THE MACROECONOMIC ENVIRONMENT DURING FY12 WAS REPLETE WITH
UNCERTAINTIES AND STRESSES. THE FRAGILITY OF THE GLOBAL ECONOMIC
ENVIRONMENT AND A SLOW RECOVERY RATE GLOBALLY NOTWITHSTANDING, WE AT
GITANJALI GEMS, VIGOROUSLY SOUGHT, IDENTIFIED OPPORTUNITIES AND
NAVIGATED CHALLENGES TO CHART A CHALLENGING YEAR SUCCESSFULLY.
Our company''s efforts were based on a firmly-entrenched belief that is
at the core of our business. We believe we have the potential to track
opportunities and find success in every situation. Our ability to look
beyond the norm has been catalytic in our reporting a successful and
There are over a billion people in India. It is a gigantic market with
a large youth population. Disposable incomes in India are on the rise.
This translates to mounting aspirations for products such as branded
jewellery. We, at Gitanjali were well-poised to take advantage of this
and as a result were able to grow customer wallet share in FY12.
We have succeeded through aggressively expanding our presence in
smaller Indian cities and towns. Our success has proved that jewellery
consumers are shifting from the unorganised sector to the organised
sector. It has also proved that branded jewellery is rapidly becoming
the preferred option for consumers in these regions and that the
increase in demand for branded jewellery is not limited to large cities
alone. That is another reason for our company to be optimistic.
Our strategy is to position multiple brands uniquely, linking them to
occasions, classes and situations and then marketing these across
regions through a diverse mix of company owned stores, shop-in-shops
and franchising. Gitanjali''s portfolio of brands is intended to ensure
that there are no gaps left and that dynamic and rapidly changing
consumer needs are addressed through our bouquet of brands.
We are now one of the leading players the world over in jewellery
branding and retailing. Our presence spans the value chain in full,
from the sourcing of diamonds to the retailing of jewellery. Being
integrated, the company enjoys benefits that emanate at the value
chain''s intermediate stages. Gitanjali not only finds a place amongst
the largest global branded jewellery and retail players but is also
among the fastest growing companies in this space.
We recognise that diamond jewellery is rapidly gaining ground in an
Indian market dominated predominantly by gold. Diamonds are also being
viewed as a form of financial security and a repository of value. These
are significant in uncertain times when risk-aversion is on the rise.
By offering a range of brands as well as trust and convenience to
consumers, our company enjoyed high growth during the year. Regional
preferences have been incorporated in the new collections, brands and
designs that were launched during the year. Our brands continue to
enjoy strong recall owing to vigorous promotional campaigns and the
choice of leading celebrities as brand ambassadors.
As pioneers in the branded jewellery business, Gitanjali has been and
will continue to benefit from this transition. We have succeeded by
capitalising on our first mover position by recognising emergent
patterns and shifts and adapting accordingly. We have, for example,
adopted modern retail formats such as boutiques, shop-in- shops and
Jewel Souk (a multi-brand store), all aimed to enrich the consumer
jewellery purchasing experience.
Gitanjali''s portfolio of brands is a potent one. Both current and
potential jewellery consumers are familiar with the company''s
brands-Gili, Asmi, Nakshatra and D''damas to name some. During the
year, nine of our Indian brands were independently valued at Rs. 5,584
Cr. We are constantly innovating-creating new designs, new collections,
introducing new channels for the sale of jewellery, supporting new
product launches with promotional campaigns thus reaching out to
consumers in a variety of ways and so enthralling them. These
initiatives have been immensely successful.
In the year 2011-2012, we commenced a business reorganising exercise
whereby we strategically reorganised our business into three focused
verticals in order to enhance value for stakeholders. The vertical
under the operating-cum-holding company Gitanjali Brands Limited (GBL),
on a consolidated basis, holds all our Indian brands for distribution
and retail of jewellery in India.
Our portfolio is well-balanced in terms of presence in India and
overseas and in terms of a balance between diamond and gold jewellery.
This has accelerated the improvement in the annual performance.
Incisive strategic initiatives relating to a gamut of activities from
branding to the launch of new collections, new store openings and sales
provided powerful impetus to our company''s revenues which swelled by
We service consumers through over 4000 points of sale. In India we are
present across 300 cities and towns. In order to leverage our position
of supremacy, we have expanded our retail presence aggressively during
the year 2011-2012. We added 23 own stores, taking the number of these
stores to 233. Gitanjali added 57 stores in the shop-in-shop format
resulting in this number increasing to 577. Our company also added 64
franchisees which took the number of franchisees to 319. The size of
our company''s retail network increased consequently from 1.3 million
square feet in 2010-2011to 1.7 million square feet in 2011-2012 We
intend to scale up to 2 million square feet by FY 2015.
The driver for the expansion of our retail presence will be our growing
franchise network. This will address the fast growing demand for
branded jewellery in small towns and cities. As a result of its
constantly increasing retail footprint, the company achieved high sales
from stores that matured during the year 2011-2012. Gitanjali''s
occupancy of over 60% of the Indian organised mall space is the largest
in the jewellery category.
A word on our US business - The retail chain, Samuels has turned
profitable. The Group currently operates through a 110 doors in the
US. The business witnessed a robust top and bottom line growth during
the year. Supply chain synergies also contributed to healthy returns
Expansions and acquisitions have been in focus during the year. We aim
to have a powerful presence in the leading jewellery markets globally
namely, the USA, Japan, China, India and the Middle-East. We opened
three more stores in the Middle-East taking the store count in that
region to four. We also want to serve emerging markets. Our Italian
brands service international design preferences which are different
from designs that are suitable for India.
Gitanjali incorporated Aston Luxury Group in Hong Kong to explore and
expand the international business of the Group in the Asia Pacific
region. Gitanjali acquired Crown Aim which is in Hong Kong. The entity
has a state- of-the-art manufacturing unit in China as well as in-depth
sourcing capabilities. With an output of over 1000 pieces of jewellery
each day Crown Aim ensures additional profit capture and enhanced
merchandising capabilities for Gitanjali. Crown Aim has a subsidiary -
“Alfred Terry”, in the UK, which distributes jewellery across 2,000
points in the UK and in the rest of Europe. The company acquired
Leading Jewels of Japan KK to expand business in Japan and the
adjoining region. The company incorporated Leading Singapore Jewels
Pte. Ltd with the objective to expand business in Singapore and the Far
We expect to continue to benefit from the increasing share of organised
players in the jewellery space in India. Our astute understanding of
market and individual segment requirements, focus on increasing market
visibility, maintaining the strong brand recall we enjoy among
customers, innovations and design concepts will fuel our growth
globally. The synergies that our company''s alliances and acquisitions
provide for in terms of learning and efficiencies will drive our
expansion in keeping with our vision and corporate philosophy.
On behalf of Gitanjali, I would like to thank you for the trust and
faith that you have demonstrated. It is these that above all drive us
on to consolidate and reinforce our position and enhance value.
Mehul C. Choksi
Chairman and Managing Director