<p>Kerala-based retail jewellery chain Kalyan Jewellers recently hogged the limelight for ceding a minority stake to global private equity fund Warburg Pincus for around Rs 1,200 crore. <br /><br /></p>.<p>In an interview to Benny Antony, Chairman and Managing Director of Kalyan Jewellers, T S Kalyanaraman, talks about the deal, future plans of the company and about the outlook on gold prices.<br /><br />Can you tell us about the recent investment by Warburg Pincus? <br /><br />What is the quantum of investment made and what is the quantum of stake sold to them?<br /><br />Warburg Pincus has invested around Rs 1,200 crore in the company for a minority stake. However, I cannot give the exact valuation due to confidentiality reasons.<br />How much will be the promoter stake post the dilution ?<br /><br />As I said earlier, I cannot give the exact quantum of stake sold to Warburg. All I can say at this point of time is that the promoters will continue to hold a majority stake in the company post the stake sale as well.<br /><br />Any plans to go for an IPO to raise funds especially with the markets scaling new peaks and retail investors back in the market ?<br /><br />Our expansion plans for the next 2 years has been taken care of through the recent fund infusion by Warburg Pincus, internal accruals and bank borrowing. We are not planning for an IPO in the immediate future. However, we might look at raising funds via IPO after two years when we might require further capital for expansion.<br />What are your revenues currently and what kind of growth are you expecting in revenues going forward ?<br /><br />Our revenues for fiscal 2014 was close to around Rs 8000 crore. For the current fiscal, that is fiscal 2015, we are targetting revenues of around Rs 10,000 crore.<br /><br />What will the proceeds of the fund infusion be used for ?<br /><br />The proceeds will mainly be used towards expanding our manufacturing set up and also for expansion of our retail presence across the country. We currently have 61 showrooms and we plan to open 28 more showrooms as part of our retail expansion plans. <br /><br />We also expect a 40-45 per cent increase in strengthening of our distribution due to the expansion due to which we plan to expand our manufacturing as well. We currently manufacture at our own units and have contract manufacturing as well.<br />You have been mainly known to be a South India-based jeweller. What are your plans to expand into other regions in India ?<br /><br />We currently have 14 showrooms outside South India and we are looking to expand more in the North and Western India. Kalyan Jewellers plans to open four showrooms in Gujarat, three in Delhi, three in Mumbai and two in Punjab by the end of the current financial year. We expect to have a pan-India presence by the end of the current fiscal.<br />What is your outlook on gold prices and gold demand for the current fiscal ?<br /><br />Gold demand has been good for the past few months and we expect good demand to continue for the rest of the fiscal. As far as prices are concerned, we are not so bullish. It is difficult to predict the future but I believe that it could be soft for the rest of the fiscal.<br />RBI has been putting a lot of restrictions on gold imports. Has that had a impact on Kalyan Jewellers in any manner whatsoever ?<br /><br />The restrictions on gold imports had been placed last year. However, we are not at all impacted due to the restrictions as we import gold through banks. For our showrooms which are outside India, we actually export gold from India.<br /><br />RBI had recently changed rules on gold deposit schemes. How has that impacted Kalyan Jewellers and its customer base ?<br /><br />The gold deposit schemes have now been restricted to 11 months by RBI. We had an inkling that there is going to be an issue with long term gold deposit schemes and hence we were prepared for it. As a group, the new RBI rules on gold deposit scheme has had no impact on our company and our customer base. We had pre-planned ourselves for this issue so that customers would not be impacted in any manner whatsoever by the change in rules on gold deposit schemes.<br /><br />What is your customer base currently and how do you plan to increase it going forward<br />?<br /><br /> ?We have a loyal customer base of over 20 lakh currently. In two years, we plan to double our loyal customer base to 40 lakh as we enter new markets in India and abroad.<br />You have recently hired a lot of big celebrities to endorse your brand. What are your advertising and marketing spends and do you plan to hike it given the recent big hirings for your endorsements?<br /><br />We have a lot of stars endorsing our brand so that we can have a pan-India presence. 1-2 per cent of our sales are spent on our advertising and marketing spends and I do not expect any change in that ratio going forward.</p>
