Joyalukkas Reveals Diversification Plans - Exclusive Interview with Joy Alukkas

While buying one’s first Rolls Royce is a difficult decision for even billionaires, for Joy Alukkas, it took only a moment’s outrage. Not only that, he was the first person in this whole world who probably gifted a Rolls Royce, before buying one for personal use. The place was Dubai. Joy had been to an exhibition where Rolls Royce cars were displayed, and Joy was upset with the arrogant behaviour of a showroom assistant. That is how Dubai’s first raffle with a Rolls Royce as gift was born. Anybody buying jewellery worth 500 dirhams was given a ticket to the raffle. Legend has it that the draw became such a hit that Arabs were willing to pay 500 dirhams for the ticket even without any jewellery. It was a hugely successful scheme for Joyalukkas, but for Rolls Royce, it resulted in a ban on such raffles as it didn’t suit the British luxury car maker’s sensibilities. Today, if such a situation again arises, Joy would rather gift a business jet. Again, the time taken for the decision would be momentary. It is on such rapid decision making power that Joy Alukkas, despite dropping an IPO plan, is continuing the expansion of his jewellery showroom network both in India and overseas, and also getting into 5 more verticals - air charter services, malls, textiles, money exchange, and real estate development.

Seasonal Magazine queries Joy Alukkas, Founder & Chairman, on the Group's Indian and overseas plans, on what makes the group tick even while gold retailing is under pressure, and his leadership and moneymaking secrets:

Is Joyalukkas diversifying into new verticals like air charter services and real estate?

We are already into some of these new verticals, for sometime now. Like, for example, we have significant presence in textiles, aviation, and money exchange. But in some sectors like real estate development and malls, though we already have incorporated companies, significant activity is yet to commence.

Is this expansion into new verticals only in India? What are the overseas plans?

Yes, mainly these new verticals will be in India. Our overseas expansion plans are even more ambitious, but it has got more to do with expanding the Joyalukkas jewellery brand to markets like Singapore, Malaysia etc. Our Singapore showroom is all set to open shortly. Some diversifications already have an overseas counterpart like our money exchange business.

In India, how will be the structure for the new activities? Is the Joyalukkas brand being extended from the core jewellery business? 

No, not necessarily. Though the promoter group is same in all, the branding strategy will be a mixed one. But before that, the first point to note is that there will be six separate companies with distinct resources and management, for each of these activities. Some of these new activities will be under new brands. For example our air charter service is branded as Joy Jets, our mall business will be Mall of Joy, and our textile brand will be Jolly Silks. Other activities like money exchange and real estate development will have the Joyalukkas name in them. For example, it will be Joyalukkas Money Exchange and Joyalukkas Lifestyle Developers.

Each will be headed by a CEO or COO?

No, each will be headed by a professional General Manager reporting directly to me. What I have found personally as an entrepreneur is that, it is better that I take up the topmost tasks that are generally left for CEOs, CFOs, COOs etc. We operate at a breakneck speed that requires rapid decisions that is not easy for everyone.

Why did you back out from the IPO plans?

While planning for the IPO, attracting funds was not the main issue. At this stage where we stand now, lenders are after us. What I was intending was better visibility, better image, better communication regarding our corporate governance etc. However, looking at many listed companies, we think we fare better than them. And one problem we encountered on the valuation front is that there is no real benchmark for us in the Indian listed space - no similar sized pure retail play in jewellery. That is not good for valuations is the advice we got from our investment bankers.

There was news that you had tied up a big-ticket loan, of around Rs. 500 crore, overseas. Was that also a dampener for going in for the IPO? 

No, that $100 million loan is to take care of our overseas jewellery expansions. It was syndicated by Standard Chartered Bank with some other leading banks in Dubai. The IPO was purely for Indian operations.

So, will you be going in for stake dilution with some PE funds?

We have enquiries from PE funds, but at this point of time, we are not terribly interested. You need PEs either for funds or for the resulting valuations. We don’t need both. We are comfortable with our existing valuations and our existing pace of growth, which many would find difficult to emulate.

So, how will all these new activities be funded?

As I told you some minutes back, we are already into many of these activities. We are just formalizing them now with formal launches and campaigns. We had established these new verticals on our own funds and debt, and going forward also, we are capable of funding them on our own and also through debt. Our good credit rating helps us in this regard. For some capital intensive verticals like our real estate division, we already hold prime lands in select cities.

