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Vikram Raizada, Tara Jewels executive director and CEO of retail
Vikram Raizada, Tara Jewels executive director and CEO of retail
 









Bevilles’ Indian supplier closes own stores

Tara Jewels, the Indian jewellery supplier which lost millions of dollars in the Bevilles collapse, has announced it is closing three stores as part of a decision to “re-strategise” its retail business.

A stock exchange filing in India has revealed that the company will close three of its “less profitable gold-centric stores” – located in Delhi and Pune – in order to adapt to the current regulatory environment.

The Indian jewellery market has experienced tough times in the past 12 months, and a nine per cent drop in gold jewellery demand in the first quarter of this year was attributed to ongoing restrictions on gold imports and uncertainty surrounding government elections.

Tara Jewels found itself embroiled in the collapse of Bevilles after it formed a “strategic alliance” with the mid-sized jewellery chain in January 2013. An official Bevilles notification at the time, addressed to the Australian retailer’s other suppliers, described the Indian manufacturer as a “long-standing supplier to Bevilles” and “a leading designer”.

However, the alliance sparked rumours that the Indian company had taken an equity position in the Australian jewellery chain.

These rumours were put to rest in April this year after Bevilles was placed into administration, with the subsequent administrator’s report revealing that $6.4 million of the total $7.5 million in unsecured creditor claims were owed to Tara Jewels.

The administrator’s report further explained that in addition to directly providing jewellery to Bevilles, Tara Jewels “also assisted in sourcing and delivering product from multiple suppliers across India”.

The Tara Jewels’ business model in India operates at both the wholesale and retail level. After the closure of the three stores – which traded for almost four years – the company will have a total of 37 company-operated retail outlets across 32 Indian cities.

The company has four manufacturing facilities in India and China, and sales/distribution offices in Australia, the US and Europe.

After announcing its own problems in the Indian market, the company will now increase its local focus on its diamond and studded jewellery business, and continue to “expand its retail footprint through the shop-in-shop model” while also exploring franchise options.

“The new strategy will help the company achieve faster expansion with lesser capital allocation,” the Tara Jewels filing stated.

Bevilles has since been reacquired by the founding Beville family and has continued its relationship with Tara Jewels under the new business structure.

Under the new business model, Bevilles now operates 16 stores across three states after closing 11.
 

UPDATE - Clarification 9 July 2014

Since publication, Rajeev Sheth, chairman and managing director Tara Jewels Limited, has issued a statement seeking to clarify a number of issues pertaining to Tara Jewels’ Indian operation and the liquidation of Bevilles.

“Previous to the [Bevilles] administration process, Tara Jewels was not a secured creditor as stated in the Administrator’s report and potentially may have been out-of-pocket had the business not continued in a new entity. But this is not the case.

“Like other creditors we had options and chose not to participate in the Deed of Company Arrangement. By choosing this option we were able to assign the debt to the new entity Bevilles Corp. Pty Ltd as a secured creditor. It was Tara’s view that a secured debt in a profitable restructured business with positive net assets was the correct way forward,” Sheth advises.

Sheth is confident that ultimately the $6.4 million debt will be recovered in full.

“Tara Jewels has ‘not lost any funds’ nor has it been ‘paid in full’. Just because one is owed money does not mean that money is lost. A commercial agreement has been reached and regular payments are being made by Bevilles and we remain a key supplier.”

The report also covered the closure of three Tara Jewels stores in India. Addressing this matter, Sheth adds, “The decision to rethink our retail business in India is not connected in anyway to the collapse of Bevilles.”


More reading
Gold jewellery demand highest since 2005
Indian company joins Bevilles, stores to close
Bevilles jewellers back in business
Bevilles jewellers enters administration

 










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