After receiving a glittering response for the initial public offering of the company, Shree Ganesh Jewellery House Ltd (SGJHL), is all set to leave landmarks in the Indian jewellery industry with its focus firm on jewellery making business with design innovation. India's jewellery business had been largely fragmented with many jewellery-makers operating on local levels. Only a few organized players are in the fray to tap the growing consumption demand of gold and silver. This has made it imminent for large players in the market to adopt innovation in market development and product segments to capitalize on the potential retail market in India.
Primarily focused on export market, SGJHL is now considering to tap Indian jewellery market with its specialized designing and enhanced manufacturing capacities. Speaking from Kolkata over a tele-conference with Rutam Vora of Commodity Online, Nilesh Parekh, Chairman - SGJHL expressed his views on growing Indian jewellery market and the growth guidance for the company.
Commodity Online: How do you find the response to the initial public offer, which hit the markets a few days back?
Nilesh Parekh: The gems & jewellery has been a negative sector for the investors, however the return from the investments have been very high. But in India, the market is not mature enough and has remained at a nascent stage. The industry is primarily labour oriented, which makes it less attractive for investors. Considering these factors, we feel that the response that we got from the market was satisfactory. Investors considered our enhanced manufacturing capacities, operating partly from special economic zone (SEZ) that allows tax breaks, gold refining that could help improve margins, and the company's increasing presence in the domestic jewellery market, which has helped us get sufficiently well response in our IPO.
CO: How do you find the future gold investment scenario? Where do you see jewellery demand going in coming days?
Parekh: Gold has been bullish over the years and is expected to continue the trend as long as there is increased purchasing power with the consumers. Gold jewellery demand across the globe has been upbeat, but some social upheavals like the terror strikes of 9/11 in the US or 26/11 in India have hampered the sales somewhat. Historically, Eastern countries have been on a forefront of investing in jewellery, but recent trend has shown that the West has also started investing in it. This would increase the overall demand for the jewellery and thereby prices too.
CO: How has been India's jewellery demand? Does the country still continue to be world's largest jewellery consumer?
Parekh: Indian jewellery demand cannot diminish. Gold and jewellery are a part of social upbringing in India. Here, gold is a way of life. So, whatever the prices may be, gold jewelry demand continues irrespective of price movement. In recent years, Indian consumers' pocket size for investing in gold has increased significantly. Prices have touched its peak in past few months, but the buoyancy is still there, this shows that India still continues to be one of the key gold consumers across the globe.
CO: Do you see any significant demand coming up in retail jewellery segment in India?
Parekh: Oh yes, India's retail jewelry demand is very upbeat and the branded jewellery market is still at the nascent stage. So, there is a huge potential as a large part of the country is untapped by the organized players. Out of the total Rs.70,000 crore of gold market in India retail jewellery business constitute about 80%. Of this nearly 48,000 crore of the business is generated from rural and semi-urban markets, which we aim to cash on in next couple of years.
CO: How do you plan to capitalize on the opportunity available in India?
Parekh: Close to 95% of our total revenue comes from exports. But looking at the potential available in the Indian jewellery market, we aim to develop retail chain for jewellery market in India. The domestic jewellery market is fast growing. We have our presence in the domestic market through our brand, Gaja and some associated brands such as Sitaare, Marigold and G Elements, together addressing women's, children and men's jewellery. The branded jewellery market is yet in a nascent stage, but in coming days we plan to increase our retail reach by setting up additional 46 retail stores across the country in next two years, These stores will be offered in all formats like, company-owned stores, shop-in-shops and franchise outlets. We have 13 such stores currently.
CO: What is your share in the Indian jewellery market and how do you see that increasing in coming months?
Parekh: India's jewellery market is largely fragmented and unorganized with local jewellery makers operating in most of the regions of the country. Secondly, we have been primarily engaged into jewellery export business, hence we need to strengthen our retail arm in India. As of 30th September, 2009, we had a manufacturing license to make jewellery up to 70.5 tonnes per annum, but we have sought permission for a license of up to 236.5 tonnes of jewellery per annum.
CO: Can you elaborate on your plans for refinery business?
Parekh: Till recently we have been outsourcing refining part of the value chain for jewellery making. But now, with our own refinery, which we aim to set up at Kolkata, we will be in a position to offer better price to our clients. This will boost our operations in retail segment as well as improve our bottom line too. This will be a win-win situation for both, our customers as well as the company.
CO: How do you differentiate yourself from others? What is the USP of the company?
Parekh: We have been primarily into gold jewellery making business with our focus on product innovation that appeals to our customers. We have an in-house designing center that ensures latest designing. We offer gold and diamond jewellery in Italian and Swiss design. More importantly, we are based in Kolkata that is a hub for Bengali artisans. We are aiming to become an integrated jewellery maker in coming days.