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Submitted To: Prof. Rakesh Gupta Submitted By: Kumari Sweta Lipi Agrawal Sukalpa Datta Sushma Kumari Vikas Sharma Vipin Khandelwal
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.
Diamond distribution was dominated by a few major diamond mining companies worldwide among which Diamond Trading Corporation (DTC) was the largest diamond distributor. It accounted for approximately 50 % of worldwide diamond distribution.
Though Indian exports in cut and polished diamonds was growing, it was restricted to lowersized and lower-valued diamond market. European manufacturers dominated the highervalued diamond market.
India was among the largest importer of gold in the world and its sale was sensitive to income level and price level. Also it was dependent on the purchases based on faith in the retailer. Tanishq and Gili were among the earliest jewellery brands in India and later there came a shift in consumer preferences towards diamond jewellery as it was positioned as affordable and contemporary.
Indian Retail Jewellery Overview
Yesterday Unbranded Silver & Gold jewellery Investment Traditional design Marriage & festival is peak season Today Branded Gold & Diamond jewellery Investment + Fashion Fashionable & innovative design Wearability and gifts
Jewellery sold on commodity basis withJewellery being sold on a per piece basis labor charges
Major Players: Tanishq Jewellery 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 •Plans to make further inorganic growth in the U.S. & Far-east •Expanding manufacturing capabilities to address increasing demand
Diversification •Gitanjali Lifestyles to focus on Manufacture and distribution Of luxury and lifestyle products •Developing 200 acres gems & Jewellery SEZ in Hyderabad •Plans to develop more SEZs focused on gems & jewellery across India •To partner for developing real estate infrastructure
Further integration within the jewellery value chain • Higher margins in retail business • Higher value addition
•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 SUPPLIER
RIVALRY AMONG EXISTING FIRMS
• Two types of rivalry. Inside India • Large presence of unorganized sector. 0.2 Million Gold jewelers and over 8,000 Diamond jewelers Outside India. • International rivals Such as, China • Threat from producing nation like S.A. & Russia.
Bargaining Power of Suppliers • • • • Russia, DTC. Few Alternatives of cutting & polishing. Skilled labor
In jewellery industry the suppliers are S.A., UAE, Australia, US, Congo, Botswana,
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:
• 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 capital requirement • Government subsidy • EXIM policy & government’s rules-regulations are high • Skilled manpower is essential • Advanced technology required Low to Medium
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.
Priority – Impact Matrix
High priority High priority Medium priority Resistance from suppliers Emergence of new Changing tastes of and decrease in technology consumers. availability of diamond . Diamond processing and Fluctuation in prices of cutting. material.(gold,diamnd)
High priority Change in exim rates And trade policies Medium priority Extinction of gold mines Economic slowdown
Medium priority Defragmented Indian market. Low priority
Low priority Disaster and mishaps
Diamond Polishing Diamond Distribution Shopping Experience
Direct From Mines
Jewellery Whole Selling
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. 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 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
Current Scenario Of Gems and Jewellery Industry
The industry registered exports worth US$ 15 billion in April-December 2008 (Provisional), compared to US$ 14.9 billion in the corresponding period of 2007, registering a growth of .59 per cent. Export of cut and polished diamonds grew from US$ 10.9 billion in 2006-07 to US$ 14.2 billion in 2007-08, witnessing a growth of nearly 68 per cent. The total gems and jewellery exports from India stood at US$ 20.8 billion in the financial year 2007-08, against US$ 17.1 billion in the previous year, witnessing a growth of 22.27 percent. The sector accounted for 13.41 per cent of India's total merchandise exports. More than 100,000 skilled and unskilled labors being laid-off due to poor demand from the US market. In fact, India’s jewellery sales to the US declined over 20 per cent even during the holiday season, i.e. Christmas and New Year. The domestic jewellery demand has also decreased by over 20 per cent. Positive government policies such as 100 per cent Foreign Direct Investment (FDI) in gems and jewellery through the automatic route, has further provided an impetus to the booming gems and jewellery industry.
Current Position of Gitanjali Jewelers
• Gitanjali Gems reported that consolidated net profits fell 42 percent to INR 291.52 million ($5.97 million) in the third fiscal quarter ending December 31, 2008 as a result of the company’s diamond and jewelry segments contracting during the period. • Gitanjali’s third quarter net sales fell 11 percent to INR 11.109 billion ($227.55 million), as diamond revenues declined 19 percent to INR 5.366 billion ($109.98 million). • The company noted a 17 percent decline in revenues at its India operations during the quarter and a 7.8 percent drop in revenues from the rest of the world. • For the first nine months of the fiscal year, Gitanjali’s net profit fell 6 percent to INR 1.195 billion ($24.48 million). The company’s diamond business saw pre-tax profits fall 16 percent during the period, while its jewelry unit profits grew 27 percent. Group net sales rose 8.3 percent to INR 36.207 billion ($741.56 million).
• As per Research and Markets, the gold processing industry in India although, has around 15,000 players, Only 80 players generate revenues over US$ 5 million. Therefore, there is high growth potential for Indian gems and jewellery in the global market. • Furthermore, in spite of the fact that India is not a major miner of precious metals and stones, the country’s inexpensive and skilled workforce are one of the best in the world for processing of diamonds, which makes the country a favored destination with the exporters. • Additionally, there is a huge potential in promoting traditional Indian designs and styles. There is a massive demand for hand-made jewellery, especially in ethnic Indian designs, from the sizeable Indian emigrant population in the Middle-East, South-East Asian countries, the US and Canada among others.
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