Industrial Projecton

Gems & Jewellery

By,Ramya| Vivek| Hari| Prapti

2500-1800 AD Indus Valley Jewellery

5th-12th CenturyJewellery on Medieval

Ages

13th -17th Jewellery

Renaissance Jewellery

18th- 19th CenturyVictorian Jewellery

Evolution

19th- 20th Century

Art Nouveau

1920s -1930s Art Deco Jewellery

1900 -PresentEthnic Tribal

Jewellery

1970s to Present Contemporary

Jewellery

Evolution

About Industry

USD 40 Billion

Estimated Gems & Jewellery market 2012-13

80%Demand from

domestic jewellery consumption

12.65%Increase in the import of Rough Diamond

Organized Retail Market SplitFood and Grocery

2%

Apparel33%

Mobile and Telecom

11%Food Service7%

Jewellery6%

Consumer Electronics

8%

Footwear4%

others24%

Home and Interior5%

Source:

About Indian Jewellery Market• Indian gems & jewellery market is highly fragmented across the value

chain with 96% of players operating in the unorganized sector

• The Domestic gems and jewellery industry had a market size of Rs 251,000 crore (US$ 41.61 billion) in 2013.*

• FY 2013–14 saw an increase of 12.65% in export of cut and polished diamonds with the segment reaching US$ 19,635 million.

• An increase of 11.98% in imports of rough diamonds with figures of US$ 16,716 million

About Indian Jewellery MarketOrganized

4%

Unorganized96%

jewellery market segregation

MSME’s are forming major constituents of the unorganized Gems and Jewellery market of India.

Tata with its Tanishq brand and Gitanjali, a pioneer in the branded jewellery segment have, however, been growing steadily carving a 4-5 per cent market share.

Organized retailers are expanding their reach and adopting product portfolio in order to suit local needs

India’s Position in Global Level• India and China are also

the two largest gold consumers in the world followed by the Middle Eastern region.

• The Gems and Jewellery industry of India contributes nearly 55% of the world’s net exports of cut and polished diamonds in value

Significance of Indian Jewellery

Tradition• Indian jewellery and Indian

women are the terms always linked inherently.

• During wedding as well as numerous other occasions, a woman is gifted jewellery by her parents and relatives

As Security• Security in times of

contingency

• Jewellery also serves the purpose of insurance, which can be depended upon.

Celebration• Jewellery are gifted in

different phases of life such as, at birth, during attaining puberty, in marriage, on becoming a mother

• Certain ornaments, such as mangalsutra, nath (nose ring) and toe rings quintessential for married Indian women

Types of JewelleryJe

wel

lery

Mangtika

Necklace

Ear Rings

Nose Rings

Bangles

Arm Band

Rings

Waist Band

Anklet & Toe Rings

Jewel’s Classification

Gems and Jewellery

Gem Stones

Pearl

Emerald

Topaz

Blue Saphirre

Coral

Ruby

Diamond

Cat's Eye

Yellow Sapphire

Jewellery and Precious Metals

GoldPlatinumSilver

About Gold

• Gold has formed the backbone of global economic activities as a reserve currency over the last several centuries.

• Currently a little over 2,600 tons of gold is mined per annum

• Gold can be alloyed with different metals to give different colours, such as white, yellow, pink, black, purple and green

• South Africa is the largest producer of gold in the world

Consumption Pattern

Region Preference

Business Model of Jewellers

Busin

ess M

odel Hedging against future

Price-rise of Gold

Charging Pure Gold price for low purity Gold

Making Charges of Jewellery

Re Purchase of Old Jewellery

Major Players

About PlayersSo

me

List

ed P

laye

rsTANISHQ

GITANJALI

TBZ

RAJESH EXPORTS

Tanishq is India's largest, most desirable and fastest growing

jewelry brand in India

With retail sales of 1200 crore last year and gunning for 2000 cores

this year

Factory located at Hosur, Tamil Nadu, the 1, 35,000 sq. ft. factory

is equipped with the latest and most modern machinery

Busin

ess M

odel Consumer –

Oriented

Online ordering of gold

Investment in IT

Global branding strategy

World’s largest integrated branded jewellery manufacturer-retailer with an annual turnover of over

