Southern markets already saturated with organised jewellery retailers: Joy Alukkas

Interview with the chairman and managing director of Dubai-based jeweller Joyalukkas

Dubai-based jeweller Joyalukkas today entered the Gujarat market with two new showrooms. Primarily a South-based player, it now plans to expand its presence in the northern markets and has roped in movie actor Hrithik Roshan as the brand ambassador globally. Joy Alukkas, chairman and managing director of the company talks to Sohini Das about the company's domestic as well as overseas expansion plans which already owns 90 stores globally across 10 countries. Planning to invest close Rs 600 crore in its jewellery business in India by March 2014, Alukkas feels that expansion is key to maintaining healthy growth in revenues and that the southern markets are already saturated with organised jewellery retailers. Edited excerpts:

Considering the tight supplies of gold and high premium charged by importing agencies, Is there enough supply of gold for jewellery markers, more so for a big players like you?

We source gold from various vendors, from Kolkata, Jaipur, Ludhiana etc. We buy from the domestic market, we do not import gold or jewellery. We have long-term sourcing contracts with our vendors, therefore our sourcing costs are also low.

What is your outlook for gold prices in India as well as internationally for next one or two quarters?

Very difficult to comment on. Gold prices would depend on how the Indian rupee behaves in the coming months. In the last three months, the prices have been in the range of $1300-1,350 an ounce.

Recently, we have seen big players like Kalyan Jewellers and Malabar Diamonds and Gold expanding in tier-II and Tier-III cities. Does it mean the market in metros has saturated?

The southern market already has many organised retailers, the southern market is saturated. Compared to that, in north there are not many organised retailers, mainly family businesses. Therefore, we are also planning to expand our presence in the northern markets. Like we are going to test the Gujarat market. Today we opened two showrooms, one at Vadodara and another at Ahmedabad. We are planning to open two more outlets before March 2014, one at Surat and another at Rajkot. Our main strength is the southern market, Kerala, Andhra Pradesh, Tamil Nadu and Karnataka. We are planning to open more outlets in the north. We plan to open 10 new showrooms in the country by March next year. Of this, two would be in Mumbai, five in Andhra Pradesh, one in Karnataka, while others would be Kolkata and Pune. This would take our total number of outlets in India to 52.

At time, jewellers are facing tough time, you are expanding your stores, any special reason for that?

We started in India around 2002. In the last ten years our Indian business has seen a 25-28 per cent rise in turnover. The reason why we add new outlets is that. Our existing outlets are growing in the range of 1-4 per cent. They are matured outlets. Investment per outlet is around Rs 60 crore, and that way we plan to invest Rs 600 crore in our gold business in India by March 2014. Also, gold buying in India is very custom driven. It is in our tradition. For every wedding, if not anything, there is the requirement for a mangalsutra.

What about your international expansion plans?

We are planning to open showrooms in New York and Qatar next year. The total number of our overseas showrooms now is around 48, and when expanding we are trying to focus on cities where Asians are staying. Indians anywhere in the world would buy gold. The turnover from our Indian business last year was around Rs 4,000 crore, while our overseas revenues were in the range of Rs 6,000 crore. Therefore, the overall turnover of the group was in the range of Rs 10,000 crore.

With gold prices going up, is the share of gold exchange on the rise when buying jewellery?

Yes, it is definitely going up. Of all the gold jewellery sold, around 25-30 per cent is old gold exchanged. Around 15 years back, exchange gold would constitute around 10 per cent of gold jewellery buying in southern states like Tamil Nadu, and now even there it has risen up to around 40 per cent. Moreover, the political uncertainty is states like Andhra Pradesh has also affected our business. We have eight showrooms in the state and plan to open another five. However, in the last six months we have not been able to keep all our showrooms open on all days because of the prevailing situation. Business in Andhra is down by around 60 per cent in the last quarter.

Apart from the gold jewellery business, you also have flight chartering and malls businesses. What are the plans for the other lines of business?

We have other lines of business like textiles, garments, money exchange, wedding malls called Mall of Joy and an air charter company called Joy Jets. For Joy Jets, we now have one flight, and by end of 2014 we plan to take the total fleet to four. These are all four to eight seater aircrafts that will be stationed at the Chennai airport and can fly all across the country. These are for our own use and chartering. This year our investment in Joy Jets is around $15 million, and next year we plan to invest close to $ 38 million.