But what about other resource intensive activities like Joy Jets?

Well, the point to note here is that Joy Jets is already operational with one business jet and one helicopter. We already have DGCA approval for unscheduled or chartered flights, and we are having regular business now. Our business jet is an Embraer Phenom 100 that has a range of 1000 nautical miles. We are now looking at buying a second business jet that can do 2000 nautical miles, that is roughly up to Turkey from here, or one that can do 3000 nautical miles which means that many parts of the world are accessible with one stop-over.

What would be the investment for Joy Jets and what is the kind of revenue expected?

We will be investing around Rs. 100 crore in Joy Jets. The second business jet alone would cost between Rs. 50-60 crore. Coming to the revenue part, it is still a bit premature to talk about it, even though we have our internal targets, and business is flowing in smoothly according to our plan. We charge around Rs. 1.25 lakh an hour, and we already have customers who have opted for yearly plans like 150 hours.

Why did you opt for these diversifications? Is business slowing down on the jewellery front?

Business may be slowing due to the high gold prices, but we are not slowing down at all. In December, we had opened two new showrooms in Karnataka, one in Hubli and the other in Mysore. In January, we opened our second store in Saudi Arabia, which is also the country’s largest jewellery showroom. In February we launched our new Kochi showroom, and in March we already had one event - the renovation of our Kottayam showroom. My policy on expansion is that we should have an inauguration or renovation every 15 days.

Are you claiming that jewellery business for Joyalukkas is not sluggish at all?

No, not at all. I was coming to that point. Jewellery sales growth is now somewhat sluggish due to the gold rally, but the point I wanted to make is that we are not taking that as an excuse. We are continuing our expansions that will improve our market share, but at the same time we are also looking seriously at diversifications now to have a better growth rate overall.

You spoke about Joy Jets. Can you tell the rough ideas behind Mall of Joy and Joyalukkas Money Exchange? 

Well, Mall of Joy is creating a new concept for malls in India, focused around the celebration theme. Each mall will have a minimum of 2 lakh sq ft and will have two anchor stores in jewellery and textiles, besides having all kinds of luxury retail stores and services. Ample parking space and children’s play areas will be added features. Designed by architects of international repute, the first Mall of Joy is getting ready at Kozhikode, and will be followed by seven more similar malls in Kochi, Coimbatore, Thrissur, Kottayam, Palakkad, Thiruvananthapuram and Alappuzha. The total investment for this phase is Rs. 1000 crore and all the malls are expected to be completed within 30 months.

And about your Money Exchange division?

Well, this is one of our oldest diversifications. We have been in this since 2006. But we were low key, as you know the regulatory hurdles are high in this field. Anyway, we are past all that now, and we have 5 centres in UAE, with another 10 being rolled out in GCC countries. Our first money exchange centre in India will be at Kochi. Our target is 100 centres within the next five years.

You seem quite at ease even while managing this vast empire. What is your leadership secret?

I believe that me fretting over any issue won’t help in solving it. In my small experience, what I have discovered is that what distinguishes a successful businessman is only one thing - the ability to take quick decisions. I think, naturally and over the years, I have that flair for taking rapid decisions. Unless and until you take decisions, issues won’t go away. You can deliberate till the end of the world, but for things to move forward decisions are vital. I too ask around, but the final decision is mine. If you had watched me closely, during these past few hours, I had taken so many decisions on quite a lot of pressing issues through phone and in person, without this interview getting affected. Many of them are decisions of significant financial or organizational implications for us. But yet I take them promptly without postponing or wavering. Rarely I may go wrong, but that is part of the game. And only rarely do I go wrong, not because I am very intelligent, but because I commit our Group’s whole might behind that decision to make sure that it is a success.

Are you more fond of delegation or micro-managing?

Maybe I do both, and I don’t even think about that, because that is not my focus. My focus is solely taking decisions and seeing that it is followed up with our full might. If it works on delegation, very good, and if it requires intervention or micromanaging, I will not shy away from it. We have created a thoroughly professional company so that maximum tasks are delegated effectively, but yes, things do come to me for decisions, which I take quickly.

As an extraordinarily successful businessman, financially too, what is the secret of making money?

The secret is this - money is only a by-product. If you target money, it will elude you. Before big money, think of how big your heart is. Our heart or vision should be big enough to conceive big plans. Then start executing those big plans, and whenever hindrances come, take rapid, merciless, but best informed decisions. Money will follow such visions.