$3billion

today owns and distributes eight out of the top ten jewellery brands

in the country including Gili, Nakshatra, Asmi, D’Damas, Sangini,

Diya and Maya Gold

Gitanjali’s extensive network of own stores, shop-in-shops and

franchise outlets span across 300 cities and 4,000 points of sale

Busin

ess M

odel

Serving the vast Indian market for branded jewellery through rapid penetration via a rapidly

growing franchise route.

Further strengthening the diamond jewellery portfolio and extending the brands to include other

lifestyle categories.

Diversifying the range of offerings so as to attract a wider range of consumers.

Positioning as an established player in mature and high margin markets such as Japan and the USA.

Developing channels such as e-commerce to establish strong, sustainable connect with customers

looking for novelty and convenience in jewellery purchases.

It has 3 world-class diamond polishing facilities

in India located at Surat, Mumbai and Hyderabad possessing production

capacity of 4, 00,000 stones a month

Domestic jewellery manufacturing facilities are

located at Mumbai, Hyderabad, Coimbatore, Kolkata, Surat and Jaipur

that produce 2,35,000 pieces of finished jewellery

each month

International manufacturing unit is in China. The

Group’s international design hub is located in Italy.

Distribution via superstores, department stores and

other retail outlets at MRP, supported by international

certifications of scientifically tested purity

and authenticity

Markets branded jewellery directly by mail order

catalogue

Operation

TBZ is a popular jewellery retail chain that has rapidly expanded its presence across

India in the past few years.

TBZ successfully transformed into the modern and innovative jewellery maker it

is today

It has its presence in almost 21 cities in India. The first to promote the concept of light weight jewelry and the first to offer

certified solitaire diamonds

Busin

ess M

odel

Continue to expand to Large Format Stores and Wedding Centers.

Increase their percentage contribution of diamond and

platinum jewellery business to their total revenues.

Continue to invest in their marketing initiatives and brand

building exercise.

14 showrooms in 10 cities across five states, which have

a total carpet area of approximately 48,818 sq.ft

Out of its 14 showrooms, 11 are “large format” high street

showrooms (carpet area of 3,000 sq. ft. or more) and

three are “small format” high street showrooms (carpet area of 1,000-3,000 sq. ft.)

It plans to open an additional 43 showrooms (25 large

format high street showrooms and 18 small

format high street showrooms) by the end of

Fiscal 2015

The company offers jewellery across different price points

so as to maximise its potential customer base

Company believes that its more than 145-year old track-

record signifies consumers’ trust in the quality and purity

of its products

Operation

Rajesh Exports Limited (REL) headquartered in Bangalore, India

manufactures gold & diamond jewellery.

REL exports its products worldwide and distributes them within India to the

wholesale jewellery market.

REL also retails its products through its own network of retail jewellery

showrooms Shubh Jewellers spread across India

Busin

ess M

odel

In-house R&D team

Customized options to customers – Orders accepted either for new designs or changes in existing designs

SHUBH Service Centers – Offer exclusive services to consumers. For the first time in the world - free repair, free 26 consumers. For the first time in the world - free

repair, free testing and buying of old jewellery.

SHUBH Infra to monetize land bank

Refining• REL procures Dore Bars

(raw gold) from various sources across the world

• The raw gold is refined and converted into fine gold bars at Rudrapur, Uttarakhand.

• REL has Four Hundred tonne capacity to refine and alloy gold.

Manufacturing• REL has set up a state-of-

the-art jewellery manufacturing unit at Whitefield, Bangalore

• The peak out-put capacity of the factory is to produce Two hundred and fifty tones of world class jewellery per annum

• Raw and impure gold is refined into fine gold by parting method

Marketing• REL has established

reliable international marketing network which has a reach in North America, Europe, Asia & Australia

• REL has a clientele of more than Five thousand jewellery showrooms in India.

