Kalyan Jewellers IPO: Information Analysis

Starting its journey in 1993 from a single showroom in Thrissur, Kerala, Kalyan Jewellers has established itself as a large pan-Indian jewellery retailer. Promoted by Mr T S Kalyanaraman, it now operates 107 showrooms across 21 states and also has 30 showrooms in the Middle East. Over the years, the company has built its business through increased transparency and highly customised offerings for different regions it operates in. It has created a wide array of sub-brands (12) to cater to various segments, such as 'Muhurat' for wedding jewellery; 'Mudhra' for antique (non-yellow gold finish); 'Glo' for casual diamond jewellery, etc. This has enabled the company to address specific customer niches at various price points. Also, Kalyan Jewellers employs a marketing strategy to set up dedicated centres (called 'My Kalyan'), which are solely focussed on channelising customers to their various stores. Since a significant proportion of the demand for gold jewellery originates from rural and semi-urban locations, where the presence of organised jewellery is low, the staff (numbering almost 2700) at these centres also play an active role in door-to-door marketing efforts and customer engagement. Barring a brief misadventure in FY2019, when an attempt to convert these promotional centres into points of sale for small-ticket items backfired (resulting in reduced marketing and overall sales), these centres have served the company well (it contributed a fifth to the company's top line in the current fiscal). Strengths Trusted brand: The company has disrupted the unorganised market by adopting higher transparency methods, such as hallmarking, price disaggregation, etc., and offering higher quality products. Customer awareness and education campaigns have also helped increase the trust factor. Presence of a large unorganised market: The company has a market share of 5.9 per cent of the organised jewellery market and given that the overall share of the organised players is only 32 per cent, there is a lot of headroom to grow. Changes in the regulatory environment, such as GST, demonetisation and compulsory hallmarking, are likely to help accelerate the switch from unorganised to organised players. Ability to cater to regional tastes: The company's hyperlocal strategy helps differentiate itself from other pan-India players. It uses regional celebrities, employs local artisans and endeavours to make designs to cat