Gitanjali to Expand Global Retail Operations

Indian diamond and jewelry manufacturer Gitanjali Gems is undertaking a number of initiatives for major expansion of its presence at the retail level in different global markets.

While Mehul Choksi, chairman of Gitanjali, has confirmed that the company was looking for suitable acquisitions in the U.S., he declined to comment on reports in the Indian press that it was purchasing U.S. jewelry retailer Samuels Jewelers Inc. in a transaction valued at $25 million.

This week, the company raised $110 million (approximately Rs 4.95 billion) through the issue of foreign currency convertible bonds (FCCBs) that will mature in 2011. The FCCBs will be listed on the Singapore Stock Exchange. The money will be earmarked for meeting the company's capital expenditure requirements and towards identified acquisitions plans.

About 60-65 percent of the amount raised will be invested in the 200-acre gem and jewelry sector specific SEZ that Gitanjali is developing in Hyderabad. Recently the company also received permission for another gem and jewelry SEZ at Panvel near Mumbai.

Earlier this week, Gitanjali signed an MOU with one of the leading retail chains in the Middle East, Sulieman Al Othaim of Saudi Arabia, to set up a 50:50 joint venture to enter the mainstream retail market in the region.

The Sulieman Al Othaim Group, which runs a chain of various specialty stores, has 38 outlets in the KSA and is planning more both in the Middle East and other international locations.

Some of the brands manufactured and marketed by Gitanjali, such as Nakshatra, Asmi, and Sangini, are already being distributed through outlets of the Sulieman Al Othaim Group. The new venture will also develop brands like Rayana, La Baguette, and Hart to Hart specific to the Middle East market.

The JV will have an investment of over Rs 500 million ($11.18 million) and a sales turnover of Rs 750 million ($16.76 million) in the initial stages and will increase proportionally in the coming years.