1. A Gem in India’s Crown
Group No. 03
Abhijit Sharma Roll No. 01
Harshvardhan Roll No. 21
Koushik Kumar Roll No. 23
Md. Zia Roll No. 26
Raman Pathak Roll No. 34
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2. Chairman’s Desk
“Since 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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3. 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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4. 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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5. Industry Overview - India
• Diamonds manufacturing industry in india was one of
the largest components of the global trade.
• Until 18th century, India was the only known source of
diamonds in the world.
• 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.
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6. 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
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7. Industry Overview – Worldwide (1/2)
• The diamond manufacturing industry is dependent on the supply of
rough diamonds.
• Countries like Australia, Botswana, Russia, South Africa are the
major suppliers and constituted most of the diamond mining
market, estimated at 137.2 million carats in 2003.
• India’s share is 1 million carats per year.
• Production wise Australia produces 25%, Botswana 22% and South
Africa 9% world wide.
• De Beers Consolidated Diamonds Company, (SA) is the largest
diamond miner in the world contributing 40% of global diamond
production by value. Rio-Tinto and BHP biliton Inc. were other
major corporate.
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8. Industry Overview – Worldwide (2/2)
• India diamond dated back to 8,000 B.C. ; It continued to be the only known
source of diamonds until the 18th century.
• India lost its prominence as a diamond producer as other location were
discovered in south Africa and Latin America. However, India continued to
remain a key player in the global diamond industry as the leading diamond
processor in the world.
• Craftsmanship and low cost of processors gave a competitive advantage in
diamond cutting and polishing. India accounted 55% of global polished
diamond market in terms of value, 80% in terms of caratage and 92% in terms
of pieces.
• Mined diamonds were distributed for further processing to cutting and
polishing centers around the world.
• India Sourced most of the diamonds from 7 countries. Diamond Trading
Corporation(DTC) was the largest diamond distributer and accounted for
approx. 50% of world wide distribution of rough diamonds.#
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9. Cut and Polished Diamonds
• India, China Israel and Belgium were the leading countries engaged in diamond
cutting and polishing globally.
• CAGR grew at the rate of 15.6% for exports in India. Major export destination
were USA, Hong Kong, Belgium and UAE for cut and polished diamonds.
• A bulk of India’s diamond processing sector was unorganized and employed about
2 million workers in approx. 1,00,000 diamond manufacturing units.
• Indian players was largely restricted to the lower-sized and lower-valued market.
• High-value market was dominated by European manufactures.
• Indian Jewellery industry appointed trained people called jewel technologists.
Leading companies like Hammer Plus, M Suresh promoted Adora brand and
Intergold, all hired jewel technologists to face global competition.
• Indian Institute of Jewellery(IIJ), SNDT women’s college and Gemmological
Institute of India updated their curriculum to train engineers for the industry.#
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10. Gems and Jewellery Industry (India)
• Gems and Jewellery Industry has played a crucial role in the
Indian economy.
• The contribution made by the Industry in terms of exports
from India stood at Rs.703.75 billion in FY 2005 accounting
for about 19.7% of Indian Exports.
• Exports from gems and Jewellery also recorded 18.8% CAGR.
• The contribution has grown gigantically by 95% where in
India exported worth Rs. 8,641.36 crores (US$ 1,941.88
million), in the month of April, 2010 showing a substantial
growth of 115.62% (91.67% in rupees term) as compared to
US$ 900.59 million (rupees 4,508.35 crores) for the same
period of the previous year.
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11. 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:- diamonds and precious, semi- precious
and synthetic colored stones.
• Jewellery:- Gold Jewellery, studded Jewellery and silver
Jewellery
• Pearls
Gold Jewellery (domestic Consumption) and diamonds (major
portion exported) were the significant constituents of the industry.#
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12. Retailing of Diamond Jewellery
• USA, the largest consumer of retail diamond
Jewellery, accounting for 48% of world’s diamond
Jewellery consumption.
• India, being the largest supplier to USA in lower – sized
diamonds, also catering to Japan, second largest
consumer.
• China, second largest supplier competing with India.
