MUMBAI (Reuters) - India’s Shree Ganesh Jewellery House Ltd, a jewellery maker and exporter, plans to tie up with a European company for a gold refinery with 50-70 tonnes per annum capacity, expected to be operational by March 2011.
“We are planning to open 2,000 centres in India for buying of scrap gold.... We plan to produce 6-8 tonnes in a month,” said Nilesh Parekh, chairman of Shree Ganesh Jewellery House.
Indian jewellery makers have been turning to refining in order to tap the scrap available with the households in the country, the world’s largest consumer of the yellow metal.
According to a World Gold Council estimate, Indian households possess 20,000 tonnes of gold primarily in the form of jewellery, which they sell whenever there is a price surge.
The company does not have the required know-how for a refinery which has prompted it to team up with a foreign firm.
“We need a tie-up to run our operations smoothly,” said Parekh.
The refinery will be set up as an ancillary unit and will help the company meet demand from both wholesale and retail clients, Parekh said.
The unit would be part of Shree Ganesh Jewellery’s planned capital expenditure of 4 billion rupees for over two years.
Shree Ganesh Jewellery, which has a licence to import gold, also plans to increase its domestic foot-print by setting-up 16 more stores in six months.
The company has 13 own outlets, as on Jan 31, 2010.
It has already bought sites in Rajkot and Ahmedabad in western region, Mangalore, Chennai and Hyderabad in south, Gurgaon, Amritsar, Ludhiana and Chandigardh in north and Siliguri in east, said Parekh.
“These would be our stores and franchisee stores would be much larger.”
Driven by higher demand for jewellery, Shree Ganesh expects its turnover to rise by 25 percent this financial year. In FY10, the company’s revenue was 32 billion rupees and net profit 1.78 billion.
An increase in market share spurred by the retail expansion is seen fuelling the revenue rise.
Indian consumers have been buying the yellow metal despite record high prices, which is likely to raise imports in 2010 to about 600-625 tonnes from 480 tonnes in 2009, the head of a spot bullion exchange had said in August.
Gold on Multi Commodity Exchange was at 19,680 rupees per 10 grams on Tuesday, after hitting a record high of 19,744 rupees on Oct. 7.
Editing by Rajesh Pandathil