Chennai-based GRT Jewellers is making its biggest bet yet on becoming a national jewellery retailer, acquiring a controlling stake in Mumbai-based Tribhovandas Bhimji Zaveri (TBZ) for up to Rs 1,033.71 crore. Announced on 31 August, the deal gives GRT an established western India presence, but the bigger question is whether the acquisition can turn TBZ’s 37-store network into the volume growth that has eluded the latter (TBZ) in recent years.
The deal will trigger a mandatory open offer for another 25.88% of TBZ’s public equity at Rs 249.61 a share, potentially taking the total open-offer consideration to Rs 431.10 crore.
“TBZ’s heritage, customer relationships and merchandise portfolio can be combined with GRT’s retail capabilities and growth-oriented approach to take it to the next phase of growth,” GRT Jewellers managing director G.R. Radhakrishnan said.
G.R. Ananthapadmanabhan, also managing director at GRT, said the acquisition fits its strategy of expanding across India.
Strategic Footprint
The rationale is straightforward. GRT has 68 stores in India and another outlet in Singapore. TBZ has 37 stores across 28 cities, with a significant presence in Maharashtra and Gujarat. The acquisition gives GRT access to an established western India network, allowing it to add stores, customers and brand recognition without building the platform from scratch.
That is particularly valuable in a capital-intensive business. Jewellery retailers must commit substantial capital to inventory before a showroom begins generating sales, while rising gold prices have increased working-capital requirements.
TBZ’s history illustrates the difficulty of scaling. Founded in Zaveri Bazaar in 1864, the brand has grown from a single storefront to 37 locations over five generations. Yet its expansion fell short of the ambitions outlined when it went public in 2012, when it had targeted 57 stores within three years.
Operational Challenge
More importantly, revenue growth has not translated into higher physical volumes.
TBZ’s revenue has grown at 19% annually over the past five years to Rs 3,203 crore. Ebitda has risen nearly 24% to Rs 361 crore, while net profit has grown 36% to Rs 203 crore in the same period.
Gold sales volumes, however, declined from 3,424kg to 2,249kg over the past three years, while diamond volumes fell from 47,371 carats to 39,031 carats, analysts tracking the company said.
This makes TBZ both a growth opportunity and an operational challenge for GRT. About 65% of TBZ’s revenue comes from wedding and occasion-led jewellery, making store productivity, inventory management and customer acquisition crucial to future growth.
GRT brings scale that could help address these challenges. It has more than 12,000 employees, around 650,000 sq. ft of retail space, an e-commerce operation and brands such as Oriana and Silvana catering to different jewellery segments.
For GRT, TBZ offers a ready-made western India platform and an established heritage brand. For TBZ, the deal provides access to the capital and management capabilities of a larger retailer after years in which scaling independently has proved difficult.