Joy Alukkas has refused to entertain private equity players so far, but plans to list his company on the Indian bourses
Image: Sri Manikandan
In 2000, the five sons of Alukkas Varghese, founder of Alukkas Jewellery, split their family’s gold jewellery business and decided to go their separate ways. The gold business that Varghese had started with a small 200 square feet retail store in Thrissur, Kerala, in 1956 had grown to 11 retail showrooms by the time the family split, over a decade after Varghese passed away in December 1989. A majority of the showrooms were located in Varghese’s home state of Kerala while three were in the United Arab Emirates (UAE). The five sons, Jos, Paul, Francis, Joy and Anto, had been instrumental in helping their father scale the family business, all joining it immediately after college.
Take Joy Alukkas, the fourth son of Varghese, who joined the family business in 1976 after graduating from St Thomas College, Thrissur. A decade after learning the entrepreneurial ropes, he took the business to the UAE, setting up a store there. He has since been based in the Emirate of Dubai.
Alukkas affirms that the family separation happened amicably and was par for the course in the life of a family-run business. “Each of my four brothers got two showrooms and I got to keep the three showrooms in the UAE,” recalls Alukkas. Though he resides in Dubai, he stays in India, at his house in Thrissur, for about five months in a year.
In late September, Alukkas, who has scaled the three stores he got into a gold retail empire that extends from the US to Malaysia, was visiting Bengaluru and Forbes India got a chance to meet up with the 61-year-old billionaire—his personal net worth is estimated to be $1.37 billion, according to Forbes. During the interaction at his sprawling showroom on MG Road, located in the heart of Bengaluru, he says the family split was a “turning point” in his three-decade-long entrepreneurial journey that started in 1987 with his first store in the UAE.
“After the separation, I changed the name from Alukkas Jewellery to Joyalukkas,” he says, while not wanting to elaborate on what led to the family split. “It was a good time to separate,” is all that he says. In hindsight, Alukkas seems to have got the much-needed elbow room to grow his business at a scorching pace—opening, on an average, four stores a year between 2002 and 2010 and about 10 stores a year since 2011. His brothers Jos, Paul and Francis, too, continue to be in the gold retail business, operating the retail chain brands Jos Alukkas, which has 35 stores in South India, Paul Alukkas and Francis Alukkas with two and six stores in Kerala, respectively. His other brother Anto is no longer in the jewellery business, while Varghese’s ten daughters were not connected with the business. “I think Joy Alukkas was extremely ambitious and realised the value of what it means to build a brand, especially in terms of scale,” says Raghu B Viswanath, chairman and chief vision holder of Vertebrand, a brand value advisory and marketing consultancy firm. All said and done, in the retail space, a brand is directly proportional to the scale of operations and Alukkas, adds Viswanath, “understood the connect between scale and valuation, and has monetised the brand far more than what the rest [his brothers] have done.”
Joyalukkas operates 140 retail stores in 11 countries. Around 80 of these are in India
As of today, Joyalukkas, which is headquartered out of both Thrissur and Dubai, operates 140 retail stores across 11 countries. Around 80 stores are in India, 50 in West Asia, two each in the United Kingdom, Singapore and Malaysia, and three in the US. All its retail stores abroad are typically 1,500 square feet in size and stock between 80 kilograms and 110 kilograms of gold jewellery. In India, the stores are bigger with the company operating its biggest store in Chennai, which is 60,000 square feet in size, and is said to stock an inventory of 1 million jewellery designs.
By next year, Alukkas has plans to expand the company’s presence to Canada, South Africa, Sri Lanka, Philippines and Australia. In the current fiscal itself, Alukkas is opening two more showrooms in the US—in Dallas and Atlanta. The jeweller also operates three manufacturing facilities—in Coimbatore, Thrissur and Sharjah.
