Shree Ganesh to double jewellery making capacity in two years

Kolkata-based Shree Ganesh Jewellery House is looking to increase its gold jewellery making capacity from the current 20 tonne per annum (tpa) to 50 tpa in the next two years, said chairman Nilesh Parekh.

The company currently has seven production facilities in the Manikanchan special economic zone (SEZ) near Kolkata and plans to have one each at Mandalpada and Donjur, also near the city.

“The total area is 111,000 square feet and by March 70,000-80,000 sq ft will be operational,” said Parekh. He said it would take the facilities two years to reach the full utilisation of their capacities.

Shree Ganesh is also putting up two scrap gold refineries at Donjur and Mandalpada which will be able to refine 70 tpa.
The company’s capital outlay this fiscal for its capacity expansion is Rs175-225 crore.

“We have placed Rs100 crore orders for machinery and I don’t think we need to spend much in the first half of the next fiscal,” Parekh said.

Shree Ganesh had its Rs365 crore initial public offering in March. Of that Rs55 crore went to Credit Suisse PE Asia Investments for partial dilution of its 10.9% stake.

The company is targeting a topline of $1 billion (over Rs4,500 crore) and a net profit of about Rs250-275 crore this fiscal compared to about Rs3,000 crore and Rs170 crore in 2009-10.

Net profit for the third quarter rose 78% to Rs68.2 crore over the year-ago period and the total income rose 43.11% to Rs1,119.4 crore over the same period of the previous fiscal.

Nearly 92% of Shree Ganesh’s business comes from exports to the Middle East, Australia, New Zealand, Singapore and other countries.

“We don’t export much to the US and Europe. We’ll see how the recovery is and then sell there,” said Parekh.

In the coming years the company is expecting a change in the composition of its business in favour of the domestic market given the huge demand here.

Parekh said the Indian gems & jewellery market is worth Rs1.5 lakh crore, which is 18-20% of the world market, and exports are in the range of Rs 1 lakh crore. “Gold jewellery would be Rs30,000 crore of that,” he said.

Asked of gold prices, he said they should be quite stable in the coming months.

The London gold price, which was $1421 per ounce in November, on Wednesday was $1371.95. An ounce equals 31.103 grams.
Talking of the company’s exclusive brand outlets named ‘Gaja’, Parekh said there are currently 17 of them and the target is 50 in three years. The outlets are either run by the company or are franchisee-operated.