Vaibhav Jewellers Seals Franchise Pact for ₹200 Cr Visakhapatnam Expansion

Vaibhav Jewellers has approved a franchise agreement with M/s. Gontla Trading LLP. The deal involves an estimated maximum transaction value of ₹180 crore for one component and ₹20 crore for another, totaling ₹200 crore for bullion and jewellery sales. This strategic expansion aims to increase the company's retail footprint in Visakhapatnam, with operations set to commence in FY 2026-27.

Board Approves New Franchise Deal

Manoj Vaibhav Gems 'N' Jewellers Ltd (Vaibhav Jewellers) announced on March 23, 2026, that its Audit Committee and Board of Directors have approved a franchise agreement with M/s. Gontla Trading LLP. This pact allows for operating new jewellery stores under the Vaibhav Jewellers brand in Ramnagar and Gajuwaka, both located in Visakhapatnam. The transaction, covering the sale and purchase of bullion and jewellery, is set to commence in FY 2026-27 and carries an estimated maximum transaction value of ₹200 crore. The company has identified this as a related party transaction but stated it will be conducted on an arm's length basis and is not considered material.

Strategic Expansion in Visakhapatnam

This move signifies Vaibhav Jewellers' strategy to expand its retail presence in key urban centres like Visakhapatnam through a franchise model. By partnering with M/s. Gontla Trading LLP, the company aims to leverage local expertise and operational capabilities to establish new outlets. The substantial transaction value indicates a significant commitment to scaling operations and increasing market share in these targeted regions.

Vaibhav Jewellers' Retail Approach

Vaibhav Jewellers is a prominent regional jewellery retailer based in South India, known for its hyperlocal strategy and focus on Tier 2 and Tier 3 cities across Andhra Pradesh and Telangana. The company operates using a hub-and-spoke model, emphasizing strong customer relationships, diverse designs, quality, transparency, and service. Vaibhav Jewellers has a history of expansion, including prior use of franchisee showrooms as part of its growth strategy, and had announced further expansion plans post its IPO.

Key Changes from the Agreement

• Increased retail presence in Visakhapatnam with the establishment of new jewellery stores.
• Formation of a partnership with M/s. Gontla Trading LLP to manage and operate these new outlets.
• Projection of significant bullion and jewellery sales transactions, up to ₹200 crore, under this agreement for FY 2026-27.
• Continued adoption of the franchise model as a key strategy for market penetration and retail footprint expansion.

Risks and Considerations

The transaction involves related parties, though the company asserts it will be conducted on an arm's length basis and is not material. Broader company risks, as highlighted in its IPO disclosures, include potential fluctuations in raw material prices (gold), significant working capital requirements, intense market competition, and reliance on its existing geographical concentration. The company's stock has also seen a considerable downturn over the past year, indicating potential market concerns.

Competitive Landscape

Major players in the Indian jewellery market, such as Titan Company (Tanishq), Kalyan Jewellers, and Malabar Gold & Diamonds, are actively employing franchise models to expand their reach, often targeting Tier 2 and Tier 3 cities to tap into a wider customer base. These competitors leverage franchising to achieve agility in market penetration and capital efficiency, a strategy now being amplified by Vaibhav Jewellers' latest move.

Next Steps

The company's announcement of specific opening dates for the new franchised stores will be important to track. The operational and financial performance of these new outlets as they contribute to the company's revenue will also be key. Any further details or disclosures regarding the ongoing transactions with M/s. Gontla Trading LLP will provide additional insight.