This story first appeared in DNA Money edition on Tuesday, December 20, 2011.
Rajesh Exports has embarked on an ambitious expansion of its retail chain ‘Shubh Jewellers’ with a goal to become the largest jewellery retailer in the country.
The BSE-listed jewellery exporter which operates 73 stores in Karnataka is planning to increase it to 550 across the south Indian states in the next three years.
It plans to invest about Rs6,600 crore for the expansion and expects revenues of Rs25,000 crore by 2014.
Siddharth Mehta, chief strategist, Rajesh Exports, said that the company aimed to have 125 stores in Karnataka by April 2012.
“Another 50 stores will be added in Karnataka after which we will expand into Tamil Nadu, Andhra Pradesh, Goa and Kerala. All stores follow a unique franchisee model, wherein established jewellers are brought into the network,” Mehta said. These stores are refurbished according to the Shubh format and require an investment of Rs15-20 lakh from the franchisee, he said, adding that day-to-day management and other operating costs would be taken care of by the franchisee and Rajesh Exports would invest in the inventory at these stores.
“The franchisee’s share in the overall revenues generated from the store is 2.3% of the profit,” he said. The average size of a Shubh store is 500-600 square feet, though the company also has stores that are as small as 300 sq ft going up to 3,000 sq ft.
With a rollout of these 125 stores by April 2012, the company expects to become the largest retail jeweller in the country.
Through the network of 550 stores, the company is eyeing 8% of the domestic retail gold jewellery trade.
For the first half, the company generated Rs650-700 crore sales through 48 stores. “Around 25 stores were added during the Diwali period and hence revenues from those stores haven’t been included in the figure.The net profit from 48 operational stores was in the range of Rs42-45 crore,“ said Mehta.
The expansion would be funded through a mix of internal accruals, external commercial borrowings and credit from suppliers. The company has Rs2,000 crore of internal accruals and is at an advanced stage of negotiations for debt with foreign financial institutions at a rate of Libor + 4.5%. It expects to close the ECB by May-June 2012.
Rajesh Exports has embarked on an ambitious expansion of its retail chain ‘Shubh Jewellers’ with a goal to become the largest jewellery retailer in the country.
The BSE-listed jewellery exporter which operates 73 stores in Karnataka is planning to increase it to 550 across the south Indian states in the next three years.
It plans to invest about Rs6,600 crore for the expansion and expects revenues of Rs25,000 crore by 2014.
Siddharth Mehta, chief strategist, Rajesh Exports, said that the company aimed to have 125 stores in Karnataka by April 2012.
“Another 50 stores will be added in Karnataka after which we will expand into Tamil Nadu, Andhra Pradesh, Goa and Kerala. All stores follow a unique franchisee model, wherein established jewellers are brought into the network,” Mehta said. These stores are refurbished according to the Shubh format and require an investment of Rs15-20 lakh from the franchisee, he said, adding that day-to-day management and other operating costs would be taken care of by the franchisee and Rajesh Exports would invest in the inventory at these stores.
“The franchisee’s share in the overall revenues generated from the store is 2.3% of the profit,” he said. The average size of a Shubh store is 500-600 square feet, though the company also has stores that are as small as 300 sq ft going up to 3,000 sq ft.
With a rollout of these 125 stores by April 2012, the company expects to become the largest retail jeweller in the country.
Through the network of 550 stores, the company is eyeing 8% of the domestic retail gold jewellery trade.
For the first half, the company generated Rs650-700 crore sales through 48 stores. “Around 25 stores were added during the Diwali period and hence revenues from those stores haven’t been included in the figure.The net profit from 48 operational stores was in the range of Rs42-45 crore,“ said Mehta.
The expansion would be funded through a mix of internal accruals, external commercial borrowings and credit from suppliers. The company has Rs2,000 crore of internal accruals and is at an advanced stage of negotiations for debt with foreign financial institutions at a rate of Libor + 4.5%. It expects to close the ECB by May-June 2012.
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