Gitanjali Q3 Sales +33% to $716.35 Mln; Profits +28% to $26.19 Mln

Opening franchised store in India's smaller cities was an important component in Gitanjali's recent growth and rising profits

(IDEX Online News) – DTC Sightholder Gitanjali Gems reported a 33 percent rise in third quarter net sales to $716.35 million (Rs.35.26 billion). Profit for the period stood at $26.19 million (Rs.1.29 billion), a 28 percent rise over the same quarter the previous year.

Aggregate net sales for the first nine months of the financial year (April-December) stood at $1.89 billion (Rs.92.89 billion), a 32 percent rise year-on-year. Profit for the period stood at $78.07 million (Rs.3.84 billion), a 48 percent rise over the same period the previous year.

The company reported that jewelry sales for the third quarter rose 35 percent year-on-year to $412.26 million (Rs.20.29 billion). Jewelry sales for the nine month period ended December 31, 2011, stood at $1.02 billion (Rs.50.12 billion), a 37 percent rise year-on-year.

The company also reported a turnaround in its U.S. business, with net profits up by 15 percent. Foreign Currency Convertible Bonds (FCCBs) were also successfully converted and redeemed in November 2011, the company said.

In its Indian operations, the company's key brands were able to penetrate the smaller, so-called Tier-3 and Tier-4 towns via chain stores through the franchisee route.

Overall, the company said that it had restructured its operations into three focused segments:

·           A diamond and jewelry manufacturing business

·           An Indian branded jewelry and retailing business

·           An international branded jewelry and retailing business

Gitanjali Chairman Mehul Choksi observed, "Gitanjali’s high growth in sales can be mainly attributed to the rapid expansion in Tier-3 and Tier-4 towns via the franchising route.

"Profits have grown faster than sales on account of economies of scale achieved in operations and a strategic shift towards jewelry retailing. The quarter has been significant for our U.S. business primarily due to profitability stemming from supply chain synergies," Choksi added.