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RAPAPORT... Gitanajli Gems Ltd.'s revenue jumped 15.8 percent year on year to $640 million (INR 39.19 billion) for the first fiscal quarter that ended on June 30. Cost of sales, depreciation and other expenses rose 19.1 percent to $617 million (INR 37.78 billion). Gross margin rose to 15.5 percent from 14.3 percent one year earlier. However, profit plunged 76.4 percent to $5.7 million (INR 351 million).
The company explained to shareholders that the dramatic decreased profit was the result of several factors, including a depreciating rupee currency, a plunge in gold prices during the quarter and provisions for ''doubtful receivables.'' Revenue by segment during the quarter reflected strong diamond sales, which jumped 33.8 percent to $364 million (INR 22.3 billion), while jewelry sales rose 13 percent to $338 million (INR 20.7 billion). Intersegment revenue, which is subtracted from reported revenue, surged 228 percent to $65 million (INR 3.96 billion). Mehul Choksi, the chairman of Gitanjali Gems, said, "With recent regulatory changes and the new Reserve Bank of India guidelines impacting the gold jewelry sales of the company, the company has realigned its business model to focus on the high-margin diamond jewelry business, which is the company's core competency and also on segments like alternate metals and low carat gold. Going forward, the company also plans to strengthen its international presence and growth will come mainly from markets like the U.S., Middle East, Japan and China." Gitanjali added 14 franchisees, six owned stores, 14 shop-in-shops and 40 retailers to its distribution channel during the first fiscal quarter. Gitanjali Jewels opened its 100th store during this period as well. Gitanjali's U.S. business recorded a sales increase of 12 percent, and the company's focus remains on capitalizing high-margin mature markets such as the U.S. and Japan along with the Middle East, according to its statement.
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