• Manufacturers in India were targeting these markets by
setting up retail distribution channels.
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13. Gold Jewellery
• In India, gold is a preferred form of Jewellery and a popular
investment vehicle for savings after gold deposits.
• Majority of gold demands are met through imports
• In 2004, India accounted for 0.4% of total gold production
making it the largest importer of gold in the world.
• Indian export of gold Jewellery were Rs. 17.3 billion in FY
2004 – 2005. Gold export from India increased at a CAGR
of 34.4%.
• UAE & USA were the major export destination and
constituted approx 85% of gold Jewellery exports from
India in FY 2005. 13
14. Branded Jewellery in India
• Branded Jewellery was a recent phenomena in India, as most
Jewellery retailed in the unorganized sector. Local population
and most purchases were made on the trust and on the basis of
reputation of the local jeweler.
• Tanishq & Gili were among the earliest Jewellery brands in
India.
• Branding of Jewellery in India was adopted from the
international markets, positioned as lifestyle and personality
statement.
• 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.
• New generation preferred to buy branded Jewellery.
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15. Retailing Formats for Branded Jewellery in
India
• Exclusive outlets at the malls and other shopping
centers.
• Kiosks/displays in departmental stores and malls.
• Display of branded Jewellery in shops of local
jewelers.
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16. Government Initiatives and Regulations
• Duty – free imports of rough diamonds.
• Waiver of customs duty on colored, rough gemstones and semi –
processed, half – cut and broken diamonds.
•
• Exim Policy 2002 – 07 focused on exports of gems and Jewellery
through market active initiatives schemes, duty free adjustments.
• Reduction of import tariff on cut and polished diamonds and
gemstones from 15% to 5%.
• Under Industrial Policy & FEMA, FDI investment up to 100% was
permitted in gems and Jewellery Industry.
• Under Foreign Trade Policy 2004 – 2009, cutting and polishing of
gems and Jewellery was treated as manufacturing for the purposes of
exemption under section 10A of the Income Tax Act.
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17. EXIM Policy 2009 – 2010 (Gems & Jewellery)
• STCL Limited, Diamond India Limited, MSTC Limited, 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.4 of Foreign Trade
Policy for the purpose of import of precious metals.
• Import restrictions on worked corals have been removed to
address the grievance of gem and Jewellery exporters.
• 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.
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18. 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.
• The GJEPC targeted exports were worth $20
billion by 2007, which increased by $28.41
billion by 2009 – 2010.
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19. Demand Conditions
• Demand depends on various factors such as
• Economic growth
• Employment levels
• Income levels
• Tax rates
• Credit availability
• Styles offered by various gems and Jewellery producers also
effects market demand.
• Promotion is the key success factor for various brands.
• Seasonal Purchases play a vital role in this Industry
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20. Supply Conditions
• Price fluctuations in process of precious metals
and precious and semi – precious stones.
• Monopolistic approach to restrict supply of rough
diamonds throughout the world (i.e., Cartels).
• Increase in price of diamonds adversely affected
consumer demand causing decline in sale.
• Changes in currency exchanges influence cost of
inputs and outputs. ($).
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21. Competition (1/3)
• Current & Political Competitors Include:
• Independent Jewellery Stores
• Retail Jewellery Store Chains
• Wholesale diamond traders
• Competition based on:
• Quality
• Design
• Availability
• Pricing
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22. Competition (2/3)
Primary Competitors:
• Mehrasons Jewellers (Delhi)
• Tribhuvandas Bhimji Zaveri (Mumbai)
• B.C. Sen and P.C.Chandra (Kolkata)
• G.R.Thanga Maligai (Chennai)
• C. Krishnaiah Chetty (Bangalore)
• Tanishq (set – up in 1994 gave tough competition by way of
reducing manufacturing costs, quick deliveries, reduced inventory
holding, quicker communication and elimination of logistics costs
and quicker lead time.
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23. Competition (3/3)
• Laxmi Dia Jewel Pvt Ltd , Surat was the second largest
exporter of polished diamonds.
• 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.
• Platinum Guild International (Platinum Jewellery Brands)
(“Dew Drops”).
