A Gem in India¶s Crown

Group No. 03 Abhijit Sharma Harshvardhan Koushik Kumar Md. Zia Raman Pathak Roll No. 01 Roll No. 21 Roll No. 23 Roll No. 26 Roll No. 34
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Chairman¶s Desk
³Since 1966, Gitanjali has come a long way. Our strength and success can be attributed to our efficient management, modern operation systems, uncompromising quality control and dynamic workforce; but above all, it is our desire and vision that has accentuated our growth´.

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Company Overview
‡ Founded as a single company cutting and polishing diamonds for the Jewellery trade at Surat, Gujarat, in 1966 headed by Mr. Mehul Choksi . ‡ Incorporated on August 21, 1986 as a private limited company and subsequently converted into Gitanjali Gems Limited. ‡ One of largest manufacturer and retailer of diamonds and Jewellery in India. ‡ Operations included sourcing of rough diamonds from primary and secondary source suppliers in the international market, cutting and polishing the rough diamonds for exports to international markets and the manufacture and sale of diamond and other Jewellery through retail operations in India as well as in international markets.
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Approach Used For Case Study Analysis
‡ Identifying the External and Internal Factors affecting Gitanjali Gems Ltd. ‡ Initiatives taken by Gitanjali Gems Ltd. ‡ Gitanjali Gems ± The Road Ahead.

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Industry Overview . India was the only known source of diamonds in the world. ‡ Until 18th century. ‡ India occupied a prominent place in the global diamond industry and established its position as the largest exporter of cut and polished diamonds in the world. The gems and Jewellery industry formed the single largest component of merchandise exports in the country. 5 .India ‡ Diamonds manufacturing industry in india was one of the largest components of the global trade.

External Factors ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ The Diamond Manufacturing Industry Gems and Jewellery Industry (India) Structure of Gems and Jewellery Industry in India Retailing of Diamond Jewellery Gold Jewellery Branded Jewellery in India Government Initiatives and Regulations Gems and Jewellery Export Promotion Council Demand Conditions Supply Conditions Competition 6 .

estimated at 137. Botswana. ‡ India¶s share is 1 million carats per year. ‡ Production wise Australia produces 25%. (SA) is the largest diamond miner in the world contributing 40% of global diamond production by value.2 million carats in 2003. South Africa are the major suppliers and constituted most of the diamond mining market. ‡ De Beers Consolidated Diamonds Company. Rio-Tinto and BHP biliton Inc. Botswana 22% and South Africa 9% world wide.Industry Overview ± Worldwide (1/2) ‡ The diamond manufacturing industry is dependent on the supply of rough diamonds. Russia. 7 . ‡ Countries like Australia. were other major corporate.

India accounted 55% of global polished diamond market in terms of value. However. 50% of world wide distribution of rough diamonds.Industry Overview ± Worldwide (2/2) ‡ India diamond dated back to 8.C. ‡ Mined diamonds were distributed for further processing to cutting and polishing centers around the world.# 8 .000 B. ‡ India Sourced most of the diamonds from 7 countries. Diamond Trading Corporation(DTC) was the largest diamond distributer and accounted for approx. . 80% in terms of caratage and 92% in terms of pieces. ‡ Craftsmanship and low cost of processors gave a competitive advantage in diamond cutting and polishing. It continued to be the only known source of diamonds until the 18th century. India continued to remain a key player in the global diamond industry as the leading diamond processor in the world. ‡ India lost its prominence as a diamond producer as other location were discovered in south Africa and Latin America.

M Suresh promoted Adora brand and Intergold.Cut and Polished Diamonds ‡ India. 1. China Israel and Belgium were the leading countries engaged in diamond cutting and polishing globally. ‡ A bulk of India¶s diamond processing sector was unorganized and employed about 2 million workers in approx. ‡ CAGR grew at the rate of 15. Hong Kong. ‡ High-value market was dominated by European manufactures.000 diamond manufacturing units.# 9 . ‡ Indian players was largely restricted to the lower-sized and lower-valued market. ‡ Indian Institute of Jewellery(IIJ).6% for exports in India. Major export destination were USA. Leading companies like Hammer Plus. Belgium and UAE for cut and polished diamonds. all hired jewel technologists to face global competition. SNDT women¶s college and Gemmological Institute of India updated their curriculum to train engineers for the industry.00. ‡ Indian Jewellery industry appointed trained people called jewel technologists.

