Dear Shareholders
The financial year 2014 has marked another year of success and growth for Gitanjali.Our company’s e orts were based on a well-entrenched belief that is at the core ofour business. We believe we have the potential to track and spot opportunities and ndsuccess in every situation. Our ability to beyond the norm has been catalytic in oursuccessful and pro table year.
The macroeconomic environment in the nancial year 2014 was replete with uncertaintiesand challenges. The inverse co-relation between currencies commodities and capital owsensured that global markets witnessed constant volatility and outflow of funds.Notwithstanding the fragility of the global economic environment and a slow revival ratewe at Gitanjali Gems vigorously pursued identifying opportunities and successfully grewthe revenues. We remain focused on the quality of growth to achieve better realizationsfrom our branded jewellery business. Gitanjali’s strong operating and nancialperformance in the year is a con rmation to its all round capabilities and its brand pull.In the coming years the company’s focus is to grow the category of diamond jewelleryand precious stones.
India is a huge market with a very large youth population. The disposable incomes inurban India are on the rise and the demographic mix is clearly in favor of generationnext. The rural income too is on the increase with various government schemes favouringminimum wages etc. This translates to mounting aspirations for products such as brandedjewellery. We at Gitanjali are well-poised to take advantage of this and hence have beenable to grow our share of the customer wallet in the nancial year 2014 and we were able togrow our branded jewellery revenues signi cantly. We have succeeded by aggressivelyexpanding our es as presence in smaller Indian cities and towns. Our success hasproved that jewellery consumers are shifting from the unorganised sector to the organisedsector. It has also been proved that branded jewellery is rapidly becoming the preferredchoice for consumers in these regions and that the increase in demand for brandedjewellery is not limited to large cities alone. This is how our strategicinitiatives arehaving the desired impact on our nancials.
Our strategy is to position linking them to occasions classes and situations and thenmarketing these across regions through a diverse mix of company owned storesshop-in-shops and through franchisee owned stores. Gitanjali’s of brands is intendedto ensure that there are no gaps left and that dynamic and rapidly changing consumerneeds tastes and preferences are addressed through our bouquet of brands at multipleprice points.
We are one of the leading players theworldoverin capabilities. jewellery acquisitionsaugmented the company’s brand branding and retailing. Our presence spans the valuechain in full from the sourcing of diamonds to the retailing of jewellery. Beingintegrated the company enjoys bene ts that emanate at the value chain’s intermediatestages. Gitanjali not only nds a place amongst the largest global branded jewellery andretail players but is also among the fastest growing companies in this space. position ofThe Indian jewellery industry is nearly USD 100 billion today. We understand that Indiahas a diversity of regional preferences and we have incorporated these in the newcollections brands and designs that we launched during the year. Our brandscontinuecities. to enjoy strong recall owing to vigorous promotional campaigns and the choice ofleading brand ambassadors. We are constantly innovating-creating new designs newcollections new channels for the sale of jewellery supporting new product launches withpromotional campaigns thus reaching out to consumers in a variety of ways and soenthralling them. These initiatives have been immensely successful.
We recognize that diamond jewellery is rapidly gaining ground in an Indian marketdominated predominantly by gold. Diamonds are also being viewed as a form of nancialsecurity and a repository of value. These are signi cant in uncertain times whenrisk-aversion is on the rise. By o ering a range of brands as well as trust andconvenience to consumers our company was able to grow the domestic diamond jewelleryrevenues. ple brands uniquely
Gitanjali Gems is a fundamentally strong company in the business of jewellerymanufacturing branding and jewellery retailing both in India and overseas.
Its olio of brands is a potent one. Both current olio and potential jewellery consumersare familiar with the company’s brands like Gili Asmi Nakshatra D’damas andSangini to name a few. During the year we added two new brands – Nirvana and Violato our brand portfolio which bring alongwith them unique design signatures andmanufacturing These portfolio and also enhanced the company’s retail footprintthrough the addition of 166 points of sales in the shop-in-shop format.
We service consumers through over 4000 points of sale and in India we are presentacross 300 cities andtowns.Inordertoleverageonour supremacy we have expanded our retailpresence aggressively during the nancial year 2014. Retail expansion will be mainly drivenby our growing franchise network as this will help address the fast growing demand forbranded jewellery in small towns and Gitanjali is also active in the e-commerce space asesas it has recognized the potential of online medium. In order to cater to the e-commercemarket it has made itself available by developing an e-commerce platform.
Having an integrated business model Gitanjali is well positioned to explore thee-commerce platform globally and reach out to millions of customers from its existing aswell as its expanding database.
Besides being an established brand for jewellery the company also launched brandextensions of its popular brands in other lifestyle categories. Gili apparel collection isalready developed while other categories like bags accessories and eye wear are in thepipeline. This extension to the next level is going to fuel cross category synergiesamongst the existing loyal customers of Gitanjali brands.
As for the Group’s international business US Middle East and Japan were the bestperforming markets for the group in the last nancial year. The 2nd half in general and thelast quarter in particular witnessed a strong performance in these markets. Also thestrategic stake of Gitanjali’s Japanese rm (Gems TV) has been merged with IMACBC ajewellery manufacturing company so that both GEMS TV and IMACBC avail of synergies of anintegrated business model. The group also hasons provide for inpresence in UK SingaporeHong Kong and other far eastern regions.
The recent regulatory changes by RBI in the months of May and June disallowed goldimports on consignment for domestic impacted the company’s business model signicantly.
The new norms stopped gold loans which were available to the company for six to sevenmonths. The company’s substantial line of credit was in the form of gold loan whichhas been impacted due to these regulatory changes. Respecting the CAD situation of thegovernment the company has started changing its business model by re-focusing on its corebusiness of diamond jewellery and other forms of precious jewellery. The company isplanning to increase its diamond jewellery sales which have better value addition.Gitanjali also plans to introduce lower category of 9K and 11K of gold and diamondjewellery in the Indian market.
Our portfolio is well-balanced in terms of presence in India and overseas. Thestrategic initiatives relating to a range of activities from branding to the launch of newcollections new store openings provided powerful momentum to our company’s domesticand overseas jewellery revenues. Our de-risking of revenues by geography channels andcategory has ensured that jewellery revenues today account for 62% of the total revenues.
We would continue to bene t from the increasing share of organised players in thejewellery space in India. Our understanding of the market and individual segmentrequirements e orts towards maintaining our strong brand recall constant innovations anddesign concepts will fuel our growth in India as well as internationally. The synergiesthat our company’s alliances terms of and learning and e ciencies will drive ourexpansion in keeping with our vision.
On behalf of Gitanjali I would like to thank you for the trust and faith that youon.This had have demonstrated.
Warm regards
Mehul C. Choksi
Chairman and Managing Director
