Gitanjali Gems to focus on small towns

Citing a huge potential in small towns, Gitanjali Gems,

which has been on an aggressive expansion spree has decided to open 60-65 stores in the second half of the current fiscal year. The smaller towns are showing demand for branded wear with rising income levels and brand consciousness in these areas. These areas are experiencing 100 per cent growth compared to large cities. Taking advantage of this situation, the company has decided to make inroads in Tier II, III towns on a large scale.

Gitanjali added 111 stores in the first half of this fiscal. The company currently gets around 60 per cent of its revenues from urban markets. In addition to the diamond jewellery range, Gitanjali plans to bring in gold jewellery collections under their key diamond jewellery brands.

Gitanjali, which retails diamond jewellery under the brands Gili, Nakshatra, Asmi and D’Damas in India, recently acquired four Italian jewellery brands from a unit of Dubai’s debt-laden jewellery group Damas International . It has 1.7 million sq. ft. of retail space in the country, of which it 400,000 sq. ft. has been added in the first half of FY12. It also has a retail presence in the US and the Middle East.

It plans to invest Rs 3.5-4 billion as capital expenditure in FY12 which will meet its working capital requirement for new stores and cost of inventory. It expects to achieve a profit growth of 50 per cent on sales growth of 35 per cent in the current fiscal.

Gitanjali is undergoing restructuring process and has transferred stake in several units of Gitanjali Brands to consolidate and realign its branded jewellery business. It has also valued nine of its major brands at Rs 55.84 billion, after it undertook a valuation exercise, ahead of tying up long-drawn-out deal talks with PE players.