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Senco Gold, a ₹1,200-crore private jewellery retail chain, plans to spend around ₹350 crore to expand its retail network, says Suvankar Sen, Executive Director.
“To fund this, we would rely on ₹100 crore private equity investment, debt and our own resources. However, we are likely to maintain the current debt-equity ratio at 2:1,” Sen told BusinessLine .
The investment would be made to add around 42 outlets pan-India in the next three years.
IPO in four years“We are negotiating with a few PE (private equity) players,” he added.
The company hopes to strike a PE funding deal before December this year for a minority stake, depending on the valuation. It plans to allow the fund to exit after three years.
“We are prepared to go in for an initial public offering to pave the way for the exit of the fund in 2018-19,” Sen said.
Senco, which sells designer jewellery, has adopted the franchise model also for growth.
“Half of our current 58 retail outlets are owned by the company and the rest are franchise assets. We would maintain this balance in the expanded network ahead,” he explained. In three years, it aims to double the turnover. It wants to increase presence in Assam, Odisha, Jharkhand, Bihar, Maharashtra and the National Capital Region.
It also plans to enter new markets such as Lucknow, Bangalore, Hyderabad and Raipur.
“The first store in Lucknow is scheduled to come up in October,” Sen added.
For the proposed expanded national retail presence, Senco is targeting the cosmopolitan middle-class customer segment. Apart from gold jewellery, diamond, precious stones and platinum products will also be part of its pan-Indian basket.
Core strengthFor the domestic market, though it has two manufacturing units in the city, it depends largely (85 per cent) on outsourcing products.
“We have created a parallel chain of sourcing points in West Bengal, Maharashtra, Kerala, Tamil Nadu and Gujarat. At the core of our strength, however, is Bengali jewellery craftsmanship. We are also incorporating local preferences in some places,” he said.
Senco also has an export-oriented unit, which caters to wholesale markets in the US, the UK, Singapore and West Asia. Its exports last year was at around ₹270 crore.
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