India Acquires a New Supplier

In a bid to disrupt De Beers’ monopoly in India, Russian state-owned diamond giant Alrosa has
struck a deal with the three major Indian diamond processors. Diamond India, Rosy Blue, and
Ratilal Becharlal and Sons have announced a $490 million deal with Alrosa to supply rough
diamonds over the next 3 years. “Alrosa overtook De Beers last year as the biggest diamond
producer after the Russian government supported the company by purchasing about $1 billion of
gems,” reported Lucian Kim of Bloomberg. In contrast to the government support of Alrosa, this
new wave of long-term contracts with India will help the company dig out of long term debt,
putting the company on solid financial ground.

This marks the first wave of deals between Indian companies dealing directly with miners. “The
deal is unique in that as it is a direct source of supply for local diamond companies, which till
recently imported roughs mined elsewhere from centres such as Belgium and Israel, thereby
adding to their costs. This agreement will lead to cost savings of at least 3-4% for the companies,
as it is a direct deal with the miner, bypassing the other centres,” said Vasant Mehta, chairman of
the Gems & Jewelry Export Promotion Council.

‘A diamond is a girl’s best friend’, holds true in the contemporary world like never before. Matched with Indian
ethnicity and beauty, the precious stone is on a roll, with more and more customers attracted towards it. The retail
revolution has opened the flood gates for national and international brands to make in roads into the Indian market,
luring the customers with creativity and innovation. This has made branded jewelry, the new market mantra, which
promises to suit the needs and budget of every Indian pocket.
 
The Trend!
The market strategy of the diamond companies are cleverly cashing on the Indian customs and traditions, which offer
the best opportunity for the promotion and sales of the brands. Another reason for the rise in the trend of branded
jewelry is contributed to the fact that gold is faring too high in the market. This has compelled the buyers to drift
towards diamond jewelry, as the price margin between the two has lowered. Thus, people want to invest in stylish
diamond jewelry, which is a status symbol they can flaunt.
 
Top Diamond Brands in India
Branded Jewelry has transformed the Indian jewelry market significantly and hopes to do well in future too. Some of
the top diamond brands in India include: 

 Adora is as diamond jewelry brand, which was launched by a Mumbai based Jewelry Corporation. The
brand is themed on love and celebration of life and is trusted by many celebrities. The list includes ‘the
Nightingale of India’, Lata Mangeshkar. An exclusive collection Swaranjali was designed for the admirers
of the legendary singer as well for all music lovers. Adora boasts of about 65 outlets in 35 cities.
 Tanishq is one of the most popular diamond jewelry brands in India and is known for its innovative designs.
It is the jewelry business group of Titan Industries Ltd, which is promoted by the TATA group. It was
launched in 1995 and boasts of 84 outlets in 61 cities. Tanishq introduced the ‘collections’ strategy in
jewelry.
 Kiah is another brand which is deemed stylish, light weight and yet striking. It was launched by Sheetal
manufacturing company in October 2004. Celebrating womanhood, the brand name, Kiah stands for
‘beautiful place’. It even won the Best showroom in DTC Diamond Season 2005-2006.
  Nirvana Diamonds were launched by Fine Jewelry (I) Ltd in 1987. Implementing the state of the art
technology, the collection is targeted at fashion conscious, modern and independent women. To prove its
authenticity, Nirvana even offered lifetime warranty to its customers.
 D'damas is one of the oldest diamond houses of India. It forms a part of the Gitanjali Digico Group and was
founded in 1966. The brand offers world class cutting and polishing facilities at five locations in the
country.  

The Gallery
With so many diamond jewelry brands in the market, the customers are assured to find a wide variety to choose from.
This implies that all the young and pretty lasses, ready to be wooed by their Prince Charming, can accessories their
cherished dream with diamond jewelry items in gold and platinum. The sparkle of those studded ear rings,
necklaces, bangles, rings and pendants will make you the perfect bride you always wanted to be. However, just in
case you are the bridesmaid, you can choose from a lot more offered, apart from the bridal collections
Nakshatra Diamonds were launched in the year 2000 and since that time, the gorgeous Aishwarya Rai has been its
brand ambassador. Quite befitting that one of the most beautiful women in this world promotes one of the most
exquisite diamond jewelry brands. Today, the brand has become one of the leading fashion diamond jewelry brands
in India, which is patronized by the women belonging to almost all the segments of the society. The reason for this is
their amazing designs, combined with the reasonable price range.
 
