Jewellery firms are taking a shine to the bourses. Joyalukkas India Ltd. and Tribhovandas Bhimji Zaveri Ltd. (TBZ) are the latest to prepare for a market outing by filing draft red herring prospectus (DRHPs) for their initial public offering (IPO) with market regulator SEBI. Both firms plan to dilute around a 25% in their maiden issues.
While the Joyalukkas IPO is being managed by Enam and Citgroup Global Markets, IDFC Capital and Avendus are the book running lead managers to the Tribhovandas Bhimji Zaveri issue.
These issues come after several companies like Thangamayil Jewellery, Shree Ganesh Jewellery House, C.Mahendra Exports and Goenka Diamond & Jewels have tapped the primary market for funds in the last 12 months.
Joyalukkas, which focuses on large format stores, is a south India based jewellery company which has around 21 stores as of September 30, 2010. The Joyalukkas Group was established in 1988 by Alukkas Varghese Joy and commenced operations in the United Arab Emirates. The company's revenues increased from Rs 1,432 crore in FY09 to Rs 1,824 crore in FY10. Joyalukkas' net profit increased from Rs 50 crore in FY09 to Rs 67.3 crore in FY10. According to its DRHP, Joyalukkas' will use Rs 425 crore for establishment of new retail outlets and another
Rs 104 crore to repay borrowers.
Earlier reports stated that Joyalukkas plans to raise Rs 600-650 crore through the IPO and is also in talks with private equity players for funding.
The other jewellery chain, Tribhovandas Bhimji Zaveri, has 14 showrooms in nine cities and plans to open an additional 44 showrooms by the end of Fiscal 2014. The firm opened its flagship showroom in Zaveri Bazaar, Mumbai, in 1864. In FY10, Tribhovandas Bhimji Zaveri reported total sales of Rs 885 crore, of which 73.48% was from the sale of gold jewellery while the rest came from the sale of diamond-studded jewellery and others. Profit after taxation for the year stood at Rs 16.9 crore. For the six months ended September 30, 2010, total sales stood at Rs 522 crore with a profit after tax of Rs 17.95 crore. It plans to use Rs 18.1 crore from the issue to establish new showrooms and another Rs 157 crore for working capital requirements.
The investor interest in the gems and jewellery space has been increasing as these companies look to tap capital markets and PE route. Several issues have also reaped good returns. Thangamayil, which listed in February with an issue price of Rs 70 per share, has more than doubled its price on the bourses closing today at Rs 160.5.
Gujarat-based diamond jewellery maker C.Mahendra Exports, which was listed at a price Rs 110 on Jan 20, closed at a more than 20% increase to issue price. Though firms like Shree Ganesh Jewellery House slipped after its IPO, investor Credit Suisse PE Asia made a 74% returns after making a part-exit in the issue. Another firm, studded jewellery exporter Tara Jewels, got SEBI approval for a Rs 200-crore issue earlier this month.
Branded jewellery manufacturer and retailer Gitanjali Gems is also raising funding for its restructured jewellery brand holding company. The $100-million fundraise has reportedly attracted interest from PE majors like Blackstone, CX Partners, Bain Capital, Apax and Advent
The Indian gems and jewellery industry is dominated by the gold jewellery and diamonds segments. India dominates the diamond processing trade with 11 out of 12 diamonds being cut and polished in India (around 80% in terms of carats and around 55% in terms of volume). India also dominates gold and silver consumption globally with consumption of approximately 700 tonnes (gold) per year, according to a CARE report.
According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian Gems and Jewellery industry - consisting of the domestic and the export market has the potential to grow from the current $45 billion to $100 billion by 2015.