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RAPAPORT... Tara Jewels Ltd. reported that sales, excluding bullion, rose 12 percent year on year to $108 million (INR 6.812 billion) for the first fiscal half that ended on September 30. The company's profit fell 7 percent to $3.6 million (INR 227 million).
Rajeev Sheth, the chairman of Tara Jewels, declared the company's first interim dividend of one rupee per share and confirmed that its international business continues to experience healthy demand for jewelry from large retailers.
''In the current year, we have added new geographies, new customers, new brands and have widened our stock keeping units (SKUs). We have a very strong pipeline of designs and collections with high revenue, generating the potential for the upcoming holiday season,'' Sheth said.
In addition to its export business and since Tara Jewels went public about one year ago, it has opened 50 stores in 37 cities in India.
Sheth stated that recent regulatory changes in India, directed by the Reserve Bank of India (RBI) and the government to curb inbound gold, encourages jewelry exports and prioritizes the allocation of imported gold, while simultaneously curbing gold imports for domestic consumption. ''The 20:80 principle of RBI does not have a significant impact on Tara Jewels as we derive over 80 percent of the revenue from exports. In September 2013, the RBI has also disallowed gold on lease facilities and restricted the nominated agencies to import gold for domestic use. The new requirements have restricted the supply of gold for the domestic use,'' Sheth said.
Given the stringent regulatory environment in India, Tara Jewels is ''re-thinking the India retail business'' and as it continues to expand its footprint through the shop-in-a-shop model, Sheth added that they will also consider other options, such as an asset-light franchise model. ''We shall continue to monitor our existing 50 stores in terms of profitability and if required will look at options of relocations / closures of few stores. By adopting the new strategy we shall now limit our capital allocation and also increase the returns from the capital already invested,'' Sheth said.
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