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Dhimant Bhatt

Mumbai , Feb. 2

THE Bangalore-based Rajesh Exports Ltd (REL) is in the final stages of negotiations with an Australian gold mining and refining company to enter into a strategic alliance for direct supply of its gold requirement.

"As for the nature of the deal is concerned, it will be a joint venture since we are looking for backward integration. We have earmarked $50 million (Rs 220 crore) towards this joint venture," Mr Rajesh Mehta, Chairman of the company, told Business Line.

REL is one of the country's largest manufacturer and exporter of gold jewellery with a turnover exceeding Rs 3,000 crore.

In 2000, the company began the construction of a jewellery manufacturing facility in Bangalore and completed the same in 2002. The total cost of the project is around Rs 60 crore with an installed capacity of processing 250 tonnes per annum of gold.

"Our current requirement is about 60 tonnes per annum. The Australian company will initially supply nearly 10 tonnes (15 per cent) in the first year and the supply will increase to 35 tonnes a year." However, the balance requirement will be met through imports," he said.

REL currently imports gold from AGR Matthey, a joint venture company of WA Mint (The Perth Mint) Australian Gold Alliance Pty Ltd and Johnson Matthey (Australia) Ltd.

"We are not permitted to disclose the name of the company as we have signed a non-disclosure agreement (NDA). Also since the company is a listed entity, we are not permitted to disclose any details till such time the deal is the finalised," Mr Mehta said.

The duration of the will be for a long-term period and the company is hopeful that it would be finalised within the next six months, he said.

The company has plans to enter domestic jewellery retailing through its branded stores in the next 18-20 months. Currently, the company's export and domestic market ratio is 75:25.

The company has planned to set up nearly 100 retail jewellery stores in the four southern States.

It has also just finalised plans to enter the diamond studded jewellery segment, which globally has been exhibiting robust growth.

REL intends to launch two brands — one for the international and one for the domestic markets — within the next six months.

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