The idea to rename the company to Joyalukkas had come from the split of a famous Dubai-based family in the early ’90s. Without naming the family, Alukkas says, “One son had added his name to the organisation’s name.” Since then, the Joyalukkas brand name has seen a few iterations: Alukkas was earlier in capital letters, but now it’s in small letters.
“After the business split, I had set myself a target of operating in 10 countries with 100 showrooms and achieving $1 billion in turnover,” says Alukkas. He met his turnover target in 2010, he points out. At the time, UAE was his largest market with 46 stores, while India had 22 operational stores. His target for 2020 is 200 showrooms across 20 countries and to achieve a turnover of $3 billion (₹20,000 crore). For fiscal 2017, Joyalukkas’s revenue touched $1.77 billion (₹11,500 crore).
“His expansion has been phenomenal and systematic without any shortcuts,” says Nitin Khandelwal, chairman, All India Gems & Jewellery Trade Federation, adding, “His story is an inspiration not only for the gems and jewellery fraternity but also for any businessman.”
Brand expert Harish Bijoor concurs, “What wins at the end of the day is the passion and vision. Scorching growth is a function of just that. Some entrepreneurs have that and some don’t.”India to Dubai and back
When Alukkas joined his father’s business in the mid-’70s, The Gold (Control) Act, 1968, restricted the sale, manufacture and purchase of gold in the country. As a consequence, the price of gold in India was about four times more than that in Dubai. Today, the difference is in the range of ₹1,000 to ₹1,500 for 10 grams of 24-carat gold. It was also a period when people from Kerala were flocking to West Asia, particularly the UAE, in search of job opportunities.
“The Gulf was booming and a lot of Keralites had gone there,” recalls Alukkas. Finally, to see what the craze was all about, he travelled to Dubai in the early ’80s. “I saw Gujarati jewellers employing Malayali salesmen to sell gold to Malayali customers. That’s when I decided it was a good time to start our family business there,” he says. If Malayali people were big customers in the UAE, it only made sense for a Kerala firm to use its local expertise and start operations there, he felt. Once he got the green signal from his father and brothers, he headed out to Abu Dhabi in 1986.
“I had a friend who suggested that I start with Abu Dhabi as it was a good market. You just needed a local sponsor for a licence. The investment was completely ours,” says Alukkas, who opened his first store in Abu Dhabi in 1987.
Alukkas opened his first store in Abu Dhabi in 1987
Image: Sri Manikandan
Six months later, he opened a store in Dubai. The store stocked about 5 kilograms of gold jewellery that was sourced from Singapore, India, Malaysia, Turkey and from wholesalers in Dubai (at that point, Alukkas sourced readymade jewellery; now, it also has its own design team). Then, in August 1990, Alukkas shut shop on account of the Gulf War. He resumed business after the war ended in February 1991. From then till the time of the split in the family business, Alukkas operated only three jewellery stores in the UAE.
Soon after the split, he went about achieving the targets he had set for himself. He started with more stores in the UAE and, in 2002, made his foray into India. While the other brothers ran their stores in India, and he had been a part of the family business, he wanted to bring his brand home too. However, there were challenges.
Alukkas had been operating stores in the UAE, selling to the Indian diaspora, largely Malayalis, and to a global audience. “The consumer thinking [in India] was completely different from what I was used to in the UAE,” he says.
And expectedly so as, in India, jewellery tastes differ from state to state, including in regions within a state. Moreover, since he had been away from the country for long, understanding the nuances of the Indian market such as tax regulations was going to be tough.
But these so-called challenges were not as daunting as he had perceived them to be. And that is evident in the share of the India business in his overall portfolio.
For the fiscal ending March 2017, about 60 percent of the company’s ₹11,500 crore revenue came from its India operations. “There is also a context in which you have to see the growth of Joyalukkas in India,” says Ankur Bisen, senior vice president, Technopak, a retail consultancy firm. This context, says Bisen, relates to how jewellery buying has evolved over the last decade and more in the country.
