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No beating about the bush.
Since 2011, the entire bullion trade is reeling under increased prices, however, Malabar Gold and Diamond’s turnover witnessed 550% jump!
Malabar Group made a modest start in Calicut in 1993 with a capital of about Rs50 lakh. In just 20 years, it has grown in to a Rs22,000 crore empire, which is 44 lakh times its original capital. And all this only through jewellery, infrastructure as well as domestic and commercial building business. This is a rags to riches story. As of today, Malabar group consist 1,600 investors, 6,000 management staff and about 10 companies in India and abroad.
The group has expanded rapidly in the last decade in India and overseas, especially in gulf countries. Since 2005, the jewellery group has roped in famous personalities to act as its brand ambassadors. This includes, its current brand ambassadors are Kareena Kapoor, the Bollywood actor, south Indian actor Suriya, famous Malayalam Superstar Mohanlal and Bollywood’s ‘dream-girl’ Hema Malini. Earlier, several film actors like Junior NTR and Puneeth Rajkumar, music director Ilayaraja and tennis start Sania Mirza were associated with Malabar Gold.
During 2005, Malabar Gold was reported to be a group worth Rs500 crore.It also signed its first brand ambassadors, Tennis star Sania Mirza and Malayalam superstar Mohanlal during that period.
Over the next two years, Malabar Gold increased its reach beyond Kerala and became a group worth Rs800 crore. In April 2007, its chairman MP Ahammed was quoted as planning to invest Rs200 crore over next one year to expand its footprint in south India and abroad. ()
Malabar Gold made rapid progress over the next four years to increase its single jewellery showrooms to 54. During June 2011, it hired Brand Union to enhance its corporate image. At that time, Malabar Gold reportedly had a turnover of Rs4,000 crore.
However, within next four months, PA Ibrahim, co-chairman of Malabar Gold, told reporters, that the group’s turnover was Rs6,000 crore with Rs2,000 crore coming from abroad. In September 2011, Malabar Gold had 1,000 members from India and abroad as investors. ( )
However, before ending the FY2011-12, Malabar Gold said its total sales were about Rs12,000 crore. KP Abdul Salam, its group executive director, reportedly said, “The group sales is around Rs12,000 crore ($2.4 billion). In India we will be opening outlets in Maharashtra, Gujarat, West Bengal, Madhya Pradesh, Uttar Pradesh and other states. The group will also open outlets in Malaysia, Indonesia, Bangladesh, Europe, US and Canada.”
Tiny Philip, chief executive of Results Consulting Group and advisor of Malabar Gold during March 2012, endorsed the phenomenal growth. He said, “Malabar Gold & Diamonds group has grown at 60% between 2002 and 2012. For other companies dependent on debt for expansion, consolidation of operations has to be there. But for Malabar Gold & Diamonds which is mainly dependent on equity investments, the issue of consolidation does not apply.”
Set up in 1993 in the south Indian state of Kerala, Malabar Gold & Diamonds at present has a retail network of 103 outlets spread across seven countries, 10 wholesale units in addition to offices, design centres and factories spread in India and the UAE.
For FY2013-14, Malabar Gold expect a turnover of $3.5 billion (Rs22,000 crore), and claims that it is the world’s third largest jewellery retailer in terms of annual turnover. The company had targeted a turnover of $6 billion when it had gone for re-branding over a year ago. It would mean a turnover of over Rs36,000 crore as per current calculations.
MP Ahammed, the chairman of Malabar group wrote on the company website that “We have over 80+ showrooms worldwide, with a strong presence in both India and the Middle East, and are well on our way to achieving our aim of becoming the world's number one jewellery group by 2015.”
What is interesting is Malabar group reportedly claims that it does not have any debt and its expansion is funded through its own sources and from investors. As per the company portal, it has 1,600 investors. However, their names were not revealed by the jeweller. In the absence of any official record like balance sheet and auditor’s report, it is very difficult to assess the business activity of Malabar Gold and we have to rely only on media reports.
Malabar Gold Pvt Ltd, which was registered on 19 June 2001, has 10 directors, including Ahammed, Nishad Athikkot, Shamlal Madathum Parambath (MP), Veerankutty Kandambath Puthiyapath, Asher Ottamoochikkal, Abdul Salam Kandampath, Ibrahimhaji Pallikere Abdulla, Mayan Kutty Cholakkal, Beerankoya Kakkodi and Abdul Majeed Mozhangal.
As per press reports, last year (FY2012-13) Malabar Gold had a turnover of about Rs12,000 crore. It is expected to touch Rs22,000 crore in the current fiscal. That too when the overall bullion trade was reeling under the sky-high prices of the yellow metal. Another surprise is the 550% jump in the group’s turnover between 2011 and 2013. It reported a turnover of Rs4,000 crore in June 2011 and expect it to reach to Rs22,000 crore. The question here is how could the jewellery group achieve such a stupendous growth within such a short span of time that too when the entire bullion trade is hit by slowdown and sales affected due to increases in the price of gold?
