Gitanjali Gems has risen its emphasis on jewellery retailing. The company is looking at the strategy of climbing the value chain and risen emphasis on branded products. It is eyeing to bring improvement in the margin which has over tripled in the past six years.
During the Fiscal year 2010-11, the retail business has been just 13% of the overall sales. However, with the surge in the number of franchisees and the firm is hoping that the share of retail to overall sales to rise to 15%.
Last year, the retail business has doubled due to the surge in the count of franchisees. The retail business has got higher operating margin of 15% as against 8% in the other business.
This asset-light franchisee model will be helping the firm to maintain growth momentum of Rs 5,015-crore jewellery business (remaining is diamond manufacturing for Rs 4,421 crore), mainly when its capital is stuck in inventory. This surge in inventory has been triggered by the jump in gold prices last year.