The diamond jewelry sold by the brand has been priced from Rs 15,000 upwards and even their starting range
designs are simply awesome. Amongst the most popular designs of Nakshatra diamonds is the traditional one, in the
form of a flower. For the dusky beauties of India, Nakshatra diamonds signify passion, attitude and independence.
The combination of traditional charisma and contemporary style, that the diamond jewellery by Nakshatra offers,
makes it simply irresistible to women.

 The stunningly beautiful and sparkling clear diamond jewelry has never failed to impress any women till date. The
slogan that says Nakshatra diamonds are the 'Brightest Circles of Light' could not have been more perfect. The shine
and brilliance of Nakshatra diamond jewelry is enough to make it one of the best gifts a man can take for his wife or
girlfriend. The certificate of authenticity and a special hologram that come with it will remove all the doubt you had
about their quality. So, go ahead and gift Nakshatra diamond jewelry to the most special women in your life.

Gitanjali Group was established in 1966 and is one of the earliest diamond houses in India. Having received
over 50 National and Council awards from the Ministry of Commerce.

What started as in 1966 as a modest enterprise in diamond cutting and polishing is no longer just a vendor to
the mighty but a $ 900 million group of businesses. But it all started with diamonds.
   

About Gitanjali
Gitanjali Group a 5000 crores company, strategically positioning itself as the leading diamond studded jewellery-
manufacturing company, today has one of the largest fully integrated diamond and jewellery manufacturing plants in
the country. The Group, which has been a pioneer in the branded jewellery industry, has always been at the
threshold of boosting the production of quality jewellery, which has obliquely proved to be an excellent, branding and
marketing strategy backed by a formidable retailing network - all ensuring the group an enviable advantage in the
jewellery arena. The Gitanjali Group is engaged in the business of sourcing rough diamonds, its manufacture, import
and export of diamonds, manufacture of plain and diamond studded gold and platinum jewellery and its marketing
and domestic retailing. As Jewellery exports form one of the largest contributors to the foreign exchequers, the
jewellery major Gitanjali, is one of India’s high-end contributors to the foreign exchequer as well as a major player in
the domestic market.
Gitanjali has four decades of experience, being one of the earliest diamond houses in India. Having received over 50
National and Council awards from the Ministry of Commerce for outstanding exports, it is today one of the largest
diamond exporting companies in India. Presently the Gitanjali Group has highly modernized diamond cutting and
polishing facilities at 5 locations in India and globally diversified manufacturing operations in Bangkok, Vietnam and
China and a marketing network spread across Europe, Hong Kong, USA and Japan. The very basis of their existence
is to successfully develop, produce and sell high-quality jewellery brands worldwide & helps the customers in getting
the maximum Value – For – Money in the process.

Gitanjali Group was established in 1966 and is one of the earliest diamond houses in India. Having received over 50
National and Council awards from the Ministry of Commerce, India for outstanding exports, it is today one of the
leading diamond and jewellery export companies in India. Gitanjali, a $900 million multinational group, is a Public
Listed Company. Gitanjali's unique business model encompasses a wide range of activities like rough diamond
sourcing, diamond manufacturing and distribution, jewellery manufacturing, jewellery branding and jewellery, lifestyle
and watch retailing at the domestic and international level. The Group has its business spread across the globe
including countries like USA, UK, Middle East, Thailand, Belgium, China, Japan, Italy and South East Asia.
Gitanjali's firsts include:
>> Introducing the concept of affordable branded diamond studded jewellery in India
>> Offering jewellery in Superstores, Department Stores and other such retail outlets at MRP
>> Offering the same quality, designs and prices throughout India with a certification of authenticity for the same from
renowned diamond grading laboratory
>> Producing the smallest heart shaped diamond (0.03 carat)
>> A mail-order catalogue for branded diamond jewellery.
>> Gitanjali Luxury Lifestyle Festival – a unique celebration for International Luxury and Lifestyle products.

RAPAPORT... Mehul Choksi makes no secret of his plans for Gitanjali Group. “We want to be LVMH and beyond
that,” the company’s managing director told Rapaport News in a recent interview. He also has a clear vision on how
to achieve that goal through a branding strategy which is lacking in the diamond industry today.