India defines value in a different way to most of the other large car markets in the world. Hence, each global player needs to take a call whether it wants to wait for the market to mature or is willing to make extra effort to address the current market needs, feels Credit Suisse
India is a unique market with strong local players, and perhaps the only large market where none of the top four players globally have even a 5% share. In fact, across the emerging markets (EMs), India is the only country with strong local players in auto segment. Global carmakers, therefore will have to develop different and long term strategy for Indian market, says Credit Suisse.
"The market defines value in a different way to most of the other large car markets in the world and hence each global player needs to take a call whether it wants to wait for the market to mature or is willing to make extra effort to address the current market needs," Credit Suisse said in a research report.
India- the only large market where top three global players have such a low share
According to the report, Maruti Suzuki India Ltd, the country's largest carmaker has a big advantage over its competitors on almost every parameter. Korean automaker Hyundai Motor Co unit, Hyundai Motor India Ltd, stands out as the key challenger to Maruti Suzuki with a complete product portfolio and reach that is second to the Suzuki Motor Corp unit.
Most MNCs have a gap in the A segment, Maruti has a gap in SUVs
Credit Suisse feels to succeed in India, global automakers need to have suitable products, distribution network, use their facility as export hub, improve brand strength, take care of ownership cost and show commitment.
(1) Suitable products—unlike most other markets globally which are C or D segment markets, India is still largely an A and B segment market;
(2) Distribution network—the importance of this factor has grown in the past few years with strong growth witnessed in rural India (share has increased from 5% to 30%);
(3) India as an export base—given that one needs a certain scale to set up a plant, a player needs about 10% market share in India. Barring Hyundai this seems a tall order for other MNCs; hence it is important for a player to make India an export hub to get the required scale;
(4) Brand strength—a car is seen as a status symbol, hence apart from the product the mother brand also matters;
(5) Ownership costs—whilst most manufacturers offer similar fuel efficiency, reliability & cost of spares varies across manufacturers;
(6) Commitment to the market—almost every manufacturer wants to focus on emerging markets but few have created the requisite organisational structure to cater to the uniqueness of markets such as India.
Right products complemented by large distribution network
Based on these six parameters, Credit Suisse feels, Hyundai, Nissan and Honda are the key challengers to Maruti Suzuki, in Indian markets. "However,” it said, "given its success in the developed markets, Hyundai's focus on India seems to have reduced. It was one of the last players to launch a diesel variant on its hatchbacks and still doesn’t have a compact sedan that have 15% market share."
"The Renault-Nissan alliance stands out as the strongest emerging threat to Maruti Suzuki. They are the only new entrant expected in the A segment with the Datsun brand. The seriousness on India is evident by the frequent visits of Carlos Ghosn and the amount of money they have committed to the market. They have also made India an export hub with about 70% of the production being exported, thus despite entering the market much later they already have a significant scale in terms of manufacturing in India," the report said.
According to Credit Suisse, Honda is the other player to watch out for in India. "Honda has a very strong brand name in India, not only in cars but also in two-wheelers and engines and India is now getting the deserved attention. They have started correcting one large long-standing gap in the portfolio by developing a diesel engine specifically for the Indian market. And over the next few months, we will see them spread themselves across the entire B segment with six models—three body types (hatchback, SUV and sedan) on two platforms," the report said.
Exports solve problem of low utilisation Maruti has big advantage on spares
Although, Maruti Suzuki is the market leader, it is not sitting on its laurels and is working hard to maintain this advantage. Maruti Suzuki is likely to launch two SUVs to plug the only two gaps in its product portfolio in the less than Rs10 lakh price bracket. It is also developing a small diesel engine for its ‘A’ segment cars where none of its key competitors have a diesel offering. This smaller diesel engine will also be used by the company for its foray into the LCV segment. Another thing that should help drive both volumes and help Maruti Suzuki better combat currency volatility is the decision by its parent to allow the Indian unit to develop export markets in Africa and Latin America.
"Going forward, we are likely to see more as localisation benefits start trickling in. Given the higher competitive intensity in the market at present, discounts may not go down to the levels seen earlier but they will definitely reduce from current levels. Once demand picks up, operating leverage too should help margins; a 10% higher growth than the normal 8-10% growth (necessary to cover cost inflation) should help margins by about 100 basis points-bps," Credit Suisse said.
MCX appointed Satyananda Mishra, former chief information commissioner & IAS officer as the Chairman of the Board on FMC approval
Multi Commodity Exchange of India Ltd (MCX) said it appointed Satyanand Mishra, the former chief information commissioner as its new chairman.
In a release, MCX said, following approval from Forward Markets Commission (FMC) it appointed Mishra as its independent director till 31 March 2016.
MCX also recommended to FMC the appointment of Miten Mehta as a shareholder director of its promoter Financial Technologies India Ltd (FTIL) on its board.
On 31st October, Jignesh Shah had resigned as non-executive vice-chairman of MCX after sector regulator FMC issued a notice to him and FTIL. MCX fiasco was due to the imposition of commodity transaction tax (CTT) applied in July and recent payment crisis at NSEL.
Earlier this month, Paras Ajmera, the last nominee of promoter FTIL and Shreekant Javalgekar, managing director and chief executive officer of MCX have also resigned from the commodity exchange's board due to Rs5,600 crore payment crisis at the FTIL-promoted National Spot Exchange Ltd (NSEL).