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Uday Jewellery Industries Ltd (UJIL), a prominent B2B supplier of fashion and innovative gemstone jewellery, will consider the acquisition of Sanghi Jewellers Private Limited's (SJPL) business segment in a board meeting scheduled to take place in the near future. The move marks a significant strategic move for UJIL as it seeks to strengthen its position within the Sanghi Group and establish a larger presence in the high-value natural gemstone jewellery market.
Board to Consider Acquisition:
Uday Jewellery Industries has put the proposal to buy business operations from Sanghi Jewellers Private Limited on its board meeting agenda. The two companies have a common promoter group and common directors, so this is a related-party transaction that will need the approval of shareholders.
Strategic Reasoning:
The deal is designed to capitalize on the strengths of both companies: UJIL's experience in mass production of cubic zirconia and rose-cut diamond jewellery for the quick-fashion retail space, and SJPL's heritage in natural colour gemstone jewellery production. By integrating operations, UJIL plans to diversify its product base and access new customer bases, such as luxury and high-end retail.
Structure of Transaction and Compliance
The proposed transaction will be conducted at arm’s length and at prevailing market rates, in compliance with Section 188 of the Companies Act, 2013, and SEBI’s related-party transaction regulations. The transaction limit for dealings with SJPL is set at up to ₹50 crore for the period from October 1, 2024, to September 30, 2025.
Synergies and Growth Opportunities:
The merger is likely to generate operating synergies, rationalize procurement (particularly through UJIL's membership in the India International Bullion Exchange for gold procurement), and optimize supply chain efficiency. UJIL is also looking to enter online retailing and light jewellery, with higher margins and greater market access.
Shareholder and Regulatory Oversight:
Since this is a related-party transaction, it shall need approval from shareholders by an ordinary resolution, with complete disclosure of the nature, value, and justification of the transaction as per statutory requirement. The board has the right to delegate powers to a committee for the implementation of the transaction.
Market Context:
UJIL, run by the fourth and fifth generations of the Sanghi family, has become a mass distributor to chain stores in India and is now looking to enter online and luxury retail channels. The acquisition of SJPL's business segment is viewed as an attempt to consolidate group strengths and propel the next phase of growth.
"The proposed acquisition will be in arm's length and ordinary course of business with a view to deriving synergies in the Sanghi Group and growing the market outreach of UJIL," the company said in its AGM notice.
The board's decision will be closely followed by the industry, as it could re-orient the competitive dynamics in India's gemstone and fashion jewellery space.
Sources: Uday Jewellery Industries AGM Notice 2023-24, Annual Report 2023-24, Management Interaction Transcript, Economic Times Company Updates, Annual Report 2020-21
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