Indian Jewellery Industry

INDIAN JEWELLERY INDUSTRY Prepared By Dalal Chintan Dalal Nirav Khushva Anand Pipaliya Manisha Shah Maulik

Submitted To (05) (06) (18) (45) (50)

Prof. Jinal Nagad

Agenda      

Introduction Generic Business Level Strategy Porter’s Five Force Model SWOT Analysis Value Chain Key Success Factor

Introduction India is a leading player in the global gems and jewellery market The gems and jewellery industry occupies an important position in the Indian economy. It is a leading foreign exchange earner, as well as one of the fastest growing industries in the country The two major segments of the sector in India are gold jewellery and diamonds. Gold jewellery forms around 80 per cent of the Indian jewellery market, with the balance comprising fabricated studded jewellery that includes diamond studded as well as gemstone studded jewellery. The Indian gems and jewellery industry is competitive in the world market due to its low cost of production and the availability of skilled labor. In addition, the industry has set up a worldwide distribution network, of more than 3,000 offices for the promotion and marketing of Indian diamonds.

Indian retail jewellery overview Yesterday

Today

Unbranded

Branded

Silver & Gold jewellery

Gold & Diamond jewellery

Investment

Investment + Fashion

Traditional design

Fashionable & innovative design

Marriage & festival is peak season Wearability and gifts Jewellery sold on commodity basis Jewellery being sold on a per piece with labour charges

basis

Conti… Major Players:  Vaibhav Gems Ltd.  Classic Diamond (India) Ltd.  Shrenuj & Company Ltd.  Goldiam international Ltd.  Su-raj Diamonds & Jewellery Ltd.  Rajesh Exports Pvt. Ltd  Gitanjali Gems Ltd

GITANJALI GEMS LTD. Business Overview Established presence The company is one of India’s largest integrated diamond and jewellery

companies Established in 1986. Sight holder status with

DTC through a promoter group company Sophisticated and scalable diamond and jewellery manufacturing facilities Approximately 1,246 retail outlets in India and 143 outlets in the U.S. Leading brands

Expansions •Ramping up the retail chain •Expanding stores in India •Acquisitions including Samuels, Rogers and Tri-Star

Diversification •Gitanjali Lifestyles to focus on Manufacture and distribution Of luxury and lifestyle products •Developing 200 acres gems & Jewellery SEZ in Hyderabad

•Plans to make further inorganic growth

•Plans to develop more SEZs focused on

in the U.S. & Far-east

gems & jewellery across India

•Expanding manufacturing capabilities to

•To partner for developing real estate

address increasing demand

• Further

integration within the jewellery value chain • Higher margins in retail business • Higher value addition

infrastructure

•Leverage its key strengths •Large opportunity for incremental revenue •Diversify business model

Generic Business Level Strategy

Michael Porter’s Five Force Model for Jewellery Industry POTENTIAL NEW ENTRY

INDUSTRY COMPETITORS BUYERS

SUPPLIER

RIVARY AMONG EXISTING FIRMS

SUBSTITUTES

Inter-Firm Rivalry

High

• Two types of rivalry. (1) Inside India & (2) Outside India. • Large presence of unorganized sector. 0.2 Million Gold jewelers and over 8,000 Diamond jewelers • International rivals Such as, China • Threat from producing nation like S.A. & Russia.

Bargaining Power of Suppliers •

Medium

In jewellery industry the suppliers are S.A., UAE, Australia, US, Congo, Botswana, Russia, DTC.

•

Few Alternatives of cutting & polishing.

•

Skilled labor

•

Bargaining power of India is enhanced because India is largest consumer of gold jewellery.

Bargaining Power of Buyers Low •

Divided in two types

1. Domestic buyers &

2. Foreign buyers •

As investment (Demand increase)

•

Bargaining power of Indian exporter is high because Majority of the world's rough diamond production is cut and polished in India.

Threat of Substitutes:

Low

•

Substitutes are Real assets, Stock market, & Bank deposits & mutual fund investment and Other types of jewellery like imitation jewellery, bagasra jewellery, stone jewellery etc.

•

Second preferred investment behind bank deposits

•

Status and standard of living increase so demand is increasing at high rate.