“There is very little branding of diamonds in the global market,” Choksi explained. “This is what we need to do and
when that happens the market will grow exponentially.” Branding, he stressed, is what creates the "pull factor" so
that customers are thinking of the product before they come to the store.

Gitanjali’s focus is evident in its portfolio of brands, which has enabled the company
to capture an estimated 60 percent of organized space in India's jewelry retail
market. The company had 185 exclusive stores and 215 franchised stores in the
country at the end of fiscal year ending March 30, 2010, and has since opened more.

The brand-focused strategy is especially apparent during the Diwali season, which
begins November 5 this year, and the company has reportedly allocated
approximately 25 percent of its annual marketing budget to promote its brands during
the festival.

Gitanjali is expecting Diwali to give its Indian sales a strong boost this November,
which Choksi estimated could set the platform for 50 percent growth in the value of
India’s jewelry retail sales this fiscal year.

“Diwali is extremely important as it gives you two and a half months worth of sales. So that’s about 20 percent of
your annual sales which take place in a one month period,” Choksi explained. “Sales by value will be up like
anything, while by volume, the increase will be less.”

The Gold Effect

Choksi noted that high gold prices would continue to impact jewelry sales but he added that the mood in India is
very different to Diwali 2009 as consumers still believe gold prices will increase further. Gold has increased about
27 percent from a year ago to trade at around $1,354.90 an ounce in London on November 2.

While Choksi estimated that about 80 percent of India’s jewelry retail market is focused on gold, he noted a
changing trend that is working in favor of the investment diamond market, which he classifies as stones above
0.50-carat. “I believe that gold will rise further and that will have a great impact on the market,” he said. “That is
why I believe that below investment category, the diamond market is going to be under pressure.”

Choksi clarified that less gold is needed for the investment category and diamond jewelry whereas fashion jewelry
requires a higher gold weight.  

In addition to hedging against high gold prices, Choksi forecasted strong movements in the currency markets over
the next two to three years which would present further opportunities in emerging markets. “From a strategic point
of view, since we are governing the product in U.S. dollars, it is better to expand in eastern rather than western
countries,” he explained. “There is going to be a currency war and I think the dollar will depreciate over the next few
years, which will help our sales in the eastern markets. It’s easy money.”

While Choksi agreed that the dollar will eventually

stabilize and remain the central currency for the trade,
he noted that businesses will start to accept more
currencies in the trade.

Expansion Strategy

Gitanjali has been aggressive in its expansion policy in

the east, but its focus is on organic growth there rather
than growing through acquisitions. “Except in Japan,
there is nothing to acquire there,” he explained. 

Acquisition opportunities are more appropriate in mature

markets such as Japan and the U.S., but Choksi
stressed that now is not the time to buy. Gitanjali has
126 stores in the U.S., after it acquired Samuels and
Rogers stores in 2007. Sales there have in fact declined
since the company’s entry to the country as it has closed
many stores. “Until we have satisfactory results in the
U.S. we will not expand,” he said. “We will selectively
[acquire] once things settle down, but at this point our
priorities are in markets like India and China so we are
going to slow our expansion in the U.S.”

Choksi stressed that the U.S. is still the most important market even if sales there have softened in the past two
years. He estimated that sales during Christmas will rise about 4 percent by value driven by higher prices
compared with 2009, while by volume, sales will decline.

India remains its flagship market and accounted for 40 percent of the group’s total sales in fiscal 2009-10, slightly
up from the previous year. Consolidated sales grew 28 percent to $1.47 billion (INR 6.52 billion) during the year
 with diamond sales up 17 percent to $719 million (INR 3.19 billion) and jewelry sales increasing 34 percent to $817
million (INR 3.63 billion).

Choksi noted that the shift has been a result of the company’s strategy as it moves away from diamonds towards
branded jewelry. “My major work is going to be in the brands,” he explained. “We are developing brands for each
market which will develop aspiration which will not only be in our stores but in others too.”

“Our aim is that price should be immaterial,” Choksi added. “Consumers should want to possess the item
regardless.”

