jewellery market. 

Kalyan Jewellers operates 72 retail stores in India and 13 abroad (ten in the United Arab Emirates and three in Kuwait) and has set a target to scale this up to 100 by the end of next March. The company also has plans to open six stores in Qatar by the end of this financial year.

The person behind it
Kalyanaraman comes from a family of priests and ministers of the maharajas. “My great grandfather, TR Ramachandra Iyer, was the first to enter business in our family when he started a textile mill [Sitaram Mills] in 1908 in Thrissur,” says Kalyanaraman. Sitaram Mills was subsequently acquired by the state government and continues to operate in Thrissur.

Kalyanaraman, who has a bachelor’s degree in commerce from the University of Calicut, never dreamt that Kalyan Jewellers would grow beyond his hometown. But, given that his father had set up five textile stores for each of his five sons, Kalyanaraman decided to adopt the same approach for his two sons. Thus, in 2000, he opened a second store in Palghat, 70 km from Thrissur. “It was a milestone for me. I wanted to start a second showroom and put my younger son there,” he recalls.

Today, Kalyanaraman, 64, has a net worth that is a shade over $1 billion. He ranked 87 on Forbes’s list of 100 richest Indians in 2014.
Why it is a gem
In FY15, Kalyan Jewellers reported about Rs 10,000 crore in revenue, up 18 percent from Rs 8,500 crore the previous fiscal. It expects to clock 30 percent growth in the current financial year. With 85 stores, Kalyan Jewellers’ revenue is ahead of the country’s biggest listed jeweller, Titan Company, a Tata Group firm, that operates more than 200 retail stores under two brand names, Tanishq and Goldplus. Titan Company’s jewellery business notched revenues of Rs 9,429.97 crore in FY15, according to its latest annual report.

“Kalyan has been the most innovative company in the jewellery industry for years. They have ambitions, immense understanding and a passion for their business. When combined with their integrity and transparency, they have a real opportunity to build the best jewellery company in India,” says Vishal Mahadevia, MD and co-head, India, Warburg Pincus, a global private equity firm that has $39 billion in assets under management.

Last year, Warburg Pincus picked up an undisclosed minority stake in Kalyan Jewellers for Rs 1,200 crore. The deal was the largest PE investment in the jewellery industry in India. Over the next four years, Kalyan Jewellers aims to cross the Rs 25,000-crore revenue mark, which translates to a CAGR of over 35 percent.

Why it was hidden
The story of Kalyan Jewellers has for the longest time been restricted to South India. In 2012, it became the only Indian company to rope in Bollywood actors Amitabh Bachchan and Aishwarya Rai Bachchan together as national brand ambassadors. It was only after the Bachchans came on board that Kalyan Jewellers received national visibility. That year, they opened four stores in Gujarat, their first foray outside South India. This was followed by a rush of store launches in Maharashtra, Punjab and Delhi. In 2013, the company expanded to the UAE, opening six stores in one day. This year, the jeweller is expanding its operations to West Bengal and Rajasthan.

Risks and challenges
Despite his success, Kalyanaraman is a worried man. “I enjoy competition as it makes you work better and keeps you alert. But, unhealthy competition is a different ball game,” he says. The over $40-billion Indian gems and jewellery industry is still a far cry from modernisation, as organised retail accounts for only about one-fifth of the industry. With local unbranded retailers, unhealthy trade practices such as impurity of products are still rampant.

“The only advice that my father gave me was: Be trustworthy and do business in a fair and transparent manner,” he says. Today, close to 90 percent of sales for Kalyan Jewellers, especially at stores that are over three years old, are from repeat customers. The jeweller’s eight-year-old loyalty programme already has 2.8 million customers. They are, clearly, doing something right.

17 July 2015

Modi's plans to trace gold deals is unworkable, says Jewellery trade

Mumbai: India is meeting stiff resistance in its drive to make the buying of gold jewellery more transparent and to channel demand into paper gold to stop the metal being used to hide billions of dollars of undeclared 'black money'.

The jewellery trade says the Narendra Modi government's plans to trace gold deals is unworkable and won't deter holders of black money, or hundreds of millions of Indians outside the tax net, from buying gold to keep their wealth away from the prying eyes of the authorities. If the proposals fail, gold inflows will continue unabated in a country that accounts for nearly a fifth of global demand and stymie Modi's effort to create a new asset class that could lure savers and back investments.

To track larger gold deals, this year's budget declared that, from June 1, customers would have to disclose their tax code, or Permanent Account Number (PAN), for purchases above 100,000 Indian rupees ($1,580). But jewellers - many of whom voted for Modi - have protested, delaying the new rule. "No jeweller will refuse to sell just because the customer doesn't have a PAN card. He will find a way to ensure the customer leaves the store with jewellery," said Bachhraj Bamalwa of the All India Gems and Jewellery Trade Federation.

