The Rs 1,130-crore Madurai-based Thangamayil Jewellery Ltd is open to forging tie ups with mutual funds for exchanging gold fund units for jewellery purchase by the unit holders.
It is also preparing to launch online purchase of ornaments for delivery across the country for which it was negotiating with a major courier company and insurance player.
Speaking to Business Line at Coimbatore, Ba. Ramesh, Joint Managing Director, Thangamayil Jewellery, said it was essential for business entities to adapt to changing times to stay ahead of competition.
From the earlier days when he was hesitant to accept debit/credit cards for business transactions, he has seen the credit/debit card purchases accounting for a business volume of Rs 15 lakh a day in his chain.
The way forward
Ramesh says he is willing to forge an alliance with mutual funds for accepting gold fund units for jewellery purchase of equivalent value. He sensed a big business opportunity in this space as he could build a strong customer relationship.
Another business opportunity he was pursuing was introduction of online purchase of jewellery. He said online buying has picked up in areas like books, electronic goods or garments and he sensed good opportunity for jewellery business too in this. Buyers could go to the company Web site, select the product code and order and make payment online.
He said the software to enable online purchase is being developed by an in-house team and he was also speaking with a major courier company and an insurance company. He expected the facility to be ready for launch by the year-end.
He said he was keen to adapt innovative practices to enhance reach. There was a gradual shift in the jewellery trade from the unorganised sector to the organised sector. Due to the polarisation taking place in the industry, the small buyers too are turning towards corporate institutions, even for small purchases like mangalyam. The share of the organised sector was a mere 2 per cent and it was the unorganised sector that dominated the jewellery business. But this was changing.
Small town advantage
Explaining the advantage of entering small towns, Ramesh said once he established his brand in small/rural towns, he would be a dominant player in the business there quickly. But in bigger cities, penetrating the market would take a much longer time, making creation of brand awareness that much more difficult.
Ramesh said the industry has been able to turn even the month of Aadi, normally considered to be inauspicious, as a major season for purchase of gold. The Akshaya Trithya and the Aadi seasons have now become a major sales period for the industry and he reckoned that nearly 20 per cent of the annual sales for his company took place during this period. He said all the showrooms have reached break even levels.
He said the industry has also benefited by the levy of VAT which has brought down the price difference between, say, Mumbai and Chennai markets or between Chennai and other cities in Tamil Nadu. A major problem they faced earlier was sourcing the bullion. But with banks themselves delivering gold in major towns to the industry, the extra cost incurred in buying gold has come down, bringing about uniformity in basic price. When GST comes, this would usher in greater price stability across the country.
Plans for Chennai
Ramesh, outlining the roadmap for entering the Chennai city, said he planned to enter the Chennai market by 2014-15. In the current financial year, he expected the number of showrooms under his fold to go up to 27 (at present there are 20 showrooms across the State). During 2013-14, he expected 12-20 more showrooms to be opened, based on bankers' support. The idea was to have major hubs in Salem, Coimbatore, Tiruchi, Madurai and Tirunelveli to which the smaller branches would be linked.
He said once this exercise was completed in the coming two years, he would be ready to launch his business in Chennai. By then, Thangamayil Jewellery would have about 40-50 showrooms dotted all over Tamil Nadu.