The Gitanjali Group lays great emphasis on celebrity endorsements and has associated itself with Bollywood
intricately to bring
about a larger than life association of its various brands, especially D’Damas, with the consumers. Towards this
purpose, the
group has seen it fit to bring stars to interact with public.
 
On the star visits to the showroom, Mehul Choksi, Chairman, Gitanjali Gems commented, “Ezeediamonds is
essentially
about selling loose diamonds on a retail platform, in just the way ‘gold’ in India is. With the launch of Ezeediamonds,
Gitanjali
Gemsaims to revolutionize the diamond market and change the way the common man currently looks at Diamonds.
By
retailing the ‘aspirational’ quality of diamonds, we want to bring it within the consumer’s reach – not only for the elite
class
but also for a much larger target audience. And in a bollywood crazy country like India, what would have been a 
better
option but to tie up with the much awaited flick like CASH and reach out to a wider audience “
 
D’DAMAS is a mega - jewellery brand that is reaching out to jewellery lovers in India and also many parts of the
world.
With an extensive and highly intensive branding exercise built upon by an impressive & aggressive advertising
campaign and
the wholehearted support of a pro-active media, D’damas is today a household name. The Gitanjali Group’s efforts
have not
just built the company’s more than 30 different brands but also made jewellery – diamond or otherwise - into an
accessible and
affordable luxury commodity that most Indians now know they can buy and posses with immense confidence and
delight. None
other than the World Gold Council endorses D’Damas Gold jewellery. D’damas, as with the rest of the group’s other
jewellery
brands, is today worn with pride by women, and men, across different strata, age-groups and levels, across the
country and
the globe. 

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.
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

