Growth of a Gold Jewelry Manufacturer, Rajesh Exports in India

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Rajesh Exports was established in 1990 as a partnership firm in the name of M/s Rajesh Exports comprising of 3 partners with the objective of manufacture and export of Gold Jewellery. The firm was reconstituted as a joint stock Company in 1995 and was registered as a Public Limited Company as Rajesh Exports Limited (REL) under part IX of the Companies Act, 1956 with the Registrar of Companies, Karnataka. REL established the first organized gold jewelry manufacturing facility in India in 1990. In the following year, it established India's first research and development (R&D) facility in the jewelry sector. In 1993-94 the Company resorted to a major change in its marketing orientation. The Company had till mid 1993 been exporting its products directly to the retail dealers. Unlike most commodities Gold products cannot be exported generally on sample and approval basis. In the event of any rejection by the importer the jewellery cannot be imported back to India under any circumstances. This gave the overseas retail importers a convenient situation to force their terms on the exporter after the arrival of the consignment. Apart from this the Company was hampered on several other counts such as poor volumes and higher costs of co-ordination in the orders, dispatch and debit collections etc. In order to overcome these problems the Company entered into strategic marketing alliances with certain key wholesalers in UAE, UK, Singapore and USA. Under the alliances the Company exported large consignments of approved designs to be stocked and retailed widely at the respective centers. The Company was thus able to provide a larger variety of its products to its retailers readily. This ensured increased offtake and faster payments. In 1995, the ...

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...%. The EBIT margin and net income dropped in 2009 due to economic recession. But with timely action and conscious decision of board, REL was successfully able to sustain the impact of recession. Perceptions about the gold jewellery are mostly negative due to prominence of money laundering and black money transactions. And with RBI introducing norms on import of gold, the stock prices of Rajesh Exports declined. The RBI norms also have an impact on current year performance. The net income, EBIT margin are in decline till Q3 of the current year. The company plans on making investments to open various retail stores and expand the retail business. So, it would not be a surprise if we see the net profits of the company declining further. Despite fledging stock prices, the company has increased its dividend payout. Earnings per share is low since stock price is declining.

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