If jewellery ecommerce entrepreneur Mithun Sacheti has his way, he will cut his diamonds in Chennai and sell them in the US, part of a plan to link India’s lowcost manufacturing with the hotly contested etail market of the US in a bid to raise operating margins of his venture CaratLane. Tiger Global-backed CaratLane is discussing with three US-based online jewellers with revenues in the range of $15-20 million to make an acquisition. The targets are brands with strong brand recall, advanced technology adaptations and a frugal human resource base. “If you look at the pipeline of diamonds, where is the money really made? It’s made by the brand selling at the front-end in the US,” Sacheti, the company’s cofounder, told ETin an exclusive interview. The idea is to climb to the higher nodes of the jewellery supply chain, which would give Carat-Lane the necessary headroom for a high-margin play. “In America, there are businesses that have great brand value but have not figured out the model entirely — because they are either not manufacturing in India, or have got the technology right. Those are costs we have already internalised. Now, if we can get a brand consumers are flocking to, then we have an opportunity to acquire,” said Sacheti. The size of the deal is a function of multiples of revenue, growth and the rate of cash-burn. With the deal still a month away to be sealed, Sacheti would not speculate on its size, but added that he would go for a purely online model, a departure from his Indian business that complements the online play with physical stores and try-it-out visits by CaratLane staff to customer homes.
Source: Economic TimesCaratLane in talks with US-based online stores for acquisition
Industry: Retail 2016-03-25
