Kalyan Jewellers, a ₹10,000-crore firm, plans to expand its operations to more regions and countries this year, said T.S. Kalyanaraman , chairman and managing director. Edited excerpts:
What would be the impact of a strengthening U.S. dollar on jewellery sales in India?
As a brand, we don’t deal in bullion and our gold coin sales will be less than 1% of our revenue. We are a retailer and sell jewellery for end user like a consumer who wants to wear the jewellery. So, gold price is not the only factor which actually bothers a consumer to come into the market or purchase from a jeweller.
It depends upon season. If it is a wedding season, even if the gold prices are a bit more than excepted, they won’t stop shopping. It is the same if the shopping is related to a festival. But of course, [normally] people like if gold prices are softer and they prepone and postpone purchase according to the prices.
In India, how many people buy for investment?
According to me, a majority of the consumers buy jewellery for their use but are happy if after two years they see that their product has appreciated by a certain percentage.
With recent incidents of bank frauds connected to jewellery industry, will retailers put expansion plans on hold?
I cannot talk about other jewellers. As a brand, Kalyan Jewellers’ expansion plan is as per target. We want to open 20 showrooms this year out of which 10 have been opened already. We reached the landmark of 100 showrooms in India and 132 globally. We will open the remaining 10 showrooms in the third and fourth quarter of this financial year.
Which countries are you expanding to?
We have 32 showrooms in the Middle East now. We are now present in five countries. We are expanding our footprint to the U.S. by opening three showrooms.
How do you finance this?
Warburg Pincus had invested ₹1,200 crore in 2013. In 2016, they invested ₹500 crore more. This, along with our internal accruals, will take care of our expansion [plans].
Are you availing bank funds for the expansion?
We have not increased our bank exposure since last year.
Issues like the Nirav Modi scam are creating problems for the jewellery sector...
Even though we belong to the same sector in large, we are not exporters, don’t do bullion sale nor deal in loose diamonds. The names you mentioned are more in that nature. We are a retailer and approximately 99% of our revenue comes from sale of jewellery to [the] end consumer.
There was a talk in the market about an IPO?
Its too early to talk on IPO plan.
How do you compete with other jewellers across India?
We are spread across 17 states and five countries today. So, it is a pan-India brand and we have operations in almost all the states in India and the advantage is that Kalyan is a very hyper-local brand.
Jewellery sector is one wherein you have to be very hyper-local if you want to be one amongst them, even in same state, the same products do not sell, town to town [the] product is different.
We have 100 showrooms in India today. But the competition is not with one or two common brands. We compete with the local jewellers..
We have brand ambassadors who represent states and also we have My Kalyan [customer service] centres to reach out to the consumers locally.
So, right from the product, right from my staff in the showroom, right from the way I communicate, right from the people I endorse, we become local. So, people see us as a son-of-the-soil brand.
My revenue was close to ₹10,000 crore last year.
Hallmarking is a major issue now. Consumers are very concerned about this. Your views?
When we entered in 1993, there was no standard of purity at that point of time. So, we were one of the pioneers to educate consumers about purity and malpractices in the industry.
We were the pioneers in selling 100% BIS hallmarked jewellery in all our showrooms. We respect the value of money of people and want people to get educated about purity. We are all expecting the Government of India to make BIS 100% mandatory like other countries. [In the] middle east countries, people can shop blindly at any showroom as the governments are very strict on standards and purity. We are expecting that to be mandatory very shortly because the government has already taken initiative for that and we respect that.
There were talks about hallmarking for a long time. But nothing happened...
Hallmarking can be made mandatory only if there are hallmarking centres even in rural areas.
Kalyan Jewellers is okay because our supply offices are there in metros or in tier one cities like I supply my Kerala products from Thrissur, my Chennai products from Chennai and Coimbatore.
Other regional offices are at Mumbai, Delhi, Kolkata, Hyderabad etc. where there are hallmarking centres.
You should imagine a jeweller who has only one showroom and his showroom is in a rural area, he also needs a hallmarking centre for him to hallmark. He cannot bring it to the metro, get it hallmarked and take it back. There is a huge cost involved for him and time involved for the inventory transit.