Two-thirds of gold demand comes from rural areas where jewellery is a traditional store of wealth. Under Modi, India has opened 160 million new bank accounts but half are idle, suggesting old habits die hard. And, in a country of 1.25 billion people, only 140 million have PAN cards.

The finance ministry's tax department has forwarded the so-called 'notification' that would put the PAN card rule into effect to higher authorities, but "no decision has been taken so far", a senior official said. "The final decision probably needs political approval as it could have wider ramifications," added the official, who was not authorised to speak on the record.

To try and divert some of the estimated 300 tonnes of annual demand for gold bars and coins to paper gold, the government also plans to issue bonds linked to the bullion price. That's not an attractive option for people who park illicit wealth in physical gold, however. "It is easier to hide unaccounted money in gold compared to other asset classes like property or shares. Such people are unlikely to switch to gold bonds," says Daman Prakash Rathod, director at Chennai-based wholesaler MNC Bullion.

The government has also proposed a gold deposit scheme to mobilise some of the 21,000 tonnes of gold held by households and temples. Though the formal notification to enforce the PAN card rule has yet to be issued, jewellers have already found ways to beat it, by issuing many small invoices or writing informal receipts. It's a reminder that ill-conceived regulation can have unintended consequences, as happened after India raised import taxes on gold to 10 percent in a series of hikes to August 2013.

The duty failed to curb demand, but revived smuggling networks which, the World Gold Council estimates, imported 175 tonnes of gold in 2014. The best way to curb gold demand is by reducing black money in circulation; not by restricting gold trading, says a Dubai-based bullion supplier who, like other market players, requested anonymity.

"People are not accumulating black money to buy gold," he said. "It's the opposite. They want to have black money and gold is providing them cover.
Source: July 13,2015, 05.40 PM  IST | | Reuters

03 June 2015

How to choose the right bridal jewellery -by Manju Kothari

Expert Manju Kothari gives tips on what to keep in mind while investing in jewellery for a wedding.
            Jewellery adds perfect dash of effervescence to the bride. It is an integral part of bride's wedding trousseau. Every bride's dream is to look beautiful and elegant on her special day. Jewellery adds sparkle to the whole aura of the bride. Every bride wants her jewellery to be different and stylish. Manju Kothari, Creative Director, Entice gives inputs for how choose right bridal jewellery:

The first piece of advice is to start planning your jewellery as soon as your wedding date is fixed. Jewellery takes minimum a month or two to make, so if you want to get something manufactured especially for you, you need time in hand. Also, basic tweaking on existing designs will take at least 15-20 days.

A set budget only for jewellery is always handy as one can plan better and you can buy much more in the same amount with carefully planning and a good market.

Always buy from trusted jewellers who are recognized by industry giants like DTC, PGI, WGC or Gemfields.

A certificate is a must. It is the identity of the jewellery and is the most essential thing for evaluation in case of re-sale.

Tips to keep in mind:

- With bridal outfit designers getting very experimental, one needs to keep in the mind that the neckline of the outfit should match the necklace silhouette. If you have already bought the necklace, buy the dress accordingly or vice versa.

- Most bridal jewellery to be worn on the day of the wedding is heavy. Invest into jewellery, which can be worn later rather than keeping them in the safe. Either buy two necklaces which can be worn separately or buy one big piece which can be detached later.

- Multi-wearable jewellery or detachable jewellery offer very good options as they can be detached with very user-friendly mechanisms and can be worn in multiple ways. Wedding necklaces that can turn into beautiful pendants and small necklaces for all the other small occasions after your wedding.

- When shopping for earrings, make sure it goes with the hairstyle you are planning to do on D-Day.

- Revamping your mother's jewellery is another classic idea for wedding jewellery. Modifying old classics with a modern touch adds emotional value to your jewellery on the most special day of your life and also creates a unique piece for you.

Match your jewellery according your wedding occasion:

Mehendi is a light occasion but traditional so wear an ethnic styled pendant earring set. You can ever experiment with a maang teeka as your hands need to be bare.

For engagement, the focus is on the ring so keep the jewellery light.

Weddings call for heavy traditional jewellery from your head to toe, but that doesn't mean you overdo it. Match jewellery with your garments.

Reception or cocktail is fun and more relaxed. A diamond choker with uptight hair do and a cocktail ring looks stunning for such an occasion. You can also add coloured gemstones to your jewellery in compliment or contrast to your dress.
 Source: http://timesofindia.indiatimes.com/life-style/fashion/style-guide/How-to-choose-the-right-bridal-jewellery 


Rajkot imitation jewellery hits mumbai business - Tv9 Gujarati

Rajkot : The demand for imitation jewellery is growing faster. Moreover, the anklets, bangles, earrings, necklaces, pendants and mangalsutras are in a huge demand in Tellywood too with a slew of serials being made.The demand have been doubled and rajkot market's imitation jewelry is in demand more then mumbai's jewelery.