Retail• REL has setup 82 retail

jewellery stores across Karnataka at prominent locations.

• REL is also in the process of setting up five hundred retail jewellery stores across the five southern states of India under the brand name SHUBH JEWELLERS.

Comparative Study

Tanishq Gitanjali TBZ Rajesh Exports

Stores 163 stores 28 stores 85 stores

Revenue Rs. 10916 crore Rs. 10,380.67 crore Rs.1658.30 crore Rs.31074.43

Business Strategy

22Ct and 18Ct light weight jewellery

Main revenue from Diamonds

Hub and Spoke model and caters

majority to the wedding

collections

Mainly export oriented income

EBITDA Margin 4.71% 8.87% 2.04%

Investment Turnover

Ratio2.83 6.97 1.61 40.44

Exports and ImportsYear Export of Gems &

Jewellery (USD Billion)

%Share of Gems and Jewellery in India’s total Export

Gold(USD Billion)

Diamond(USD Billion)

2008-09 24.49 15.36 8.61 14.802009-10 28.41 16.34 9.42 17.542010-11 42.99 17.40 12.88 28.252011-12 42.83 15.45 16.78 23.312012-13 39.03 14.57 18.28 17.41

Year Import of Raw materials for Gems & Jewellery (USD Billion)

Gold Bar (USD Billion)

Diamond

(USD Billion)Rough Diamonds Cut& Polished

2008-09 19.54 4.06 7.53 6.972009-10 28.53 7.17 9.05 11.612010-11 41.93 8.28 11.93 20.772011-12 42.26 10.51 15.15 14.472012-13 36.90 10.73 14.89 5.58

Strength1. Large integrated diamond and jewellery players and having an international presence.2. Strong marketing and distribution network.3.About one million craftsmen are associated with this industry. Their skills can be utilized for designing and making modern Jewellery 4.Supportive government industrial/ EXIM policy.

Weakness1. Small firms lacking technological/ export information expertise.2. As major raw material requirements need to be imported, companies normally stock huge quantities of inventory resulting in high inventory carrying cost.

Opportunities 1. New markets in Europe and Latin America.2. Growing demand in South Asia and Far East countries.3. Expansion possibilities in lifestyle and luxury product like watches and leather goods. Platinum jewellery because increasing disposable income of people.

Threats1. Unusual increase in the prices of gold and rough diamonds 2. Infrastructure bottlenecks, absence of latest technology.

SWOT ANALYSIS

Change in TrendsTraditional Practice Emerging Trend

Gold jewellery consumption emanates from traditional and investment-related demand.

It is regarded as a fashion accessory by the growing young population.

Demand peaks during weddings and festival seasons.They still remain the main demand drivers but its use for regular wearing and gifting has evened out the demand

throughout the year.

Consumption of pure gold – s preferred 22-carat. Traditional & ethnic designs preferred.

Lower caratage & light-weight jewellery preferred. Trend is more towards fashionable and contemporary designs

Purchase from neighbourhood jewellers dominated. Hence the industry lacked transparency

Growing preference for brands, retail stores & e-retailing. Introduction of hallmarking & certifications.

Pre-dominance of gold (yellow)-based jewellery. Acceptance of white gold, platinum and diamond-studded jewellery. Even imitation jewellery is gaining acceptance.

Jewellery largely sold on prevailing gold price, per gram, plus labour charges. Branded players sell on a fixed-price basis

Government Policies

The number of days for re-import of unsold items in the case of participation in an exhibition in the US has been increased to 90 days

Duty free re-import entitlement for rejected jewellery shall be 2 per cent of free on board (FOB) value of exports.

The Government of India has allowed 100 per cent foreign direct investment (FDI) in gems and jewellery industry through the automatic route

In order to encourage more investments in the sector, gems and jewellery SEZs have been set up of four are operational in Maharashtra, West Bengal, Rajasthan and Andhra Pradesh.

Formal approval has been given to 13 SEZs in the sector — three have got in-principal approval and seven have been notified, as per the SEZ Board of Approval statistics