India's largest jewellery retail chain Kalyan Jewellers, is gearing up to enter the competitive Mumbai market next week. But instead of choosing zaveri bazaar or upmarket Bandra, the Kerala-based jeweller is instead opening three showrooms in the suburbs and that could prove to be a golden opportunity for Kalyan Jewellers, Reports Farah Bookwala of CNBC-TV18.
Thrissur-based retail jewellery chain, Kalyan Jewellers, is foraying into Mumbai with three showrooms that will open their doors on the same day 24th March. This move is part of the 2-decade old company's national expansion drive, which kickstarted with Gujarat in 2012.
In Mumbai, the company will open 3, 15,000 square feet showrooms in the suburbs at Thane, Vashi And Borivali. Each showroom will adopt the hypermarket format and will see a considerable investment of Rs 60-75 crores each.
Kalyan Jewellers will meet up to 35 percent of their capex needs through internal accruals, with the rest being sourced from banks. Overall, the company plans to add 20 showrooms in India and overseas in FY14, with an investment of 1,500 crores.
Additionally, Kalyan Jewellers, which clocked revenues of Rs 7,500 crore in FY12, is spending 90 crore rupees on their advertising and marketing campaign as they go national. But is this kind of investment justified in a market where Kalyan Jewellers is a late entrant and faces stiff competition from the likes of TBZ and Tanishq?
Analysts say the company's decision to set up large showrooms in the suburbs will reap dividends as established jewelers have not penetrated these areas, which are future consumption hubs.
"Every year we have been growing at the rate of 100-150% and the entire profits is being reinvested in the business because we are quite sure of what we are doing," Rajesh Kalyanaraman, Executive Director, Kalyan Jewellers
But could the recent policy to introduce KYC norms for jewellery purchases above Rs 50,000 prove to be a dampener? No, according to the management, who feel the policy will be tough to implement in the first place.
"If a person genuinely wants to invest black money he still has a choice, of making 15 bills or purchasing from different showrooms," Kalyanaraman said.
But as of now, the management is waiting for Sunday when Kalyan throws its doors open to Mumbaikars.