<p>Kerala-based retail jewellery chain Kalyan Jewellers recently hogged the limelight for ceding a minority stake to global private equity fund Warburg Pincus for around Rs 1,200 crore. <br /><br /></p>.<p>In an interview to Benny Antony, Chairman and Managing Director of Kalyan Jewellers, T S Kalyanaraman, talks about the deal, future plans of the company and about the outlook on gold prices.<br /><br />Can you tell us about the recent investment by Warburg Pincus? <br /><br />What is the quantum of investment made and what is the quantum of stake sold to them?<br /><br />Warburg Pincus has invested around Rs 1,200 crore in the company for a minority stake. However, I cannot give the exact valuation due to confidentiality reasons.<br />How much will be the promoter stake post the dilution ?<br /><br />As I said earlier, I cannot give the exact quantum of stake sold to Warburg. All I can say at this point of time is that the promoters will continue to hold a majority stake in the company post the stake sale as well.<br /><br />Any plans to go for an IPO to raise funds especially with the markets scaling new peaks and retail investors back in the market ?<br /><br />Our expansion plans for the next 2 years has been taken care of through the recent fund infusion by Warburg Pincus, internal accruals and bank borrowing. We are not planning for an IPO in the immediate future. However, we might look at raising funds via IPO after two years when we might require further capital for expansion.<br />What are your revenues currently and what kind of growth are you expecting in revenues going forward ?<br /><br />Our revenues for fiscal 2014 was close to around Rs 8000 crore. For the current fiscal, that is fiscal 2015, we are targetting revenues of around Rs 10,000 crore.<br /><br />What will the proceeds of the fund infusion be used for ?<br /><br />The proceeds will mainly be used towards expanding our manufacturing set up and also for expansion of our retail presence across the country. We currently have 61 showrooms and we plan to open 28 more showrooms as part of our retail expansion plans. <br /><br />We also expect a 40-45 per cent increase in strengthening of our distribution due to the expansion due to which we plan to expand our manufacturing as well. We currently manufacture at our own units and have contract manufacturing as well.<br />You have been mainly known to be a South India-based jeweller. What are your plans to expand into other regions in India ?<br /><br />We currently have 14 showrooms outside South India and we are looking to expand more in the North and Western India. Kalyan Jewellers plans to open four showrooms in Gujarat, three in Delhi, three in Mumbai and two in Punjab by the end of the current financial year. We expect to have a pan-India presence by the end of the current fiscal.<br />What is your outlook on gold prices and gold demand for the current fiscal ?<br /><br />Gold demand has been good for the past few months and we expect good demand to continue for the rest of the fiscal. As far as prices are concerned, we are not so bullish. It is difficult to predict the future but I believe that it could be soft for the rest of the fiscal.<br />RBI has been putting a lot of restrictions on gold imports. Has that had a impact on Kalyan Jewellers in any manner whatsoever ?<br /><br />The restrictions on gold imports had been placed last year. However, we are not at all impacted due to the restrictions as we import gold through banks. For our showrooms which are outside India, we actually export gold from India.<br /><br />RBI had recently changed rules on gold deposit schemes. How has that impacted Kalyan Jewellers and its customer base ?<br /><br />The gold deposit schemes have now been restricted to 11 months by RBI. We had an inkling that there is going to be an issue with long term gold deposit schemes and hence we were prepared for it. As a group, the new RBI rules on gold deposit scheme has had no impact on our company and our customer base. We had pre-planned ourselves for this issue so that customers would not be impacted in any manner whatsoever by the change in rules on gold deposit schemes.<br /><br />What is your customer base currently and how do you plan to increase it going forward<br />?<br /><br /> ?We have a loyal customer base of over 20 lakh currently. In two years, we plan to double our loyal customer base to 40 lakh as we enter new markets in India and abroad.<br />You have recently hired a lot of big celebrities to endorse your brand. What are your advertising and marketing spends and do you plan to hike it given the recent big hirings for your endorsements?<br /><br />We have a lot of stars endorsing our brand so that we can have a pan-India presence. 1-2 per cent of our sales are spent on our advertising and marketing spends and I do not expect any change in that ratio going forward.</p>
