Gitanjali Gems, India’s largest jewellery retailer, is close to acquiring a jewellery retail company in China and hopes to announce a deal in the next 2-3 months, a top official said.
In December 2011, it acquired Hong-Kong based jewellery manufacturing company Crown Aim, but has so far not disclosed the financial details of the deal.
We are looking at another company in China as that market is very attractive for us, Abhishek Gupta, head of corporate strategy, said in an interview on Monday.
This time round we are looking to acquire a retailer with about 50 stores…It will be a sizeable buy, he said.
The Indian retailer plans to expand in China, India and the U.S in the coming fiscal year that begins April 1.
The United States accounts for 35 percent of the total diamond jewellery market, while China, Japan, India and the Middle East each account for 10 percent of global demand.
Gitanjali retails diamond jewellery under the brands Gili, Nakshatra, Asmi and D’Damas in India.
It also manufactures and wholesales gold and diamond jewellery, and has signed a sourcing pact worth $10 million with a consortium of diamond miners.
This sourcing deal is very important as procuring roughs (diamonds) is a big challenge, Gupta said.
He said the deal will help the company achieve consistency in supply and bring down costs by 8-10 percent.
The company, which the market values at $752.2 million, hopes to achieve a 45-50 percent rise in profits in FY13, as it expects robust demand for its high-margin retail business, and sees a 30-35 percent rise in sales.
Gitanjali expects its same store sales, a key gauge of profitability for retailers, to rise 30 percent in FY13, even as same store sales for other lifestyle retailers in India drop to single-digits due to sluggish consumer offtake.
The company, which has completed restructuring its Indian operations, aims to finish restructuring its overseas operations by March.
It hopes to make an announcement about roping in a private equity partner post that, he added.
RETAIL EXPANSION PLANS
Gitanjali, which is continuing to expand its retail footprint in India, aims to add 485 points of retail sale in FY13 at an investment of 150-200 million rupees.
It expects revenues from its retail operations to touch 50-60 percent of its total sales over the next three years from about 30 percent currently.
The Indian jewellery retailer is also seeing a revival in its U.S. business, which has been under stress for the past two years, and aims to achieve a 30 percent rise in revenues from that market in the upcoming fiscal year.
It plans to open 20 new stores in the U.S in FY13.
We will be able to achieve overall profitability of our U.S. operations by the end of this fiscal year, Gupta said.
Source: Indian Express