59 million (rupees 4.703. in the month of April.508. 8. 10 . ‡ The contribution made by the Industry in terms of exports from India stood at Rs.35 crores) for the same period of the previous year.Gems and Jewellery Industry (India) ‡ Gems and Jewellery Industry has played a crucial role in the Indian economy. 2010 showing a substantial growth of 115.75 billion in FY 2005 accounting for about 19.62% (91. ‡ The contribution has grown gigantically by 95% where in India exported worth Rs.8% CAGR.88 million). ‡ Exports from gems and Jewellery also recorded 18.67% in rupees term) as compared to US$ 900.941.641.7% of Indian Exports.36 crores (US$ 1.

studded Jewellery and silver Jewellery ‡ Pearls Gold Jewellery (domestic Consumption) and diamonds (major portion exported) were the significant constituents of the industry.# 11 .precious and synthetic colored stones.Structure of Gems and Jewellery in India ‡ The gems and Jewellery sector was classified into the following sub-sectors based on characteristics. manufacturing processes and position in the value chain: ‡ Gemstones:. semi.Gold Jewellery. ‡ Jewellery:.diamonds and precious.

accounting for 48% of world¶s diamond Jewellery consumption. ‡ Manufacturers in India were targeting these markets by setting up retail distribution channels. 12 . second largest consumer. ‡ India. ‡ China.Retailing of Diamond Jewellery ‡ USA. being the largest supplier to USA in lower ± sized diamonds. second largest supplier competing with India. also catering to Japan. the largest consumer of retail diamond Jewellery.

gold is a preferred form of Jewellery and a popular investment vehicle for savings after gold deposits. India accounted for 0.Gold Jewellery ‡ In India. ‡ Majority of gold demands are met through imports ‡ In 2004.4%.4% of total gold production making it the largest importer of gold in the world.3 billion in FY 2004 ± 2005. 13 . ‡ Indian export of gold Jewellery were Rs. ‡ UAE & USA were the major export destination and constituted approx 85% of gold Jewellery exports from India in FY 2005. Gold export from India increased at a CAGR of 34. 17.

Branded Jewellery in India ‡ Branded Jewellery was a recent phenomena in India. ‡ New generation preferred to buy branded Jewellery. positioned as lifestyle and personality statement. as most Jewellery retailed in the unorganized sector. ‡ Tanishq & Gili were among the earliest Jewellery brands in India. ‡ Branding of Jewellery in India was adopted from the international markets. 14 . ‡ Introduction of Value Added Services like Certification of Gold & Diamonds and Life Time return and buy ± back schemes gave a boost to branded Jewellery in India. Local population and most purchases were made on the trust and on the basis of reputation of the local jeweler.

Retailing Formats for Branded Jewellery in India ‡ Exclusive outlets at the malls and other shopping centers. ‡ Display of branded Jewellery in shops of local jewelers. 15 . ‡ Kiosks/displays in departmental stores and malls.

16 .Government Initiatives and Regulations ‡ Duty ± free imports of rough diamonds. ‡ ‡ Exim Policy 2002 ± 07 focused on exports of gems and Jewellery through market active initiatives schemes. ‡ Reduction of import tariff on cut and polished diamonds and gemstones from 15% to 5%. duty free adjustments. rough gemstones and semi ± processed. ‡ Under Industrial Policy & FEMA. cutting and polishing of gems and Jewellery was treated as manufacturing for the purposes of exemption under section 10A of the Income Tax Act. FDI investment up to 100% was permitted in gems and Jewellery Industry. half ± cut and broken diamonds. ‡ Waiver of customs duty on colored. ‡ Under Foreign Trade Policy 2004 ± 2009.

