Rajesh Exports plans to raise Rs 2,500 cr via ECB route

Rajesh Exports, the Bangalore-based publicly-held gold jewellery exporter and manufacturer, is close to raising a debt of Rs 2,500 crore through the External Commercial Borrowing route (ECB) to fuel its retail expansion plans in India. The company, which is India’s largest gold jewellery exporter, since the past 18-months has been focusing on retail sales in India and is on an drive to convert a slew of gold jewellery retailers across South India to be their associates.

Rajesh Mehta, CMD, Rajesh Exports said they consciously want to curtail gold exports to a level of Rs 20,000 crore a year and will channel their energies towards retail sales. The company through gold exports operates on a razor thin margin of around 1.5 per cent, while retail sales margin will be in the range of around 5 per cent. The retail arm has so far done sales of Rs 1,500 crore and the company is looking to double them in the near future. Mehta said that the debt is being raised at an average cost of around 4.5 per cent and with this will be leveraging their balance sheet by 1.5 times.

“There is enough headroom for us as RBI allows Indian corporates to raise as much as 4 times their networth through the ECB route. We are totally debt-free as of now apart from working capital,” Mehta added. Rajesh Exports has adopted a unique model of converting various single store jewellers into their fold by offering a scheme through which they can benefit for pan-India franchise.

“Other than the real estate, the entire cost of supplying gold jewellery is on us. Not only there will be volume sales due to our branding exercise, the jewellers will also be earning a share on the total sales,” Mehta added. The company, operates in the same segment as dominated by Tanishq, the gold jewellery retailing arm of Titan Industries, hopes to match its reach within the next two years.

“Undoubtedly, Tanishq is a leader in the gold-jewellery market and have healthy margins as well. We are working on plans first to expand our franchise across South India and then on we will have a pan-India presence,” Mehta added. The company, whose flagship exports business accounts for nearly 95 per cent of its topline of around Rs 20,000 crore, imports gold directly from the source from across the world, refines at its own unit and churns gold jewellery to be exported to various wholesalers across the world.

“We are among the very few players who are fully backward-integrated and this is one of the reasons we can control costs and offer jewellery at cost-effective prices,” Mehta added.