Even though Maharashtra is one of the largest markets for gold jewellery, many in its capital, Mumbai, woke up to Kalyan Jewellers when actors Aishwarya Rai Bachchan andAmitabh Bachchan appeared in its ads. Pulling all stops to make a grand entry in the island city, the Kerala-based jeweller ensured that not just ads but store openings were attended by at least one of its brand ambassadors, as well. This was a year back.
Kalyan Jewellers was again back in the news recently when it attracted the second-biggest bet (Rs 1,200 crore) on an Indian firm by Warburg Pincus, and the largest in the jewellery sector. Much less conspicuous was founder T S Kalyanaraman’s entry into the Forbes list of India’s Richest, in September 2014 as a billionaire.
The promoters claim that by bringing in the aspect of educating the average customer about fair practices in jewellery sales and judging the purity of the gold has helped it win her over. “We teach customers on how to test the purity of their gold,” says Ramesh Kalyanaraman, son of the founder-chairman and the executive director.
Tanishq, from the Tata group, too, had taken a similar stance a while back when it advertised with none other than present-day Kalyan ambassador, Amitabh Bachchan, and his wife Jaya Bachchan, highlighting the qualities in a diamond.
Jewellery in different regions differ in motifs and design. Kalyan would be factoring in the diversity when opening new stores and differentiate from the national Tata retail brand. Kalyanaraman says, “In a sense, we compete with the local jewellers, and not Tanishq. We go to a new market as a local brand, while Tanishq goes as a national brand” aiming to adapt better to local tastes, in contrast to a more centralised and uniform design approach at Tanishq.
With the infusion of funds, the chain is also ready to test the water in more markets. The senior Kalyanaraman says, “With our motto, ‘Trust is all in life’, propagated through a highly visible marketing campaign, we have now set out on aggressive expansion.”
Part of the expansion would retain the local flavour as it ventures deeper into the market. It is planning to deploy its sub-brand for customer service and loyalty programme, My Kalyan, to sell diamonds in rural markets. It is planning to sell diamonds at prices between Rs 5,000 and 25,000 in rural markets.
Its showrooms, which are owned by the company and not franchisees, would increase by 16 by December, 2014. Three would be in the UAE, where it already has six outlets, three in Kuwait, one in Mumbai, two in Bengaluru, five in Kerala and two in Punjab. Interestingly, it has, so far, not opened one in Chennai, another large gold jewellery market but plans to open by next April.
Kalyan is also looking to enter Southeast Asia, starting with Singapore and Malaysia.
The retail expansion is expected to cost Rs 1,000-1,200 crore, to be funded by the Warburg Pincus investment. “We are well funded for now – the current infusion by the PE firm, internal accruals and debt will take care of the expansion for the next two years,” says the junior Kalyanaraman. It would also invest Rs 300-400 crore in increasing manufacturing capacity.
While the 600 My Kalyan centres were originally set up for staff to venture into nearby villages to educate prospective customers on purity, transparency and utility of gold purchases, Kalyan is hoping to do the same for diamonds. Already launched in Karnataka and Kerala, villages in Tamil Nadu would be next.
The junior Kalyanaraman says, “In villages, jewellery shops mostly sell gold, and diamonds are rarely sold. We want to push diamonds.”
My Kalyan also doubled as the chain’s gold schemes front. Gold schemes run by jewellers came under the government scanner earlier this year, and were declared as public deposit schemes. The government, effectively capped their unbriddled returns promise and the amount of deposits a player could have.
The chain would also open an e-commerce platform by April 2015, to cash in on the trend of buying jewellery online for gifting purposes.
The 66-year-old senior Kalyanaraman belongs to the third generation of a business family which began operations in 1908. He took the group into jewellery retail and claims to have been able to cross-sell jewellery to the customers of the group’s first line of business – textiles. Kalyan made Rs 8,000 crore last year. It spends 2 per cent of its turnover on brand ambassadors who range from the Bachchans to southern celebrities like Manju Warrier, Nagarjuna Akkineni, Prabhu Ganesan and Shivaraj Kumar.
Source : Business Standard