Gem & Jewellery Export Promotion Council and Star Trading Houses (for gem and Jewellery sector) have been added under the list of nominated agencies notified under Para 4A.EXIM Policy 2009 ± 2010 (Gems & Jewellery) ‡ STCL Limited. MSTC Limited. Diamond India Limited. ‡ Authorized person of Gem & Jewellery units in Export Oriented Units shall be allowed personal carriage of gold in primary form up to 10 kg in a financial year subject to RBI and customs guidelines.4 of Foreign Trade Policy for the purpose of import of precious metals. 17 . ‡ Import restrictions on worked corals have been removed to address the grievance of gem and Jewellery exporters.

‡ The GJEPC targeted exports were worth $20 billion by 2007.Gems and Jewellery Export Promotion Council (GJEPC) ‡ The Government of India designated the Gems and Jewellery Export Promotional Council as the importing and exporting authority in India. 18 .41 billion by 2009 ± 2010. which increased by $28.

Demand Conditions ‡ Demand depends on various factors such as ‡ Economic growth ‡ Employment levels ‡ Income levels ‡ Tax rates ‡ Credit availability ‡ Styles offered by various gems and Jewellery producers also effects market demand. ‡ Seasonal Purchases play a vital role in this Industry 19 . ‡ Promotion is the key success factor for various brands.

20 . ‡ Changes in currency exchanges influence cost of inputs and outputs.Supply Conditions ‡ Price fluctuations in process of precious metals and precious and semi ± precious stones. Cartels). ‡ Monopolistic approach to restrict supply of rough diamonds throughout the world (i.e.. ‡ Increase in price of diamonds adversely affected consumer demand causing decline in sale. ($).

Competition (1/3) ‡ Current & Political Competitors Include: ‡ Independent Jewellery Stores ‡ Retail Jewellery Store Chains ‡ Wholesale diamond traders ‡ Competition based on: ‡ Quality ‡ Design ‡ Availability ‡ Pricing 21 .

Competition (2/3) Primary Competitors: ‡ Mehrasons Jewellers (Delhi) ‡ Tribhuvandas Bhimji Zaveri (Mumbai) ‡ B. quick deliveries.C. quicker communication and elimination of logistics costs and quicker lead time.R.Chandra (Kolkata) ‡ G. reduced inventory holding. Krishnaiah Chetty (Bangalore) ‡ Tanishq (set ± up in 1994 gave tough competition by way of reducing manufacturing costs. 22 . Sen and P.Thanga Maligai (Chennai) ‡ C.C.

‡ Rajesh Exports Ltd (Bangalore) was the world¶s largest gold Jewellery manufacturer and the country largest exporter of gold Jewellery. ‡ Swarnmandir Jewel Designer (Karnataka) was known for its exclusive designer series (916) handicraft gold Jewellery.Competition (3/3) ‡ Laxmi Dia Jewel Pvt Ltd . Surat was the second largest exporter of polished diamonds. 23 . ‡ Platinum Guild International (Platinum Jewellery Brands) (³Dew Drops´). ‡ Zirconium Jewellery was gaining popularity by Brand ³Ishtaa´.

Internal Factors ‡ Infrastructure ‡ Human Resources ‡ Technology ‡ Procurement ‡ Manufacturing ‡ Marketing ‡ Distribution ‡ Customer Relationship Management ‡ Acquisitions & Alliances 24 .

‡ In 1990 commenced production and in 1994 opened retail sales of Gili. one of the first in India. ‡ Accorded a ³sightholder´ status with DTC in 1968. 25 . one of the first branded Jewellery lines introduced and awarded a ³superbrand´ status by Times Of India in 2004. ‡ Initially limited to manufacturing and export of cut and polished diamonds to various international markets.Gitanjali Gems ‡ Integrated diamond and Jewellery manufacturing company and one of the largest manufacturers and retailers in India.

including jewelry manufacturing . Hyderabad) Sophisticated manufacturing facilities. ‡ Large customer-base outside India. strong design capabilities and focus on stringent quality control. ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Diminco Pacific Manufacturing Co Ltd (China) Gemsiam Manufacturing Co Ltd (Thailand) Hai Duong Diamond Factory (Vietnam) Special Economic Zone (Gujarat) Diamond Cutting & Polishing (Mumbai) Santacruz Electronic Export Processing Unit (Mumbai) Two Modern Jewellery Manufacturing Facilities (Mumbai. large deparmental store chains. 26 . retail store and wholesalers.Infrastructure Specialized factories in different parts of the world.

