We are on the look-out for more jewellery brands in different geographies: Renaissance Global

Mumbai-based Renaissance Global Ltd has positioned itself as an established design house and a key supplier to global jewellery retailers. With three acquisitions in the last five years, Renaissance is venturing into new geographies and expanding its product category. The most prominent of these acquisitions is the Enchanted Disney Fine Jewellery which has helped it enter the license jewellery space, says Sumit Shah, Vice Chairman in a conversation with BusinessLine. Excerpts.

What led to the acquisition of Jay Gems? What kind of competitive advantages will the acquisition add to the company’s global business?

The company’s focus is to increase percentage share of brands in its global portfolio. Therefore, we are acquiring brands and looking for more such opportunities in different geographies. In line with this strategy, in 2016, RJL entered into a licensing agreement with Hallmark to launch the Heart of Hallmark jewellery collection. Similarly, Jay Gems LLC has an exclusive licensing agreement with Enchanted Disney Fine Jewellery. The acquisition of Jay Gems was in line with the company’s strategy to expand the branded jewellery segment. Enchanted Disney Fine Jewellery offers exclusive collections at major retailers across USA, UK and Canada. Sales through licensing agreements yield superior product positioning and higher margin. The company’s focus is to have greater presence globally. After USA, UK and Canada, we will expand into new geographies such as China, Japan, Middle East, Russia and India which are large markets receptive to the Disney brand.

How has the company been able to maintain a healthy debt-to-equity ratio?

The company has been extremely conservative about debt in the business. The debt in the company is largely working capital debt and the company makes effort to reduce the working capital cycle in the business by negotiations with buyers and also efficient inventory management. The entire borrowing is dollar denominated and therefore, the interest rate is fairly stable. Even the acquisitions that the company has done over the last two years including the recent Jay Gems acquisition were planned through internal accruals rather than taking debt. With the improved profitability in the business on a year-on-year basis and conservative approach to debt, the company has been able to maintain a healthy debt equity ratio and will continue to do so.

How does the company plan to leverage the equity of brand Disney further?

The Disney brand is estimated to be worth $55 million and the Disney princess which is part of Enchanted brand is a $3 billion brand worldwide. In the past, Jay Gems was largely concentrating on the US market. However, the company is planning to expand the market into new geographies like China, Japan, Middle East, Russia and India. The market for Enchanted jewellery is under-penetrated and there is a huge opportunity to expand this portfolio and grow it to be a $500 million brand in the next 3-4 years.

The gems and jewellery manufacturer and exporters in India are facing huge challenges on raising capital as banks are tightening lending norms. How has the company managed to remain self-sufficient?

After the banking frauds perpetrated by large players of the gems and jewellery sector, banks have become extremely cautious. The company enjoys a good reputation among its lenders and the credit limits have not been impacted. However, there has been a general push back for increasing credit to the sector by the banks. The company has taken this as an opportunity to moderate the working capital requirement by effective management of debtors and tight inventory controls.

Renaissance is also planning to venture into Indian domestic jewellery sector. What’s the rationale behind the strategic shift?

We are finalising our strategy for venturing into the Indian market and positioning for the same as the retail jewellery market is large but challenging for a new brand.

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