About a month ago, I posted about the talk that Gitanjali was looking at Zale. Following that, Gitanjali USA CEO Nehal Modi called me to talk more about how he sees the current market.

In 2006, Gitanjali, the Indian diamond and jewelry manufacturer, purchased the Samuels chain, and then two years later purchased Rogers. It now has a chain of about 100 stores, making it, by most estimates, the fifth largest jewelry chain in the United States.

Modi says that the company’s model of a vertically integrated chain has been proven. “The last three years have been wildly profitable,” he says. “As a manufacturer you are either a niche player or you are vertically integrated. Those are the only two long-term models we view as viable.”

And now the company wants to scale upward.

“Growing in an organic way is very cumbersome,” Modi says. “For the scale that we require, that growth has to be exponential.” 

The “access to capital is there,” he says. “A lot of equity is still sitting on the sidelines because there is so little deal flow.”

Of course, there is still talk about Gitanjali in India—and its stock is still languishing—but Modi says those problems have mostly been solved and were mostly related to “external regulatory issues.”

In any case, the company hopes to make its move in the next 8 to 12 months. Which brings us back to Zale. Modi declines comment on what Gitanjali might look at, saying any targets are speculative. But, still, there aren’t too many options out there.

Rob Bates

JCK News Director