The acquisition of Samuels Jewels, an American jewellery retailer, has enabled Gitanjali to foray in to the world's largest jewellery market. It was followed with a second buy-out of Rogers, which operates 46 stores, with an aim to control 300-400 outlets in the US.
In India, it's high profile acquisition was Diamond Trading Corporation's jewellery brand Nakshatra, that changed jewellery retailing in the country. Gitanjali expects Nakshatra to garner Rs 1,000 crore (Rs 10 billion) in revenues in five years with plans to extend it into other lifestyle categories.
Recently, it also acquired sterling silver jewellery brand Lucera and a watch company. Neelesh Hundekari of consultancy firm AT Kearney says, "The jewellery companies need to have a presence across the value chain for better realisations. The impending slowdown in the US will offer viable inorganic opportunities for companies to expand their operations."
Gitanjali, which owns about 60 brands, perhaps identified the potential for branded jewellery way back in 1994 when it launched the gold jewellery brand Gili.
The company's chairman, Mehul Choksi, hails from the family of diamond traders from Palanpur, a little town on the Gujarat-Rajasthan border, home to most of the Indian diamond traders. Choksi, who joined his father's diamond business at an early age, recently told Business Standard, "The company operates across five verticals from jewellery manufacturing to retail.
Going forward, jewellery will remain the core business but we will explore opportunities in related products as well." Following this dictum Gitanjali has formed the wholly-owned subsidiary Gitanjali Lifestyle to steer its retail operations.
Gitanjali Lifestyle has inked deals with national and international brands to spread its wings in various sectors like watches, accessories, silverware and even salons. The company's strategy to get sponsorship rights of Indian Cricket League's Kolkata Tiger's team, introducing Wimbledon jewellery collection and association with fashion events is perceived as an effort to connect with the youth.
Industry sources estimate that by 2009-10, retail is likely to become a Rs 300 crore business for Gitanjali; the American operations are pegged to reach $1 billion in the next five years. The company has raised $110 million (nearly Rs 445 crore) through the issue of FCCBs and $180 million (nearly 729 crore) GDRs to fund its expansion plans.
Vineet Suchanti, managing director, Keynote India, said, "Gitanjali's acquisitions have been close to it's core competency catering to similar target audience and will not require much investments.
There is not much deviation but it offers a pretty good value to boost the topline in reaching the final leg of the value chain." He mentioned that the company's balance sheet is also healthy with cash reserves of Rs 600-700 crore (Rs 6 to 7 billion) for future expansion.
However, industry peers have their own reservations. "Very few jewellery companies have attempted to launch brands and enter retail. Some of those who tried have burnt their fingers.
Gitanjali is another extreme with aggressive diversified plans," said an industry insider. Some others like one jewellery brand marketing head observes Gitanjali has a challenging task to implement these projects and recruit right people as it lacks prior experience in these new businesses.
