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Kerala Jeweller Becomes Billionaire as Gold Surges

TS Kalyanaraman believes in less margin, more turnover


TS Kalyanaraman is beloved by his customers and detested by his rivals for bringing transparency to jewellery sales in India. He opened a shop in Kerala in 1993 and taught customers how to test the purity of their gold to expose cheating craftsmen. He was also the first jeweller in town to attach price tags to his gold and gem collection, angering competitors who accused him of ruining the trade. 

Two decades later, the 65-year-old has become a billionaire as a 12-year rally in gold prices fails to damp demand in India, the world’s largest consumer of the precious metal. He owns 44 stores in the country and plans to open 36 more by March 2014, including five in the Middle East. “Less profit, more turnover; that is what we believe in,” Kalyanaraman, chairman of Kalyan Jewellers, said. “Be as transparent as you can in your trade. The big thing in life is trust.” 
Kalyanaraman’s closely held Kalyan Jewellers is valued at about $1 billion, according to the Bloomberg Billionaires Index. The estimate is based on the average enterprise valueto-earnings before interest, tax, depreciation and amortisation and price-to-earnings ratio of three publicly traded peers: Titan Industries, Gitanjali Gems and Rajesh Exports. Kalyan Jewellers posted revenue of . 9,500 crore ($1.8 billion) and Ebitda of . 295 crore in the year ended March 31. It has net debt of . 760. He has other assets worth about . 350 crore, according to Sanjay Raghuraman, chief operating officer of Kalyan Jewellers. 
“I don’t calculate my net worth,” said Kalyanaraman, when asked about his status as a billionaire. “I am more keen to trade, develop my brand, but you may be right.” He has never appeared on an international wealth ranking. 
He recently set up a property company, developing apartment units and villas in Thrissur. Kalyan Jewellers is spending about . 3,000 crore to expand in the world’s secondmost populous nation, including opening jewellery shops in Mumbai. 
As the company grows, he is using the appeal of film stars to woo customers. Aishwarya Rai is one of the brand ambassadors. 
“She is a woman icon,” Kalyanaraman said. “We wanted somebody who wears our jewellery, who endorses our product to be the most beautiful woman in the world.” 
The billionaire is the first owner of a private jet in Kerala. He bought the seven-seater Embraer Phenom 100 about a year ago for . 30 crore to visit his chain of jewellery shops in the other parts of India. “It was only done to save time because time is money; nothing connected with luxury,” he said. 
“Our stores are spread across very small towns where there are airports but there are no frequent flights. For just a oneor two-hour job, I would spend one-a-half days because I would go there and come back only the next day.” 
Demand in India, the world’s largest consumer of gold in 2011, climbed 9% in the quarter ending September 30 even as global use declined 11%, according to the World Gold Council. The jewellery market in the South Asian nation is valued at $16 billion to $18 billion, according to Firstcall India Equity Advisors while New Delhi-based consultants AM Mindpower Solutions estimate sales of gold ornaments may reach $41.3 billion in three to four years. 
India consumes 30% of the global gold supply, according to the council. More than half of gold jewellery is bought for weddings. South India accounts for 45% of the total jewellery business in the country, according to Firstcall. 
“We don’t find it tough to sell gold; people love to buy jewelry,” Kalyanaraman said. “The only way to make your wife, sister or lover happy is to give them something that they love.”