Shree Ganesh Jewellery House

Crack jewellery retailer and exporter Umesh Parekh, 45, has a long-standing peeve. "I have not been able to convince my mother-in-law to buy gold from my company yet," he says, only half in jest. The larger point, of course, is that most middle-aged and senior citizens, a sizeable constituency of jewellery buyers, stay away from the razzmatazz of modern jewellery retail with its huge, flashy showrooms and slick salesmen (and women), and prefer to keep trundling along the beaten path to their traditional, friendly neighbourhood jewellery shops. Nothing, it seems, can replace the trust developed over ages between the two entities, leaving modern jewellery retail to oil its growth wheels on the bulging wallets of the youth.

Not that it should matter to Umesh Parekh, the younger sibling of two (the older is Nilesh Parekh, 46) that run the Kolkata-based Shree Ganesh Jewellery House. Over the past five years, the company has grown its top line at an incredible average of 178 per cent, and its bottom line, at 126 per cent, pitch-forking it to the top dog slot in the ‘heavyweights' category (sales in FY2009-10: between Rs 1,000 crore and Rs 4,999 crore) of BW's listing of India's Fastest Growing Companies.

For that matter, the Parekh brothers have the entrepreneurial spirit of youth to thank for their growth. Hailing from a jewellers' family, the duo would have continued running an ordinary mom-and-pop jewellery store had they not spotted the opportunities ‘The City of Joy', Kolkata, provided. Their idea to deviate from the family norm and set up a large-scale gold jewellery export unit in Kolkata was an instant hit, thanks to abundant cheap skilled labour and the sop that the West Bengal government provided, in the form of Manikanchan special economic zone (SEZ).

"We realised that artisans from the East travelled to the western parts of the country for work, but their hearts remained here, and it helped create a large opportunity for the company," says Nilesh, chairman of Shree Ganesh Jewellery House. While the stable business environment in the late 1990s, a relatively steady dollar and improving demand did help the firm blossom, it also had to face its stiffest challenges then. "No banks were looking at businesses growing in the East, so getting funds was difficult." The brothers also had to struggle to hire craftsmen from other states, as well as to get the first few orders as a new entrant in the market. "Our first consignment was 5 kg of gold jewellery to Singapore," recalls Umesh, the company's managing director.

Braving the difficulties, the brothers soldiered on, and Shree Ganesh Jewellery House, which was started in 2002 as a private entity with a modest export-oriented unit (EOU) in north Kolkata, recorded revenues of about Rs 2,953 crore in fiscal 2010. For the financial year ended March 2011, the company has targeted revenues of Rs 5,000 crore; in the nine months ended December 2010, it had reported revenues of Rs 4,146 crore. "We see our top line growing at about 30-40 per cent in the next 3-4 years," says Umesh.

Shree Ganesh Jewellery House now designs and manufactures gold and gem-studded jewellery, and besides selling them in India, also exports them to the Middle East, Singapore and others parts of the world. The company boasts a state-of-the-art facility of about 18,000 sq. ft at the Manikanchan SEZ, which employs 700 people including an in-house team of 50 designers. "Credit Suisse invested $20 million in April 2008, and we went public two years later — giving us enough capital for expansion that boosted our revenue," says Umesh. The company went public in March 2010 and raised about Rs 316 crore. It is opening two more facilities to increase its productivity — a 60,000-sq. ft facility at Domjur and a 20,000-sq. ft unit at Mondalpara, where it is using Italian machinery for the production of Italian fusion jewellery. The units are expected to be operational by the first quarter of fiscal 2012.

Shree Ganesh Jewellery House has collaborated with fashion designer Sabyasachi Mukherjee for a special range of gold jewellery, and is selling gold jewellery under the brand name ‘Gaja', at its 13 retail and wholesale stores across the country. It also plans to invest Rs 100 crore to open more retail outlets across India over the next two years.

The company also believes that the growth potential is the highest in the semi-urban and rural areas, and plans to open more stores in the Tier-2 and Tier-3 towns. "We plan to open 30 more stores in the coming year to push sales growth," says Umesh. The company is also looking at expansion opportunities in foreign markets. The company is reportedly looking at acquisitions of overseas brands, with deal sizes in the region of about $50 million. It has been in talks with 12-15 brands in Europe and the Middle East. Shree Ganesh is also planning to open duty-free shops in airports across the world, such as in Hong Kong, Singapore, Dubai, London, Australia, Newark and Sharjah.

Having entered almost all the verticals of the business, Shree Ganesh is looking at gold refinery as its next frontier. "There's a huge influx of gold, and this would give us more opportunities to explore this sector with ease," says Umesh. The company has tied up with a European company to set up a gold refinery in West Bengal with a capacity of 50-70 tonnes per annum. The company believes that the refinery, which is expected to be operational by June 2011, will help improve its margins and the overall bottom line. India imports approximately 700-1,000 tonne of refined gold annually, and refiners in India can make up to 2-3 per cent margins.

Going ahead, skyrocketing gold prices could be an area of concern. Over the past 12 months, gold prices have risen from Rs 18,300 per 10 gm to Rs 22,400 per 10 gm, but the Parekhs are not  deterred. "Though the rise is steep compared to previous years, gold has shown a positive growth and the investors — besides the general customers who buy gold for occasions — have received very good returns," says Nilesh.

Of course, the other problem — of Umesh's mother-in-law's and the great number of senior buyers' propensity to avoid modern retail — remains. Hopefully, the Parekh brothers will crack that riddle, too.

abhinav(dot)sharma(at)abp(dot)in

(This story was published in Businessworld Issue Dated 23-05-2011)