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Cover Story

Now to Get The Collaborative Model Up
The Positive Trend in Gold Prices as well as The Gradual but Visible shift towards Organised Retail Chains is doing Gitanjali Group a World of Good. As it Celebrates its Exceptional Performance in The Past Fiscal, it also needs to sort out some of The Positioning Issues it Currently Faces
Issue Date - 26/05/2011
By the end of April, gold, the most preferred precious metal for every occasion in India had touched a price of Rs.22,470 per 10 grams, a growth of 31% since the beginning of this financial year. With definite conviction, and if we were to use a moribund cliché, players are seeing only bright and ‘shiny’ days ahead.

Riding on this wave is the country’s leading jewellery retailer in terms of retail presence – Gitanjali. For the quarter ending December 2010, the company posted net sales of Rs.26.54 billion, a growth of around 46.47% yoy. Net profit was far better at Rs.1 billion, a growth of 147.4% yoy. The company is ranked 17 in the B&E Wealth Creator list in terms of percentage growth in mcap for the financial year ended March 2011, with mcap growth of 107.77% yoy. “After the slowdown, demand has suddenly emerged, so jewellery consumption for both consumers as well as for stockpiling has gone up,” affirms Mehul Choksi, MD, Gitanjali Group. Paying heed to the US market has also shown positive signs. Gitanjali Gems Ltd. manage to record a sales growth of 15% in the US. So for this year too the group has big plans for US and European markets.

For the financial year ended 2010-11, Gitanjali evinced an astonishing growth of 40% from its branded jewellery retailing in India. The jewellery consumption pattern in India is changing and with inherently family jewellers offering limited and mostly age old designs, the modern branded retail chains, which offer jewellery for every occasion, are becoming popular among Indian consumers. This is palpable in the findings of Gems & Jewellery Exports Promotion Council report, which states that organised retail jewellery sales have been growing at 35-40% against the family jewellers’ growth rate between 5-10%. So Gitanjali definitely has a good time ahead and is planning to roll out more new products. But when it comes to retail penetration, the group is facing some issues. Its many strategic alliances for retailing international brands are getting affected due to the group’s own brands. For instance, Dubai-based Damas put a stymie to the Indian retail project with Gitanjali due to the organisation’s internal problems related to the Gitanjali group’s own brands. And with this two year venture coming to an end, the group has also been hesitant to launch a new tie up, even as main competitor Tanishq ramps up presence to 45 cities on the basis of a single brand.

The positive trends give Gitanjali group enough reasons to celebrate and it must indeed look for expansion. But it must correct such issues in terms of positioning in time.


Angshuman Paul           

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