The clothing store that went into jewellery: Kalyan Jewellers' Kalyanaraman on his path to success

Success Quotient is a weekly feature that appears every Friday on Firstpost, which looks at the pains and joys en route to success for a head honcho - whether a CEO, MD or an entrepreneur. The column looks at the ideas that helped launch a company, its highs and lows. Hailing from a family of priests that veered towards the textile business, 64 year-old TS Kalyanaraman switched tracks to the gold jewellery business. He has moved from one store in 1993 to 83 showrooms in India and West Asia. Private equity major Warburg Pincus picked up a minority stake in Kalyan Jewellers for Rs 1,200 crore, the biggest-ever PE investment in India’s jewellery manufacturing and distribution industry. The company plans to set up 22 showrooms this fiscal, of which nine will be in the Gulf region. Plans are also afoot to launch six showrooms in Qatar. Kalyanaraman, Chairman and Managing Director of Kalyan Jewellers, talks about his dreams, goals and future plans in the gold business to Firstpost. Excerpts from a conversation:   From priesthood to textiles to jewellery, each generation in your family has moved away to a new business. What prompted you to veer towards gold?  In 1908, my grandfather TR Ramachandra Iyer relocated to Thrissur (Kerala) from Thanjavur (Tamil Nadu), and set up Sitaram Mills, the district’s first spinning and weaving mill. It was subsequently acquired by the state government. My father, TR Seetharama Iyer, then ventured into textile retailing. In 1993, I diversified into jewellery in keeping with the wishes of our customers who suggested that we sell jewellery too, since they were buying textiles from us for wedding purposes. We began by sourcing jewellery and selling it at the showroom in Thrissur that I set up with an initial investment of Rs 75 lakh, of which Rs 50 lakh was raised through a bank loan. W****hat did you learn from your father while being in the textile business? How much of that learning have you adapted into your businesses? My father believed that one must sell quality products at reasonable prices.  This way, even if we did not make large profits, the business will be sustainable. When we moved into the jewellery business, we followed the same principle. We kept our profits minimal and focussed on growing volumes. That has kept us in good stead. Our strategy has been to build lifelong relationships with our customers. Today, nearly 90 percent of our turnover is through repeat business. [caption id=“attachment_2313782” align=“alignleft” width=“380” class=" “] Chairman and MD TS Kalyanaraman (seated) with sons Ramesh (left) and Rajesh[/caption] What were the goals you had set for yourself then? My intention was to offer a compelling and unique shopping experience to our customers. In 1993, Kalyan Jewellers launched its first showroom in Thrissur, spread over 4000 sq ft, air conditioned with clean toilets and ample parking space. The showroom challenged convention with its large format instead of the traditional 300-400 sq feet shops. We began to stock a wide selection of quality ornaments, where salespersons talk about the importance of verifying the purity of gold instead of the normal practice of haggling with customers. We have also eliminated the waiting time for jewellery. For the first time in Kerala, there are detailed rate tags on gold ornaments that clearly spell out the making charges. It is a far cry from the traditional practices of the family jeweller who would make his margins by adding negotiated charges on making and wastage, while compromising on the purity of gold. The ‘unconventional’ practice attracted a loyal set of customers. What is it about the gold business that thrills you to be part of it and expand your reach as you are doing of late? I started the jewellery business at the behest of our customers.  Our dream is to expand into every city that has a market for gold. What is your business strategy? Since our inception in 1993, Kalyan Jewellers has set industry-level benchmarks on customer experience, innovations and transparent pricing. Our business is defined by its customer-centric business model that includes many “firsts” such as the first to introduce BIS certification of gold jewellery, a customer loyalty program, which today has more than two million members; to pioneer the use of detailed price tags, thus demystifying making charges and providing increased transparency to customers; concept of neighbourhood customer service centers in the jewellery industry under the My Kalyan brand, a male brand ambassador in a woman-dominated category, multiple-showroom launches in the same city on the same day and the first to offer affordable diamonds duly certified and with a cash-back and buyback offer. Our turnover in FY 14-15  was close to Rs. 10,000 crore. Our target is to achieve a topline of Rs. 13,000 crore in FY 15-16. We plan to touch the 100 showrooms mark by the end of the year. Which state, according to you, shows a penchant for gold?  Gold jewellery is popular across all the regions in the country. However, the market varies in motifs and designs from state to state and region to region. For example, in the eastern part of the country, intricate Bengali jewellery is the norm. Colour stone-studded jewellery is popular in parts of Andhra, whereas traditional jewellery in popular Kerala and Tamil Nadu. As a national player, our strategy is to cater to local tastes and preferences. While people use gold jewellery for everyday occasions. bridal jewellery is a huge segment in the country. We have also started seeing a growing demand for diamonds and are actively looking at fulfilling this need. Diamonds also represent a significant opportunity in the gifting segment. You have brand ambassadors for each shop opening besides popular regional actors of the state too promoting the brand. How much does this translate into business?  Our brand ambassadors have played an important role in building the brand. We have always believed in conducting our business in a fair and transparent manner, especially in a largely unorganised industry. This has helped us in good stead and today we have a loyal base of over 2 million customers. Buying gold is part of the Indian tradition and heritage. There are several factors in the customer’s consideration –  purity, pricing, service, resale value and exchange offers. What is your outlook on the gold industry? What do you think needs to be changed? The jewellery sector is largely unorganized and opaque, and impure gold is still being sold. There is need to educate and empower customers.  Your sons Rajesh and Ramesh are in the business now. What are the benchmarks and cut-offs that you insist they follow in the business? Transparency and trust are the guiding principles of our business. I always tell my sons that there are no short cuts to success. You have an aircraft. You travel a lot. What are your hobbies?  When I am not working, I like to be home with my family. In the morning, I do yoga and spend quality time with my grandchildren. Every day, I go to the family temple before going to work. During the weekends we get together, and go for movies or play games. I also take two or three long vacations during the year. Europe is a favourite destination.