Retail chain Suwarnsparsh plans to raise Rs 40 crore via PE

MUMBAI: Suwarnsparsh, an organised retail chain in gemstone and jewellery, said it is exploring options to raise Rs 40 crore through private equity to fund expansion to about 200 outlets in next five years on pan-India basis.

Established in 2009, Suwarnsparsh currently operates 42 outlets in Mumbai and Pune on owned-and-operational basis.

With an annual turnover of Rs 34 crore in 2012-13 (April- March), the company has set an ambitious topline target to reach over Rs 500 crore with its proposed retail expansion.

Suwarnsparsh has a total retail space of 23,000 sq ft from its 42 outlets and plans to bring under its ambit 150,000 sq ft with its planned expansion of 200 outlets, Suwarnsparsh Chairman and Managing Director Vimal Patel told PTI here.

The retailer, which currently derives about 75 per cent of its revenue from gemstone and the balance from one gram jewellery, expects to see increased contribution from the latter segment and garner revenue in equal proportion going forward.

"Unlike the organised retail industry, which is modeled on high volume low margin business, we operate a niche business with high margins derived from our insightful domain knowledge on the subject generated over the past two decades," Patel said.

The retailer plans to end 2013-14 with revenue of Rs 65-70 crore based on its current sales trend. The company also expects a margin expansion on this enhanced sell, as a result of in-house manufacturing of the one gram jewellery and merging gemstone purity certificate business, highly profitable group company, with itself.

Based on broad estimates, the gems and jewellery segment in India is estimated at Rs 2 lakh crore with jewellery constituting 80 percent of it.

While there are no established data to proved the market size of 1 gm jewellery segment, industry sources estimate it at around 5 per cent of the prevailing market size of the conventional jewellery ornament market at around Rs 8,000 crore but growing at a much faster rate than the convention jewellery segment.

The astro gems market - a niche segment in the colour gemstone market is estimated at around Rs 5,000 crore, Patel said.