Barriers to entry

Low to Medium

•

Low capital requirement

•

Government subsidy

•

EXIM policy & government’s rules-regulations are high

•

Skilled manpower is essential

•

Advanced technology required

SWOT ANALYSIS OF GITANJALI JEWELLERY LTD Strengths

•

Large integrated diamond & jewellery player and having an international presence.

•

Pioneers of branded jewellery in India.

•

Strong marketing & distribution network. Strong retail presence in India and in U.S. 112 distributors and 1246 outlets in India and 143 outlets in U.S.

•

Strong brand equity and broad product range Such as, Gili, Asmi, Nakshatra, Sangini, D’damas, Vivaaha, Maya, Giantti, Desire, Samuels etc.

•

Visionary leadership (Acquiring Nakshatra, Samuels, Rogers etc.)

•

Expanding manufacturing capabilities in Mumbai and at special economic zone in Surat to address increasing demand.

•

Net Worth is 3,460.37 million Rs. So we can say that it is financially very strong company.

•

Sight holder status with DTC through a promoter group company.

•

Highly skilled, qualified and motivated employee.

Weaknesses • There may be conflicts of interest between them and certain of their Promoter group companies. • As the major raw material requirements need to be imported, companies normally stock huge quantities of inventory resulting high inventory carrying costs. • Technology is less improved compared to China and Thailand’s company. Opportunities • New markets in Europe & Latin America. • Growing demand in South Asian & Far East countries. • Industry moving from a phase of consolidation. • Expansion possibilities in lifestyle and luxury products in India like watches, leather goods, Platinum jewellery because increasing disposable income of people. Threats • International Competition:-China, Sri Lanka and Thailand's entry in small diamond jewellery. • Increase in the price of Gold & Diamonds. • Other local competitors. According to the data 97% jewellery sales are by family jewelers. • Threat from producing nation like S.A. & Russia.

VALUE CHAIN Diamond polishing

Diamond Distribution

Rough Distribution

Jewellery Manufacturing

Direct From Mines

Jewellery whole selling

Shopping Experience

Jewellery Retailing

Jewellery Branding

Finance •

The company’s operations running across the whole value chain so finance is the very much important factor. Working capital requirement is much more. The company is having finance from various sources like shares, bank loan, and credit line.

Infrastructure •

The company is having latest technological manufacturing plants. Its branded showrooms & other outlets are having good infrastructure. It is also having plants in special economic zone at various places

Procurement •

The company procures its raw materials, machinery & other ancillary things from recognized sources. The company is having good creditability with supplier. It has to maintain its relations with different sight holder for procurement of diamond for jewellery making.

Technology • The company is using latest technology in processing means jewellery manufacturing & also in designing. The company is having business in so many countries so that it has to pay attention over the designing, manufacturing etc. with the high technology to satisfy buyer’s needs . Human resources • As of September 30, 2005, the Company had 410 full-time employees, of which approximately 117 employees were employed at its corporate offices in Mumbai. In addition, as of September 30, 2005, its subsidiaries, joint ventures and associate companies employed in the aggregate more than 740 employees, including 250 employees in its retail operations.

KEY SUCCESS FACTOR (KSF) Marketing & Distribution related factor: Strong retail presence in India and the U.S.: The company is occupying good position in retail jewellery provider in both India as well as U.S. Gitanjali has a strong network of distribution. Here Strong retail presence in India and in US. It has 112 distributors and 1246 outlets in India and 143 outlets in US. Strong brand equity and broad product range: It is the pioneer of branded jewellery in India. It brand equity is too high. Significant focus on retail and distribution network to drive growth: It also keeps in mind distribution network which provide the product to end users. The company is having its retail outlets also. Manufacturing related factor: Sophisticated manufacturing facilities including upcoming Hyderabad SEZ: The company is having good infrastructure facility in various special economic zones. Gitanjali has been achieved economies of scale and learning curve effects which is benefited in low cost production because in India skilled labor is available at cheaper rate.

Technology Related factor: • Gitanjali has expertise in cutting, polishing the diamonds and in designing the jewellery (specifically in small design). • Presence across the whole value chain : The first & foremost success factor for the company is of its presence across the entire value chain Human Resource and Top Management related factor: • Visionary leadership and a deep management team • Strategic Acquisition of Tri-Star : Manufacturer and global distributor of Canadia® brand diamonds and diamond jewellery in various countries, such as Australia, Canada, England, Ireland, Northern Ireland, New Zealand, Scotland, and the United States

Thank you…..