Rajesh Exports: Golden Times
For Rajesh Exports, the largest manufacturer of gold products in the world, it’s glitter all the way
Bangalore-based jeweller Rajesh Exports, in its latest annual report, said that the company created a ‘milestone’ for itself in the year 2016-17. And why not? After all, it posted impressive growth figures in the fiscal, despite all oddities in the market.
In a year when companies were battling the demonetisation slump, Rajesh Exports was able to manage stability in operational performance primarily on account of growing sales from its retail business. The company also performed well in its export and wholesale businesses, the result of which was visible in its financial report.
“Rajesh Exports has been focusing more on expansion of retail stores (Shubh Jewellers), which could assist an expansion in its operational performance in the medium to long term,” says Deven R. Choksey, managing director at KR Choksey Investment Managers.
Rajesh Exports, a zero-debt company on standalone basis, is the largest manufacturer of gold products in the world — it processes about 35 per cent of gold globally. It is the only company that has a presence across value chain starting from mining to owning its own retail brand.
In FY17 Rajesh Exports posted profit after tax of Rs 12,436.33 million, a 16.34 per cent jump from Rs 10,690.03 million in the previous fiscal. It also posted record breaking revenues of Rs 24,21,319.84 million last fiscal (a whopping growth of 46.55 per cent) compared to Rs 16,52,114.37 million in the year before.
What is noteworthy is the fact thatRajesh Exports has been able to keep up its growth trajectory amidst challenging times not only in the domestic market, but also in the global market, where currencies have been impacted because of the dwindling global trade. Ever since Rajesh Exports completed the acquisition of Swiss company Valcambi, the world’s largest gold refiner, it has been able to establish a strong global presence for itself. While the main purpose of the acquisition in 2015 was to secure raw material at lower prices and adding technological prowess, it also helped the company become the largest gold refinery in Switzerland.
Going forward, the company’s strategy is to grow its retail presence by increasing the number of its showrooms globally and launching an e-commerce platform for global distribution of its products. Back home, it also plans to focus on changing its product mix. “We have also been launching new products across different lines and at different price points in the retail segment on a regular basis,” the company said in its annual report.
So, are the threats completely over for the company? Well, the current fiscal so far has been challenging for gold companies “given the first quarter was shrouded in ambiguity due to higher tax rate under the GST regime,” says Choksey. Further, an imposition of 5 per cent import duty on jewellery levied by the UAE government along with fall in gold prices and appreciation of the Indian rupee against the US dollar are all likely to put pressure on financial performances of companies this year. Besides, experts are also keeping a close watch on whether there will be any adverse impact on the industry with the government levying KYC norms for buying gold jewellery over Rs 50,000.
All in all, it is a time wired in opportunities and threats. And, for Rajesh Exports, it’s all about keeping the glitter intact.