• Zirconium Jewellery was gaining popularity by Brand
“Ishtaa”.
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25. Gitanjali Gems
• Integrated diamond and Jewellery manufacturing
company and one of the largest manufacturers and
retailers in India.
• Accorded a “sightholder” status with DTC in
1968, one of the first in India.
• Initially limited to manufacturing and export of cut and
polished diamonds to various international markets.
• In 1990 commenced production and in 1994 opened
retail sales of Gili, one of the first branded Jewellery
lines introduced and awarded a “superbrand” status by
Times Of India in 2004.
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26. Infrastructure
Specialized factories in different parts of the world.
• 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, Hyderabad)
• Sophisticated manufacturing facilities, strong design capabilities and focus
on stringent quality control.
• Large customer-base outside India, including jewelry manufacturing , large
deparmental store chains, retail store and wholesalers.
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27. Human Resource
• 2,300 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.
• Employee motivation and empowerment were the key to competitive
advantage.
• Regular Staff Training Programs
• Leadership Programs
• Performance Enhancement Programs
• Benefits to employees included medical expenses, housing or rent
assistance, annual leave and travel
allowance, PF, healthcare, schooling, pension and group gratuity .
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28. Technology
• Achieved an International first by perforating heart
cut diamonds and making them available in
affordable process between Rs. 1,000 to 6,000.
• It took two years and 250 carats value at Rs. 2 crore
for Gitanjali Laser House to perfect the technology.
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29. Procurement (1/2)
• Operations and revenues were dependent upon availability of
rough diamonds.
• World's know sources were
Angola, Australia, Botswana, Brazil, Canada, Ghana, Russia, S
outh Africa.
• Procurement at competitive prices from Diamond Trading
Company (DTC), De Beers, S.A from London and South
Africa to a selected groups or “Sight Holders”
• Gitanjali’s employees attended offerings of rough diamonds
held by DTC periodically at London.
• At Sight, they purchased a “series” of composite rough
diamonds at DTC’s stated price. 29
30. Procurement (2/2)
• In 2000, DTC announced significant changes in its approach to
rough diamond marketing by stopping open market
purchases, alter its market control and pricing policies by way of
“Supplier of choice” marketing programs.
• Gitanjali was able to combat these changes by broadening the
sales base and implemented strict inventory, pricing and purchase
controls to decrease the impact of price fluctuation.
• Sophisticated rough diamond evaluation program and inventory
utilization programs.
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31. Manufacturing
• Diamond Manufacturing was a Labor Intensive process
requiring specialized knowledge and skills.
• Steps Involved in Diamond Manufacturing
Cutting Polishing
Sawing
Cleaving
Marking
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33. Marketing (1/2)
• Offering a comprehensive range of diamonds and other
Jewellery products aimed at:
• Various Jewellery categories.
• Different customers and price segments.
• During various festive and social occasions by offering
custom made Jewellery.
• Branded Jewellery enjoyed significant brand equity which
gave Gitanjali a competitive edge.
• The sub collection “D Damas” was particularly noted for
Wedding and general collection.
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34. Marketing (2/2)
• The company was under the process of registering 24 trademarks in India in
connection with braded Jewellery lines. Innovative designs and product lines
enabled Getanjali to develop brand and increase retail sales.
• Gili brand was introduced in 1994 and was among the first branded Jewellery
introduced in India.
• DTC permitted Gitanjali another three site holders and this paved way for
launching the new products under the “Nakshatra” brand.
• In 2004, Gili was selected as the “Super Brand” by the Indian Consumer
Super brand Council.
• In 2004, the company began selling branded gold Jewellery to different
consumer segments (in association with World Gold Council) under the brand
names “Collection G, Gold expressions, and vivaha Gold. In 2001, Gitanjali
launched the buy – back scheme for diamonds.
• Aggressive Marketing Campaigns by way of Advertising.
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35. Distribution
• Independent sales and distribution network for diamonds
and Jewellery products.
• Promoter group companies outside India played major role
in developing strong relationships with customers in the
international markets.
• Wholesalers acted as procurement agents for Jewellery
retailers in the international market .
