Gems And Jewellery Industry_new

Micro Economics for Managers MBA-Capital Markets (2007-08)

Gems and Jewellery Industry Su-Raj Diamonds & Jewellery Limited

Presented by:

Ashish Kumar Jain (11) (12) Anthony Abhishek Joseph (14) (15)

Mehul Jain Satish Kachhawa

Introduction and Outlook 

Constitutes:   

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Accounted for 13.7% of the total Indian exports

Diamonds Jewellery Gems and Pearls

International GJ market estimated ~ $85bn Indian market value ~ $13bn  15% Gold forms 80% of Indian GJ market

Values of Exports ( $bn) 16.9* 15.5

18 16 14

13.4 10.7

12 10 8 6 4 2 0

2003-04

2004-05

2005-06

2006-07

Estimation of Diamond Export Current Scenarios  Lead position in diamond processing  96% Market in unorganized Hands  High Labor Cost  High investment projects coming up

Potential Trends  Expansion in processing of High quality diamonds  Consolidation of Organization Sector  Promotional Activities by Indian Govt.

Company Under Scan:

Su-Raj Diamonds & Jewellery Ltd. Core Business  Manufacture and export 

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Of Gold, Silver and Platinum jewellery Of Polished Diamonds

Infrastructure  Firm has five dedicated jewellery divisions and two diamond divisions strategically located in India

Firm’s Global Reach

Market Structure of the Firm Diamonds  Four state of the Art factories  Manufacture diamonds of range 0.005 carats to 3 carats  Diamond business constitutes 46% of the total  Major portion of the Diamond production is exported

Gold, Silver and Platinum  Team of 100 professionals, churns out 700 designs per month  All company products are hallmarked ensuring quality  Revenue generated from this part is around 54% of the total

Competitive Position 

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Doesn’t Have Does not have a recognized brand in the market place as of now (like Gili of Getanjali) Does not have a well established retail chain to sell directly to the consumers (like Tanishq) Does not have facilities to process high quality diamonds (like Rajesh Exports)

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Does Have Does have access to high technology and thus cost advantage. Does have reach in the international market though wholesalers as in New York, Belgium, Antwerp, Middle East and China Keeps the jewellery designs updated as demanded in the international market (apart from the traditional jewellery)

Potential Risks 

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Emergence of China, Sri Lanka and Thailand’s entry in small diamond segment Fluctuations in Currency Rates Infrastructure bottlenecks, absence of technology Consumers prefer Bank products to Gold/Silver jewellery for investment purpose Low availability of skilled labor

Recent Strategies 

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Established six wholly owned subsidiaries to cater to overseas and domestic market The firm has set up an exclusive factory outlet in Bangalore Planning to manufacture handicraft jewellery along with branded to cater to diverse market Expanding B2B business by increasing its retail clients such as Tanishq, Khazana, Alukkas etc.

Demand Forecast for Diamond Exports • Regression model

• Import of rough diamonds • Export price • Currency Rate

70,000.0 60,000.0 50,000.0 Export Value in Rs mn

• Variables affecting the demand

Export Projections

40,000.0 30,000.0 20,000.0 10,000.0 0.0 2002

2003

2004

2005

2006

2007

2008

2009

Year Actual Exports

Estimate 1

Estimate 2

Estimate 3

Y = 4396 + 0.27415 * X1 + 249.98796 * X2 - 570.66153 * X3

2010

Recommendations      

Introduce a Jewellery or Diamond Brand Increase presence in the retail segment Tap the opportunities with the Retail biggies Explore new markets in Middle East Invest in Technology Invest in labor’s training and skill enhancement programs.

Thank You