For a traditional diamantaire, Mehul Choksi is on unfamiliar territory. Unlike his brethren from the
-billion diamond cutting and exporting business who haven’t moved from the old, crowded diamond
hub near Opera House in South Mumbai, Choksi operates from the city’s latest financial district. Two
years ago, he gave up eye glasses and the assortment table for a chic office to play host to high
profile guests, mostly Bollywood actors. He talks of brands, advertising expenditure and balance
sheet, something his hush-hush industry has often shied away from.
Even as his peers continue to hunch over the table sorting out prime diamonds, the 50-year-old
college dropout — whose clothes come stitched from Hong Kong with his initials embroidered on
them — talks passionately about making jewelry, branding and selling them through retail outlets.
“The next LVMH (the international luxury group with brands like Louis Vuitton and Christian Dior) will
be born out of India,” says Choksi, managing director of the Mumbai-based Gitanjali Gems.
Choksi is already the largest integrated diamond jewelry retailer in India with brands like Nakshatra,
D’damas and Gilli under his belt. He also has over 150 retail stores in the US by virtue of two
acquisitions his company made last year, which sell well known brands.
He has a flashy ambition. He is aiming to be the world’s biggest jewelry retailer, growing bigger than
Tiffany, which had net sales of .86 billion last year and has over 200 exclusive stores; at the same
time, create a group full of well known brands, something on the lines of LVMH, which owns 50
brands netting it over 17 billion euros in revenue in 2008. For Gitanjali, Choksi unabashedly talks of
revenues of billion from his 60-odd brands, from the current consolidated sales of .2 billion in the
next “few years.”
By any standards, that’s a tall order. Even more so, if you read a little deeper into Gitanjali Gem’s
financial statements for 2008-9. The company sold goods worth Rs. 2,700 crore, 40 percent of it on
consignment basis for which it gets paid upfront. Its sundry debtors owed it Rs. 1,600 crore, nearly
as much as its remaining sales. Its long term loans stood at Rs. 1,600 crore and the company had
an inventory of Rs. 700 crore. A mere look would tell you that the company’s cash is not gainfully
employed and any default from debtors may well send it into a financial quagmire.
Choksi says though export sales of diamonds were a problem last year due to the slowdown, his
sales realisations have long led times. He also wants to be classified as a retail company, as he is
making substantial investments in building a chain of stores and associated infrastructure. Says
Choksi: “Our business model is changing and some of (the) legacy is reflected in the numbers.”
There is some proof to back up Choksi’s claim. Next week, Gitanjali is opening a sprawling 10,000
square feet retail outlet in a plush south Mumbai mall. He has leased up a dozen more places in the
last couple of months when real estate was available cheap to enlarge his retail presence. “Our
confidence stems from the fact that our retail jewelry business has been growing more than 20
percent even during the downturn. We want to be there when the tide turns,” says G.K. Nair,
Gitanjali’s executive director and in charge of finance.
Though most of the growth in the jewelry business came in recent years, Choksi saw the writing on
the wall pretty early. Choksi realized that he was in the lowest end of the value chain, whereas more
than 70 percent of the additional value accrued to the companies that sold those diamonds in
branded jewelry. According to the International Diamond and Jewelry Exchange, or IDEX, in 2006-
07, rough diamonds of billion in the mines were worth .8 billion after they were cut and polished by
the likes of Gitanjali. They value increased exponentially to billion when they got sold in stores
across the world.
Today, jewelry accounts for 40 percent of Gitanjali’s sales but Nair expects that the diamond
business to eventually contribute just 20 percent of its increased sales. The company’s retail jewelry
sales are growing fast too, thanks to the fast growth of retailing through malls and shopping arcades.
But the icing on the cake lies in the profitability. According to a senior industry official, diamond
companies profit margins lie between 2-3 percent, compared to 9-12 percent for jewelry companies.
Gitanjali’s net margins at 8 percent already seem to indicate that trend.
It wasn’t easy. In an industry known to work more on oral contracts than written ones, Choksi’s move
to bring in a corporate-like structure at Gitanjali had been beset with hurdles.
It also didn’t help that the industry is eyed with suspicion and its detractors talk in hush tones about
money laundering and “terror money” finding its way into the business. “Back then, about 15 years
ago, if I had known the industry as well as I do today, I might have not taken up Mr. Choksi’s offer,”
says Nair.
The initial public offering (IPO) in 2006 was a particularly difficult affair. Its two lead managers,
known names in the financial world, backed out in the last minute citing “reputation” problems with
the diamond industry. Gitanjali went ahead with the IPO with a new lead manager and mopped up
the targeted Rs. 330 crore. A year later, the same two lead managers came back and asked to be
part of Gitanjali’s latest fund raising initiatives — a 0 million foreign currency convertible bond and a
0 million global depository receipt. They were politely refused. Gitanjali had made a statement.
Choksi also had to go against the tradition and push his business through branding. Though the
Gujarati businessman already had 15 brands under him by 1997, it was only after DTC — the
trading arm of miner De Beers — introduced Nakshatra in India in 2000, that Choksi had an
opportunity to hone his skills in actually building a popular brand.
DTC’s retailing model — giving consignment rights to its site holders like Gitanjali to sell the brand
through family-owned retail shops — backfired. Its products didn’t have uniform prices and the site
holders and the retailers were under no obligation to sell the brand in preference to their own jewelry
items. After four years, Nakshatra had logged only Rs. 7 crore in annual sales. The South African
company changed tack and handed over the management to Gitanjali Gems, the most experienced
among the site holders in selling branded jewelry.
Realising that he needed to do something out of the box to drive Nakshatra, Choksi brought in
Samsika Marketing Consultants. The Jagdeep Kapoor-led consultancy advised Choksi to use the
fast-moving consumer goods model to sell Nakshatra, a blasphemous advice for the then marketing
team that was full of jewelers. They revolted but Choksi ignored them. He got in a new marketing
team with experience in selling FMCG products. He opened zonal offices, set up a team of
designers, introduced new product lines and tied up with big retail chains like Shopper’s Stop to sell
his brand. Over the years, the move has paid dividends.
In 2008, the Katrina Kaif-endorsed premium luxury brand had sales of Rs. 250 crore. This year, it is
expected to hit Rs. 400 crore and become the biggest jewelry brand in the country. Last year,
Gitanjali Gems completely bought out Nakshatra for Rs. 100 crore. “Today all our brands follow the
FMCG model,” says Amrish Masalia, CEO of Brightest Circle Jewellery Pvt. Ltd., the Gitanjali
subsidiary that owns Nakshatra. But Gitanjali’s scorching growth, from 0 million in 2005 to .2 billion
in 2008, has got the industry hooked.
Now he wants to double the retail presence in the US. Similarly in China, where it has production
facilities, it is planning to double its retail network to 100 stores. In West Asia, Gitanjali has tied up
with Damas International to open 100 stories in another three years. There are talks about a billion
dollar acquisition in the US.
Choksi has changed from a diamond trader to a globetrotting executive with the same penchant for
board room discussions as for Page 3 parties attended by Bollywood celebrities (25 of whom are his
brand ambassadors). The continued branding media blitzkrieg sucks out about Rs. 500 crore a year.
Out of his many brands, only about five are profitable. Another three to four have broken even but
not made considerable money.
Choksi never sounded more confident. “Tiffany is a brand for classes, but we have brands for
masses. Each of my brands should have its own identity and not known for their association with
Gitanjali Gems. Each day three to four outlets will be added and a new brand will be launched every
few months.” The confidence is reflected in his move to increase prices of his brands when others
were slashing to stimulate demand. For Mehul Choksi hasn’t believed in retaining the status quo.