• Back home gitanjali has a strong sales and distribution
channel by way of exclusive distributors, direct sales to
large departmental stores and reputed Jewellery lines, and
direct sales to and customers through retail operations.
• 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)
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36. Customer Relationship Management
• Gitanjali identified specific customer requirements
and delivered on such requirements effectively
within the shortest time frame.
• CRM enable Gitanjali to reduce payment risks.
• International customers visited diamond
manufacturing facilities in India and placed orders
of certain specifications.
• Participation in trade shows & fairs.
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37. Acquisitions & Alliances
• The Company had strategic alliance with World Gold Council.
Collection “g”
• Gitanjali was a DTC sight holder since 1967.
• In 2001, the firm entered into a 50% joint venture in the form of
D’Damas Jewellery Private Ltd with Damas Jewellery LLC
(Dubai).
• The company acquired 99.04% equity interest in Fantasy
diamond cuts private ltd in 2005.
• Hyderabad gems SEZ was incorporated in 2005.
• Gitanjali gems has 2 associate companies Gili India (60% equity
interest) and Brightest Circle (33.34%).
• In 2005, Gemplus, Prism, Giantti were amalgamated into the
company.
• Gitanjali has five subsadries namely, mehul impex, hyderabad
gems. Gitanjali expots, fantasy diamonds, CRIA Jewellery.
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38. Initiatives taken by Gitanjali Gems Ltd.
• Increased market share in the diamonds and Jewellery business in
India. (70% Increased)
• Maintained focus on international markets. (70%)
• Developed branded Jewellery lines.
• Expanded retail operations.
• Expanded product offerings and maintained high quality customer
service.
• Increased product capacity.
• Pursued strategic acquisitions and alliances
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39. Gitanjali Gems Ltd. – A Road Ahead
• The Indian gems and Jewellery sector is expected to cross US$ 26
billion by 2012, driven by availability of huge base of skilled labor
and improving lifestyle, according to a research report
• Due to various government efforts and incentives, coupled with
private sector initiatives, the Indian gems and Jewellery sector is
expected to grow at a Compound Annual Growth Rate of around 14
percent from 2009 to 2012.
• The consumption of diamond Jewellery in India is expected to
touch US$ 6.41 billion in 2012.
• State-run National Mining Development Corp (NMDC) plans to
produce close to 100,000 carats of diamonds from the Panna
diamond mines in Madhya Pradesh by 2010-11.
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41. Indian Retail - Jewellery
Yesterday Today
Unbranded Branded
Silver & Gold Jewellery Gold, Diamond & Gems Jewellery
Investment Investment + Fashion
Traditional design Fashionable & Innovative Design
Marriage & festivals - peak season Gifts & Personal use
Jewellery sold on commodity basis Jewellery being sold on a per piece
with labor charges basis
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42. Some Advantages
• Forward Integration
• Unique Production houses for Retail & Wholesale.
• Low labor has helped GITANJALI GEM LTD. to sustain in
the market (Capital Intensive)
• Recruitment of technologist have helped them in attaining
the point of difference.
• Consumption of jewellery is affected by Culture. (Diwali,
Akshya Tritya, Christmas)
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43. Value Chain
Diamond Polishing Diamond Distribution Shopping Experience
Jewellery Jewellery Retailing
Rough Distribution
Manufacturing
Direct From Mines Jewellery Whole Selling Jewellery Branding
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44. Strategies – Gitanjali Gems Ltd.
• Various distribution channels.
• Securing suitable locations.
• Ability to hire, train & retain qualified personnel.
• Regular Staff Training Programs.
• Various Leadership & Performance enhancement
programs.
• 26 Distributors, 620 Outlets.
Operational
Excellence • 17 Franchise outlets.
•Inventory Management System
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45. Strategies – Gitanjali Gems Ltd.
Market
Development
New Retail Outlets
Shop in Shop Concept
Expansion Plans
Participation in Fashion Shows
Various new products for different customer profile.
International Retailing
Market
Development
Product Development
Product poliferation
Product
Replacement of unsold stock on quarterly basis
Development
Continuous process of product development
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