06 April 2015

Rajesh Exports

Indian jewellery billionaire Rajesh Mehta to buy Australian gold assets

(Rajesh Exports is one of the world's biggest private sector buyers of gold and sells its products through more than 80 retail stores in India.)

India's biggest jewellery maker, billionaire Rajesh Mehta, wants to deepen his relationship with Australia's gold industry by buying stakes in Australian mines and potentially opening retail jewellery stores in the country.
Speaking on a rare visit to Melbourne, Mr Mehta said his company wanted to spend up to $US700 million ($921 million) growing its presence in Australia, with mines the primary focus.
'We have been importing gold from Australia on and off in the past, but now we want to have a formal presence in Australia," he told Fairfax Media.
"We are setting up a subsidiary in Melbourne primarily to look into acquiring interests into the gold sector of Australia, looking at gold mining assets in terms of equity or loan or whatever is feasible for us so we can ensure a reliable and permanent gold supply-line to our company.
"We would also like to invest in the retail jewellery sector in Australia - that is, take the gold from here, process it in India and then supply the jewellery back here in the retail line that we set up here."
The Bangalore billionaire's company, Rajesh Exports, is listed on the Bombay Stock Exchange with a market capitalization of 58 billion rupees ($1.22 billion), and is vertically-integrated through the mining, refining, manufacturing and retailing stages of the gold industry.
The company consumes about 140 tonnes of gold a year, making it one of the world's biggest private sector buyers of gold, and sells its products through more than 80 retail stores in India plus exports to other countries.
For comparison, Australian mines were estimated by Surbiton Associates to produce 284 tonnes of gold last year and the nation ranks as the world's second biggest gold producer behind China.
Mr Mehta would not name the Australian mines nor companies that he was looking at, but said talks with advisers had begun.
"We have met a lot of investment bankers here and we are evaluating the best way to get in, what is the best way to do it, as we are looking at not only taking interest in the gold mining sector but we are also looking at forging a relationship with the largest gold-producing mines to buy and ensure supply from them," he said. "We can be a good consuming partner for them."
The comments follow recent momentum towards a free trade agreement between Australia and India, and last year's visit to Australia by Indian Prime Minister Narendra Modi.
It also comes after two years of regular deal-making in the Australian gold industry, as  several foreign gold miners have sold assets to try to reduce their exposure to Australia.
Mr Mehta said the timing was good for an Indian company to be investing in Australia.
"We hear currently there is good government support in Australia and there is encouragement in the other sectors to participate in the gold sector in Australia, plus the time is right because the assets are available at a reasonable price so all these things combined together, we feel it is the right time to get into Australia and acquire some assets and secure our supply lines," he said.
If successful in buying Australian gold assets, Mr Mehta's Indian company would be a rarity in a sector where foreign investment has typically come from North American or Chinese buyers.
Big North American miners such as Barrick Gold and Newmont Mining have owned large numbers of Australia's biggest mines over the past two decades. Chinese investors have shown an appetite to buy some of the nation's smaller, marginal operations such as Norton Goldfields and Focus Minerals.
Surbiton Associates gold expert Dr Sandra Close said: "Foreign ownership has changed over time. At one stage it was South African and North American companies. More recently it has been the Chinese, and while the Indians have not taken a major stake in Australian mines, I know they have been looking around."
Barrick and Newmont have sold several Australian gold mines in the past 18 months, meaning many of those assets are now under the control of ASX-listed companies like Northern Star.
"Foreign control of Australian gold mines peaked near 70 per cent in the early 2000s, but it is now down to about 50 per cent overseas control," said Dr Close.

Branded jewellery in INDIA

Branded jewellery is the new darling of investors

(Image: Getty Images
In 2014, India was the world’s leading purchaser of gold, consuming about 880 tonnes)
Last month, private equity (PE) firm Creador said it has invested Rs 135 crore in a minority stake in publicly listed Delhi-based jewellery makers PC Jeweller Ltd. So far, consumer services were the sweet spot for Creador; it focuses on long-term investments in India, Indonesia, Malaysia and Singapore. With this deal—Creador’s sixth in India—the PE firm made its first investment in the jewellery segment.

Private equity investors have traditionally shied away from commodity and commodity price-driven businesses like gold and silver jewellery because generating margins is not easy in such sectors; it is not possible to charge more than an accepted amount when the commodity is traded on a daily basis and customers are aware of the rates.

However, over the past two years, there has been an increase in investor interest in the jewellery business in India: In 2014, there were nine such transactions worth $277 million, compared to four deals worth $35 million in 2013.

The reason for this newfound interest lies in the fact that gross margins are higher in jewellery businesses that are design led. Also, massive profits can be registered by offering a mix of gold and diamond jewellery.

