Gitanjali Gems to expand in diamond retailing

The share price of Gitanjali Gems, jewellery manufacturer and exporter, hit a 52-week high last week, with its plan to capture the global recovery in diamond jewellery demand and other luxury items.

Its share price hit the lowest in many years at Rs 29.95 on March 1, before recovering to hit the highest in one year at Rs 51.50 on August 11. The stock closed unchanged at Rs 44.2 on Thursday. Investors have lost 93 per cent in this scrip since its peak of Rs 650 on April 23, 2013.

Apart from diverting its focus from gold ornaments to diamond jewellery, Gitanjali introduced low-carat gold content in stone studded products. It now plans to raise Rs 110 crore by issue of convertible warrants to the promoter and promoter group or others through preferential allotment, subject to shareholder approval. The capital infusion is for its proposed expansion plan in both domestic and global markets.

"The company is going in for diamond jewellery retailing all over the world and also for more profitable items. It plans to add 50 more stores in the United States, to expand its presence by 50 per cent in the world's largest diamond jewellery consuming market. We are putting up distribution centres in China and the Middle East to increase our base there," said Mehul Choksi, managing director.

America is about 40 per cent of the world market for luxury items. Apart from there, Gitanjali plans to increase its shop-in-shop model by 3,000 outlets all over the world to increase penetration. In the proposed investment, the promoter (Choksi) plans to infuse Rs 40 crore; private investors would bring the rest.

"While focusing on branding and retail, the company plans to increase its reach in the shop-in-shop model. In the US, we are planning to open at least 15-20 stores by November," said Choksi.

After America, it plans to concentrate on the Indian markets, followed by China and West Asia. With the capital infusion, Gitanjali aims to add Rs 400-500 crore to its existing annual turnover by the end of the next financial year. Retail, nearly 30 per cent of turnover, is expected to see a 15-20 per cent jump in FY18.

The company had a net loss of Rs 6.6 crore for the quarter ended March, on net sales of Rs 3,149 crore. For 2015-16, the net profit was Rs 48.8 crore, on net sales of Rs 8,604 crore.