For one, the rise of organised gold retailers is a consequence of people having moved away from buying jewellery from their neighbourhood or traditional family jewellers. A report released by the World Gold Council early this year estimates that by 2020, organised gold retailers would account for about 40 percent of the gold jewellery trade in the country. In 2000, nearly 90 percent of the gold jewellery trade was in the hands of the unorganised sector. “When I opened my store in Coimbatore in 2003-04, I was the only big organised retailer. Now there are more than 19 competitors near my store,” says Alukkas.
Moreover, the purpose of buying jewellery is no longer restricted to being an investment for the Indian consumer. “Jewellery has become an object of expression,” adds Bisen. As it happens, Alukkas was at the right place at the right time, and he used the changing consumer habits to his advantage. “He started to build a brand that would have a pan-India appeal,” says Bisen. Similar to what Titan had done when it launched Tanishq back in the mid-’90s.
In 2013, Alukkas forayed into fashion, multi-brand retail and real estate businesses in Kerala. He set up a silks business, Jolly Silks, which is named after his wife; established a cosmetic retail chain brand ME, which is named after his daughters Mary Antony, 29, and Elsa Joy Alukkas, 23; and set up a watch retail chain, John Paul Watches, named after his son John Paul Alukkas, 32. All these multi-brand retail ventures operate within the Joyalukkas Group-owned Mall Of Joy centres, a one-stop destination for shoppers. Currently, there are three Mall Of Joy shopping centres in Kerala with another four set to be operational in the state by next year.
Alukkas also set up a real estate company, Joyalukkas Lifestyle Developers, that has built a 22-storey residential project, Gold Tower, in Kochi, Kerala. But these businesses are just his passion, not key growth drivers, and are “nominal” in revenue terms in comparison to his gold business. Measuring success
To appreciate Alukkas’s success in scaling and growing his gold retail business in the last 17 years, consider this: Titan Company Limited’s jewellery business, which was started in 1995, clocked revenues of about ₹10,237 crore in fiscal 2017. Considered to be the first pan-India jeweller, Titan operates about 270 jewellery retail stores between its brands Tanishq and Mia. Then there is the 12-year-old listed gold jewellery retailer PC Jeweller, which reported a revenue of ₹8,105 crore in fiscal 2017 from 75 retail stores that are largely located in the West, North and East of the country.
Another unlisted, family-run, Thrissur-based gold retailer, Kalyan Jewellers, closed fiscal 2017 with revenues of ₹13,000 crore. However, while Kalyan Jewellers is backed by private equity (PE) major Warburg Pincus, Joyalukkas is a bootstrapped entity. Alukkas explains why. “Many PE players had approached me a number of times, but I was not interested. With PE people, I will have them sitting in the chair next to me, asking so many questions, telling me to do this and do that,” he says, and adds with a laugh, “Then they will ask for an exit.” That said, Alukkas does have plans of listing his company on the Indian bourses, the process for which would start soon, he says.
When it comes to scale and size, unlisted Kerala-based jewellery retail chain Malabar Gold & Diamonds tops the charts. Led by Ahammed MP, Malabar Gold & Diamonds operates 194 stores across India, West Asia and Southeast Asia, and has revenues of over ₹20,000 crore, making it India’s biggest jewellery retailer. “An honest work ethic, emphasis on high customer satisfaction standards and quality excellence have been the defining hallmark of jewellers from Kerala,” says Ahammed MP, chairman, Malabar Gold & Diamonds. Indeed, considering the popularity of gold jewellery in the South, jewellers from Kerala have been at the forefront of expanding the organised gold retail trade not just in the South but also across the country.
Meanwhile, at Joyalukkas, the next generation is being groomed. Alukkas’s son John Paul runs the international operations of Joyalukkas in the role of executive director and his son-in-law Antony Jos manages the operations of Joyalukkas Exchange. Alukkas, however, has no plans to retire anytime soon. “I will draw a clear succession plan once I decide to slow down,” he quips.
(This story appears in the 24 November, 2017 issue of Forbes India. To visit our Archives, click here.)