annual leave and travel allowance. healthcare. Employee motivation and empowerment were the key to competitive advantage.300 employees as on 2005 Out of which 1.800 employees at manufacturing facilities More than 250 employees in retail operations 410 full ± time employees Out of which 117 employees at Corporate office Senior Management with significant Industry experience was instrumental in the consistent growth in revenues and operations. Regular Staff Training Programs Leadership Programs Performance Enhancement Programs Benefits to employees included medical expenses. pension and group gratuity . housing or rent assistance. 27 .Human Resource ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ 2. schooling. PF.

28 .000.Technology ‡ Achieved an International first by perforating heart cut diamonds and making them available in affordable process between Rs.000 to 6. ‡ It took two years and 250 carats value at Rs. 1. 2 crore for Gitanjali Laser House to perfect the technology.

Botswana. De Beers. Australia. ‡ At Sight. Canada. Russia. Ghana.A from London and South Africa to a selected groups or ³Sight Holders´ ‡ Gitanjali¶s employees attended offerings of rough diamonds held by DTC periodically at London.Procurement (1/2) ‡ Operations and revenues were dependent upon availability of rough diamonds. 29 . ‡ World's know sources were Angola. South Africa. ‡ Procurement at competitive prices from Diamond Trading Company (DTC). Brazil. they purchased a ³series´ of composite rough diamonds at DTC¶s stated price. S.

‡ Sophisticated rough diamond evaluation program and inventory utilization programs. alter its market control and pricing policies by way of ³Supplier of choice´ marketing programs.Procurement (2/2) ‡ In 2000. pricing and purchase controls to decrease the impact of price fluctuation. ‡ Gitanjali was able to combat these changes by broadening the sales base and implemented strict inventory. DTC announced significant changes in its approach to rough diamond marketing by stopping open market purchases. 30 .

‡ Steps Involved in Diamond Manufacturing Cutting Sawing Cleaving Marking Polishing 31 .Manufacturing ‡ Diamond Manufacturing was a Labor Intensive process requiring specialized knowledge and skills.

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Marketing (1/2) ‡ Offering a comprehensive range of diamonds and other Jewellery products aimed at: ‡ Various Jewellery categories. ‡ The sub collection ³D Damas´ was particularly noted for Wedding and general collection. 33 . ‡ Branded Jewellery enjoyed significant brand equity which gave Gitanjali a competitive edge. ‡ During various festive and social occasions by offering custom made Jewellery. ‡ Different customers and price segments.

34 . the company began selling branded gold Jewellery to different consumer segments (in association with World Gold Council) under the brand names ³Collection G. Innovative designs and product lines enabled Getanjali to develop brand and increase retail sales.Marketing (2/2) ‡ The company was under the process of registering 24 trademarks in India in connection with braded Jewellery lines. In 2001. ‡ In 2004. ‡ Gili brand was introduced in 1994 and was among the first branded Jewellery introduced in India. Gitanjali launched the buy ± back scheme for diamonds. ‡ In 2004. ‡ Aggressive Marketing Campaigns by way of Advertising. ‡ DTC permitted Gitanjali another three site holders and this paved way for launching the new products under the ³Nakshatra´ brand. and vivaha Gold. Gold expressions. Gili was selected as the ³Super Brand´ by the Indian Consumer Super brand Council.

‡ Promoter group companies outside India played major role in developing strong relationships with customers in the international markets. and direct sales to and customers through retail operations.Distribution ‡ Independent sales and distribution network for diamonds and Jewellery products. ‡ Wholesalers acted as procurement agents for Jewellery retailers in the international market . direct sales to large departmental stores and reputed Jewellery lines. ‡ 12 retail outlets were established as franchisees. ‡ Gili brand was sold though an independent distribution network through regional offices and operations were handed through retail outlets in host stores (Shopper¶s stop) 35 . ‡ Back home gitanjali has a strong sales and distribution channel by way of exclusive distributors.