“When you add beauty and design to jewellery, it is not a commodity. It becomes aspirational, artistic and brand-driven,” says Gaurav Singh Kushwaha, founder and chief executive of online jewellery company BlueStone. “We see jewellery as an ornament and that’s where high margins come into play; the fundamental value of the business is very high.”

BlueStone, founded in 2011, has been backed by Ratan Tata, chairman emeritus of Tata Sons, apart from Accel Partners, Kalaari Capital, Saama Capital and Meena Ganesh. It has so far raised $15 million over two rounds of investments. In FY2014, the company’s revenues grew four times to Rs 17 crore; it is expected to touch Rs 70 crore for FY15.

According to Kushwaha, margins are not more than 3-5 percent in gold coins and bars. But for finished branded jewellery, the margins are between 25 and 35 percent.  “Internal rate of return [IRR] for companies like us, based on the valuation over a period of time [the past two to three years], is anywhere between 70 and 80 percent.”

Mridul Arora, vice president of SAIF Partners, which invested in Senco Gold Ltd, says designs are a formidable differentiator and margin creators when it comes to jewellery. In October 2014, SAIF Partners invested Rs 80 crore in Kolkata-based Senco Gold, one of the largest jewellery retail chains in Eastern India. “It [jewellery] is a very profitable retail format; it’s the most profitable retail business per sq ft from the point of view of margins,” says Arora, adding that the demand for jewellery has been steady for the last two decades.

In 2014, India was the world’s leading purchaser of gold, consuming about 880 tonnes, says a report prepared in conjunction with Gold Fields Mineral Services (GFMS) analysts at Thomson Reuters. This was at a time when global demand for gold fell by 18.7 percent.

Diamonds: A Jeweller’s Best Friend
However, even design-led jewellery with gold alone cannot give investors the desired returns of 20-25 percent as day-to-day trading prices set the value of the ornament; making charges and design alone cannot generate a premium of more than 18 percent. But add diamonds to gold, and the stones alone can bring in margins of 100 percent to a whopping 8,00,000 percent.

Unlike metals, it is very difficult to put a price on diamonds, even if you get them assessed on caratage, colour and clarity. The value of these stones depends on their source, and on the rarity of their colour and size. In the hands of a renowned diamantaire, the price shoots up to a few crores.

“Diamonds are huge value creators. Pricing of diamonds is based on how one uses it in the jewellery. If used imaginatively, it can fetch attractive premiums,” says Anand Narayan, senior managing director, Creador Advisors India. “That’s the most attractive part of these businesses, with margins that can be massive.”

When it comes to diamonds, jewellers typically buy large stones that are then cut into smaller pieces. All these smaller pieces are then sold at various price points. The waste that is produced during the cutting of diamonds is also put to use, and is often used in bangles. “You charge the customer for these diamonds [which are actually a waste],” says Narayan.

PC Jeweller has demonstrated a growth of 46 percent compound annual growth rate (CAGR) in profit after tax between fiscal years 2010 and 2014, driven by an increasing proportion of domestic sales and diamond mix. It has an average return on equity (RoE) of 34.7 percent over the last five years.

Brand Value
Only 20 to 25 percent of the jewellery market in India is organised, including companies like Tanishq and Gitanjali. Experts say there is a viable opportunity to build branded, design-led jewellery businesses here, on both online and offline platforms. Investors too are bullish about both these formats.

“A capacity to sell intricate, complex designs in gold and diamond can drive the margins up. Your brand also drives margins. Organised firms have higher margins because of the making charges,” says Arora of SAIF Partners.

But buying gold is not what it used to be a couple of decades ago. About 15-20 years ago, jewellery was seen only as investment, but that mindset is changing, says Harminder Sahni, founder and managing director, Wazir Advisors, a retail consulting firm. “Customers are now more open to the fashion aspect of jewellery and do not want to spend a lot on pure gold [18 or 22 carat] jewellery,” he says.

In the fashion jewellery space, typically the ticket size is between Rs 1,500 and Rs 2,000. In BlueStone, for example, they are talking about design-based fine jewellery with an average ticket price between Rs 15,000 and Rs 20,000. “It is more of a brand that you are creating and people specifically look for your designs and brand and that’s what we want,” says Meena Ganesh, promoter and investor.

“Gold is now a fashion accessory. Fashion is not dying. It is the customers’ need to look beautiful, to flaunt. The nature of the business may change, but requirements for luxury, fashion are not gone,” says Vasudevan of Creador. “Customers in the US are buying 12 carat jewellery. It will come to that in India soon.”
This article appeared in the Forbes India magazine issue of 03 April, 2015

Read more: http://forbesindia.com/article/work-in-progress/branded-jewellery-is-the-new-darling-of-investors/39891/1#ixzz3WWBBOeSa