Gitanjali Gems has reported a 28 per cent rise in net profit at Rs 129 crore (Rs 101 crore) in the third quarter of this fiscal on the back of better demand for branded jewellery. Sales grew 33 per cent to Rs 3,526 crore (Rs 2,654 crore). Jewellery sales grew by 35 per cent to Rs 2,029 crore.
The company's US operations, comprising of 111 stores, has turned around. The US business recorded growth of 8 per cent in the top line and 15 per cent in the bottom line as November and December are considered the peak season for jewellery sales.
Mr Mehul Choksi, Chairman and Managing Director, said the sharp growth in sales could be attributed to rapid expansion in the tier-III and IV towns via the franchise route. Profits have grown faster than sales on account of the economies of scale achieved in operations and a strategic shift towards jewellery retailing, he added.
“The Indian retail business took a giant stride forward this year with our major product brands converting to national retail chains through a combination of franchisee and own stores. Our retail operations will continue to propel our growth in India,” said Mr Choksi.
The company had incurred a one-time exchange loss during the redemption of Foreign Currency Convertible Bonds in November due to the high dollar rate. Gitanjali Gems had issued a one per cent FCCB worth $110 million, which matured on November 25, 2011. Many bondholders chose to convert during this period, resulting in 63 per cent of the total issue being converted into equity shares, with the balance to be redeemed at a premium, the company said.
Shares of the company rose one per cent to Rs 379 on Wednesday.