Rajesh Exports, the world's biggest jewellery maker, expects to raise gold imports by 17 percent next year to power its renewed thrust in the competitive and fragmented local jewellery market as a cushion against a volatile export market, its chairman said on Wednesday.
The profitability in exports is always lower due to bulk business, and the profitability on retail is higher. The idea is to increase our profitability on our revenues, said Rajesh Mehta, chairman of Rajesh Exports.
Rajesh Exports draws most of its revenues from overseas markets and now aims to be the biggest retailer in India, the world's biggest consumer of gold.
If the volatility is less in 2012, we will see good demand for gold. After the euro crisis and the U.S. downgrade, people are largely looking towards gold rather than equities and real estate, Mehta said.
The company set up 550 new retail stores by 2014-15 across southern India with an investment of 65 billion rupees. Currently, it has 73 stores in the southern state of Karnataka.
Consumers have preferred lower weight jewellery due to fixed budgets and high prices, he said.
Earlier a piece used to cost them 4,000 rupees, now that piece costs them 6,000 rupees, so that has gone out of reach because of that we are trying to reduce our weights.
The company will invest 65 billion rupees for the retail expansion, which will also include 25 billion rupees from external commercial borrowing route. The debt free company will source 20 billion rupees each from internal accruals and gold supplier's credit.
Rajesh Exports expects to generate revenues of around 200 billion rupees by 2014-15 from the retail venture, taking its total revenues to 400-450 billion rupees.
Shares of the company ended flat at 133.05 rupees in a weak Mumbai market.