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October 22, 2009

Forbes India profile of Gitanjali Gems

From the Forbes India profile:
He is aiming to be the world’s biggest jewelry retailer, growing bigger than Tiffany, which had net sales of $2.86 billion last year and has over 200 exclusive stores; at the same time, create a group full of well known brands, something on the lines of LVMH, which owns 50 brands netting it over 17 billion euros in revenue in 2008. For Gitanjali, Choksi unabashedly talks of revenues of $5 billion from his 60-odd brands, from the current consolidated sales of $1.2 billion in the next “few years.”

...Though most of the growth in the jewelry business came in recent years, Choksi saw the writing on the wall pretty early. Choksi realized that he was in the lowest end of the value chain, whereas more than 70 percent of the additional value accrued to the companies that sold those diamonds in branded jewelry. According to the International Diamond and Jewelry Exchange, or IDEX, in 2006-07, rough diamonds of $7 billion in the mines were worth $19.8 billion after they were cut and polished by the likes of Gitanjali. They value increased exponentially to $73 billion when they got sold in stores across the world.

The initial public offering (IPO) in 2006 was a particularly difficult affair. Its two lead managers, known names in the financial world, backed out in the last minute citing “reputation” problems with the diamond industry. Gitanjali went ahead with the IPO with a new lead manager and mopped up the targeted Rs. 330 crore. A year later, the same two lead managers came back and asked to be part of Gitanjali’s latest fund raising initiatives — a $110 million foreign currency convertible bond and a $180 million global depository receipt. They were politely refused. Gitanjali had made a statement.


Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in