36 . ‡ International customers visited diamond manufacturing facilities in India and placed orders of certain specifications.Customer Relationship Management ‡ Gitanjali identified specific customer requirements and delivered on such requirements effectively within the shortest time frame. ‡ Participation in trade shows & fairs. ‡ CRM enable Gitanjali to reduce payment risks.

fantasy diamonds. ‡ Gitanjali gems has 2 associate companies Gili India (60% equity interest) and Brightest Circle (33. Gemplus.Acquisitions & Alliances ‡ The Company had strategic alliance with World Gold Council. ‡ The company acquired 99. mehul impex.04% equity interest in Fantasy diamond cuts private ltd in 2005. 37 . ‡ In 2005. ‡ In 2001. CRIA Jewellery. ‡ Hyderabad gems SEZ was incorporated in 2005.34%). Giantti were amalgamated into the company. Gitanjali expots. ‡ Gitanjali has five subsadries namely. the firm entered into a 50% joint venture in the form of D¶Damas Jewellery Private Ltd with Damas Jewellery LLC (Dubai). Prism. hyderabad gems. Collection ³g´ ‡ Gitanjali was a DTC sight holder since 1967.

Initiatives taken by Gitanjali Gems Ltd. ‡ Expanded retail operations. (70%) ‡ Developed branded Jewellery lines. ‡ Pursued strategic acquisitions and alliances 38 . ‡ Expanded product offerings and maintained high quality customer service. ‡ Increased market share in the diamonds and Jewellery business in India. ‡ Increased product capacity. (70% Increased) ‡ Maintained focus on international markets.

Gitanjali Gems Ltd. ‡ The consumption of diamond Jewellery in India is expected to touch US$ 6. 39 . coupled with private sector initiatives.41 billion in 2012. according to a research report ‡ Due to various government efforts and incentives. driven by availability of huge base of skilled labor and improving lifestyle. the Indian gems and Jewellery sector is expected to grow at a Compound Annual Growth Rate of around 14 percent from 2009 to 2012. ‡ State-run National Mining Development Corp (NMDC) plans to produce close to 100. ± A Road Ahead ‡ The Indian gems and Jewellery sector is expected to cross US$ 26 billion by 2012.000 carats of diamonds from the Panna diamond mines in Madhya Pradesh by 2010-11.

Learning from the Case 40 .

Jewellery Yesterday Unbranded Silver & Gold Jewellery Investment Traditional design Branded Gold.peak season Gifts & Personal use Jewellery sold on commodity basis Jewellery being sold on a per piece with labor charges basis 41 . Diamond & Gems Jewellery Investment + Fashion Fashionable & Innovative Design Today Marriage & festivals .Indian Retail .

to sustain in the market (Capital Intensive) ‡ Recruitment of technologist have helped them in attaining the point of difference. ‡ Low labor has helped GITANJALI GEM LTD. ‡ Consumption of jewellery is affected by Culture. Christmas) 42 . (Diwali. Akshya Tritya.Some Advantages ‡ Forward Integration ‡ Unique Production houses for Retail & Wholesale.

Value Chain Diamond Polishing Diamond Distribution Shopping Experience Rough Distribution Jewellery Manufacturing Jewellery Retailing Direct From Mines Jewellery Whole Selling Jewellery Branding 43 .

Strategies ± Gitanjali Gems Ltd. ‡ Ability to hire. ‡ Various distribution channels. 620 Outlets. ‡ 26 Distributors. ‡ Regular Staff Training Programs. Operational Excellence ‡ 17 Franchise outlets. ‡ Various Leadership & Performance enhancement programs. ‡ Securing suitable locations. train & retain qualified personnel. ‡Inventory Management System 44 .

Strategies ± Gitanjali Gems Ltd. International Retailing Market Development Product Development Product poliferation Replacement of unsold stock on quarterly basis Continuous process of product development Product Development 45 . Market Development New Retail Outlets Shop in Shop Concept Expansion Plans Participation in Fashion Shows Various new products for different customer profile.

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