The Hindu Business Line : Shrenuj buys 84.6% stake in US co Simon Golub

Mumbai May 8 Shrenuj & Company Ltd has acquired 84.6 per cent stake in the US-based jewellery distributor Simon Golub & Sons Inc for $22.7 million (over Rs 90 crore).

The deal is funded through internal accruals to the extent of $2 million, an FCCB issue of $5.8 million and a term loan from Exim Bank of $14.9 million, said Mr Vinod Shetye, Chief Financial Officer of Shrenuj & Company Ltd. The listed diamond and jewellery company has made the acquisition through its US-based fully owned subsidiary Astral Holdings Inc.

The acquisition will allow Shrenuj to reach its US retailers directly and, thereby, increase its profit margins. This will also help the company gain first-hand information on changing fashion trends and consumer preferences in the US, said a statement from the company.

Shrenuj will be utilising the massive distribution system of Simon Golub to run various business-to-consumer marketing and branding programmes.

Simon Golub is a private company with a turnover of $136 million, with two main lines of business in America-sales to large chain stores and sales to retailers.

Other chains

J.C. Penny, Sam's Club, Zales, Sterling are some of the large chain stores that constitute the clientele of Simon, said Mr Vishal S. Doshi, President of Shrenuj & Company Ltd.

Simon also shelves three other non-competing products from two Hong Kong and one Bangkok-based jewellery manufacturers, he added.

With the new company structure, Shrenuj will guide Simon's overall strategy of distribution in America. The key employees at Simon Golub have decided to remain in the company, he added.

Product development will be through merchandisers hired in America while the product manufacturing will be done in India due to cheaper costing, said Mr Doshi.

Products range

"The product range from Shrenuj will include basic studded products, as well as bridal and mass market fashion jewellery. Though a majority of the products will be value-added we may consider a small supply of loose cut and polished diamonds," he told Business Line. Simon Golub operates its inventory management system based on an enterprise resource planning software called `Navision'. This software links the sales personnel to the back-end operations for any kind of assistance. Post the acquisition announcement the share price of Shrenuj closed at Rs 47.45 on Tuesday, up from Rs 44.40 on the previous day.

More Stories on : Mergers & Acquisitions | Gems & Jewellery

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