By Santhosh V Perumal/Business Reporter
India’s fastest growing gold retailer, Kalyan Jewellers, which has invested QR200mn to open seven outlets here, is expecting QR650mn turnover within a year and will explore feasibilities to open more showrooms as well as a factory, as it exuded “confidence” in Qatar’s economy.
The jeweller, which is slated to maintain QR500mn annual capital expenditure, is also planning to expand operations in the Gulf Cooperation Council (GCC), expected to constitute 40% of its total turnover, as well as foray into Singapore, Malaysia and Sri Lanka, within the next three years, according to Ramesh Kalyanaraman, executive director of Kalyan Jewellers.
“Next year (2016-17) we are expecting QR650mn turnover,” he said, adding in Qatar, as of now, seven showrooms are well distributed but after six months it will undertake a survey to assess any untapped areas.
Terming the current slowdown in the country as a short-term phase, he said the group is a long term player in every country.
“We are confident about Qatar” not only due to its intrinsic macro strengths but also on growing population, which augurs well for the sale of gold, which will be the last commodity to be affected by the current turmoil in the oil market, he said, adding gold prices are expected to remain range bound in the immediate term but long-term predictions become untenable on various external factors, including oil prices, expected US Federal Reserve interest rate rise and the currency fluctuations.
Although there was an initial small dip in the gold sales (in the UAE) owing to concerns among expatriates in view of low oil prices, it soon recovered as people do not postpone buying gold too much, Kalyanaraman said.
Kalyan Jewellers, whose topline growth has consistently expanded 20% annually against the industry average of 5% to 6%, will look at the feasibility of establishing a factory in Qatar. At present, Qatar’s market will be fed by the factory in Sharjah in the UAE.
So far, it has invested QR600mn in the GCC (where its bespoke wedding collection “Ameera” is increasingly being welcomed by the Arabs) with QR400mn in the UAE and Kuwait, and QR200mn in Qatar, Kalyanaraman said, adding it will spend another QR100mn in the UAE next year to open five more outlets; which will take its total there to 16.
The group is expecting a total turnover of QR7.5bn in 2016-17, of which 20%, or QR1.5bn, will be in the GCC and the remaining QR6bn from India, where it now has 73 branches. It is planning to open 17 more showrooms next year with three in Rajasthan state (scheduled for inauguration on April 24), three in Calcutta (scheduled for inauguration on May 8) and also into Uttar Pradesh, Madhya Pradesh and Bihar.
Asked about the funds for the expansion (both domestic and global), he said it would come from internal accruals and bank loans.
Kalyan, in which the US private equity Warburg Pincus invested about $200mn in 2014, ruled out any talks with any other firms for further capital infusion and also said there were no immediate plans to float an initial public offering.
“They (Warburg Pincus) have a long-term vision and so we don’t have any immediate exit plan. They are OK with long-term investments. There are no exit plans for the next two to three years,” he said.
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