“The family jeweller is still an important channel in jewellery retail in India”

Founded as a single company cutting and polishing diamonds for the jewellery trade at Surat, Gujarat, in 1966, the Gitanjali Group became, a pioneer among major diamond and jewellery brands in India. Today Gitanjali Gems owns over 20 branded jewellery lines, 2,500 retail outlets and 250 franchise stores across India, while in the US, where it broke into a few years ago, the company logged over Rs 1,000 crore in sales, against the Rs 1,500 crore transacted in India, last year. Last year, Gitanjali Gems also bought the Nakshatra brand from DeBeers and set about establishing it with new vigour in a country, where branded jewellery accounts for only 20% in a Rs 25,000-crore diamond jewellery retail market. According to Mehul Choksi, CMD, Gitanjali Group, his brands account for nearly 50% of the branded jewellery market in India. Under Choksi?s stewardship, Gitanjali Gems went public in 2006. The company has expanded its portfolio through joint ventures with Armo Netherlands Finance BV and Italy?s Mariella Burani Fashion Group. ?The year 2008 was the best year for us, when Gili grew over 33%, against the industry average of 15%,? he told FE?s Radhika Sachdev during the course of a recent interview.

How much did you pay DeBeers for Nakshatra and what is the present valuation of Nakshatra and Gili brands and their combined contribution to Gitanjali Gems?

We pumped in over Rs 100 crore into Nakshatra. Its present sales stand at Rs 250 crore, while Gili?s sales are Rs 350 crore. Together they contribute 75% to the Group?s turnover. The rest comes from other brands in our portfolio, namely, D?damas, Asmi, Sangini, Morelatto, Greggio, Giantti, Stephen Hafner, Diya, Maya, Rosato, Calgaro, World of Solitaire, Saint Honore, Shuddhi and Parineeta, to name a few.

What is Gili?s individual contribution to the Group?

Gili contributes over 10% to the topline, 25% to the branded jewellery segment and plays a very important role in our bottomline as well. The brand has a strong appeal with the NRI community in Nepal, Bangladesh etc. The year 2008 marked a paradigm shift for the brand?from having an ambassador to changing its overall look, logo redesign to becoming an affordable luxury brand.

What do you attribute the industry-defying growth of these two brands to?

To the volatile gold prices, the emergence of modern day retail formats and the Indian consumers? rising interest in branded gold and diamond jewellery. While we were always known to be fixated on gold, our fascination with diamonds was never publicised, perhaps because there was this mistaken notion that diamonds don?t have a resale value. Not any more. We introduced Gili at Shoppers Stop in June 1994, followed by multi-level stores like Amarsons and Premsons. Our first exclusive showroom was opened in 2004. The experiment was successful in Delhi and Mumbai, but not so successful in Chennai and Cochin.

However, with certification and third party verification, diamond jewellery has come to be well accepted in this country. We also step up promotions and media spends on occasions such as Valentine?s Day, Diwali and Raksha Bandhan. We made mass use of direct mailers of seasonal catalogues with partners like Citibank and grew from an initial 50,000 orders to a staggering 1.2 million in three years.

There was a time, when jewellery trade was largely dominated by family-run businesses. Giving them competition are international brands such as Cartier, Tiffany, Chopard and Piaget, besides the homegrown Tanishq. Where do you fit in in this design of things?

The family jeweller is still an important channel in jewellery retail in India and auspicious occasions like Akshaya Tritiya and Dhanteras still contribute hugely to our sales, but all that is gradually changing. Lately, to increase their footfalls, even family jewellers have begun to stock our brands and today, we have a 8-10% share in the total diamond trade in the country.

What are some of the challenges that you faced when you took over your father?s business?

The biggest challenge was to introduce modernisation and professionalism into a traditional industry, and to guide the forward integration of the diamond business, first into jewellery manufacturing and then into retailing. In the latter phase, the challenge was to understand the changing consumer mindset, and to cater to the varied needs, first, of a vast market like India, and second of different international markets. Today, we have successfully developed a range of brands that appeal to different segments.

How would you differentiate between the Gili and the Nakshatra brands?

Gili is the older sibling, the first jewellery brand launched in lifestyle stores in the country. Hence its personality is confident and poised, while Nakshatra is an aspirational brand that we are using to push diamond jewellery sales in the country. These attributes are reflected in our brand ambassadors, Bipasha Basu for Gili and Katrina Kaif for Nakshatra. Gili, for instance, reflects a lot of attitude?it is a successful, enthusiastic and a reliable brand for mature women. Bipasha, in our view, is not just successful, she is also self-made and a style icon, a perfect blend of beauty with brains that goes with Gili.

There was once a time when Indian families bought jewellery for investment rather than a fashion accessory. How did this transition from 22 to 14 and 18-karat jewellery come about?

It may have happened for some utilitarian, functional reasons. The working woman today wants jewellery for everyday use. Jewellery is also accepted as a fashion accessory. All this is driving a demand for lighter 14k and 18k pieces and modern retail is also contributing its bit to creating this mass appeal.

How big is the export opportunity for Indian retailers? You have been on an acquisition spree in the US and in China.

The overseas opportunity is huge. At present, we have a strong retail presence in the US, the Middle East (we have an exclusive tie-up with Damas Jewellery there), China and Japan. We entered the US market two years ago by buying a family-run chain in Texas, Samuels Jewelers. Started in 1891, the company had $100 million in annual revenue at the time of the purchase and nearly 100 outlets. Last November, we bought Rogers Jewelers, a Midwest chain with $80 million in revenue. This gave us nearly 50 more outlets. At both Samuels and Rogers, we have retained the US management and staff, but the jewellery comes from our diamond processing and design centres in India.

It?s mainly to tap the overseas market that we are in the process of setting up an SEZ in Hyderabad on a 170-acre plot. The government is offering a 15-year tax holiday to companies that move in. We will be the first and then we will rent out the rest of the space to other companies. We are investing in modern-day casting, laser-cutting and refining equipment that they can rent out from us.

You also bought a diamond-cutting factory in Qingdao and another in Panyu. Are costs significantly lower in China than in India?

It?s not just about costs, which of course are 30% to 40% lower, but about the fact that the Chinese are extremely good at their craft. Anyone can see that the Nakshatra designs that are emerging from China have a timeless appeal about them.

What?s next on the anvil?

Plenty. We continue to strengthen our ties with Italian jewellery makers who are renowned for their design flair and technical expertise. Internationally, we have been expanding our retail presence in all the key markets through strategic acquisitions and tie-ups.China will serve us as a second design hub for the US market. Meanwhile, we are also focused on developing skilled workers in India.