As Gold loses sheen, Gitanjali turns to gems.

KOLKATA: High import duty coupled with less availability of gold has forced jewellery major Gitanjali to reorient its business strategy to remain profitable.

Gitanjali has taken the decision to cut down its pure gold jewellery business by 60% and step up diamond and gemstone business by 40%. The company is also entering into fashion jewellery business in a big way so as to cater to the growing fashion-conscious young India. Talking to ET, Mehul Choksi, CMD, Gitanjali, said: "Margins are far better in diamond and gemstone-studded business. If we have to grow our business, we need to focus on this category. The availability of pure gold jewellery in our 3,000 retail points will come down and they will be stuffed more with studded jewellery."

The margins in diamond-studded business are as high as 40% whereas it is around 8% to 10% in gold jewellery. "With import duty as high as 10% and premium going up due to scarcity of gold in the market, pure gold jewellery business is losing its sheen," Choksi said. The new business strategy will be executed by Saurav Bhattacharya, a HUL brand veteran, who has joined the company recently as group president. Its business model envisages expansion of products at the entry-level segment by creating lower price points either by bring in semi-precious stones to lend volume to the diamond jewellery business or by working on the gold base by buffing or electroplating so that it looks fuller and chunkier. The gold content will be less in this category.

Gitanjali group has recently acquired diamond-based production facility in Thailand. The unit has a total capacity is 2.6 million pieces per annum. This acquisition is the first step in a revamp of the group's go-to-market strategy for diamond jewellery. "There will be a complete new category of fashion jewellery where we will use brass, steel, silver with semi-precious stones. This is being done to lower the entry barrier further and reach out to a broader customer base. The demand for this sort of fashion jewellery is increasing in India," Bhattacharya added.

Source : economictimes.indiatimes.com