Gitanjali Group acquires India's No.1 Diamond Jewellery Brand - Nakshatra

Gitanjali buys De Beers Groups Flagship brand in India ; Investment by Gitanjali so far exceeds Rs. 100
crores which includes brand nurturing, brand purchase and stake Nakshatra brand purchase and 100 %
stake in BCJPL (Brightest Circle Jewellery Private Ltd.); The Company would pump in another Rs.100
crores over the next 2 years; Strengthens its position as pioneers of branded diamond jewellery in India
owning the largest & top most brands; DTC's most premium brand 'Nakshatra' is sold to over 480
jewellers in India and also worldwide in United Kingdom, Singapore, Angola, GCC & Lahore; Nakshatra
will now be available in over 200 different retail formats, which includes stand-alone stores, shop- in
shops, airports, etc.; Gitanjali to expand and manage Nakshatra sales through various avenues and
maintain the leading position in the branded jewellery segment.

Mumbai, Maharashtra, January 8, 2008 /India PRwire/ -- The Rs. 3500-crore Gitanjali Gems Ltd., India’s
largest integrated diamond and jewellery manufacturer and retailer, today announced the complete
acquisition of Nakshatra Diamonds - DTC’s most premium brand. Nakshatra was a brand owned by
the DTC, with manufacturing, distribution and marketing rights held by done by Brightest Circle Jewellery
Pvt. Ltd. (a joint venture between Gitanjali and two other companies.). This acquisition gives Gitanjali
Group sole rights over the world’s most supreme diamond jewellery brand and also 100 % stake in
BCJPL.

The company now plans to extensively broaden the Nakshatra brand portfolio hitherto restricted only as a
diamond jewellery brand. The group will soon introduce other lifestyle accessories like designer bags,
watches, belts etc to complement the contemporary global citizen. Gitanjali aims to position Nakshatra as
a Jewellery and Lifestyle brand worldwide and report sales worth Rs. 1000 crores over the next 5
years. With Aishwarya Rai, one of the most beautiful women on the planet, a rare achiever, & India’s
most recognised and loved film star as its brand ambassador, the brand has a great aspirational value
attached to it. Gitanjali aims to blend this popularity to bring Nakshatra to the next level – a brand that
truly speaks class. It desires to be at par with the international brands like Gucci, Louis Vitton, etc. hence
positioning India as the house of luxury & premium brands.

This powerful acquisition will drive much more value to key stakeholders including end customers, and
partners of Gitanjali Group. This all adds up to advantages including better deals for consumers and
access to the world’s most coveted brand than ever before.

Speaking on the momentous occasion, Mr. Mehul Choksi, Chairman Gitanjali Group said, ‘We are
aggressively pursuing opportunities that will synergies with the company’s philosophy to add incremental
value at every level of the supply chain, thus ensuring greater shareholder value and boost to the bottom
line. Also this acquisition brings unparalleled depth and breadth of lifestyle and product offerings to
existing and prospective customers of Gitanjali.”

Gitanjali has a reputation of bringing world-class brands in the country. It may be recalled that the
company has introduced renowned brands such as ‘Asmi, D’Damas, Gili, Gianti and several others to
establish itself as the pioneers in innovation and technology.
“Nakshatra has been a key component in the rapid growth of the Indian diamond market since its launch
in 2000. We are happy to see the successful conclusion of the transfer of the brand to Gitanjali Ventures,
an important partner in its success to date,’ commented David Rudlin, Director of International
Markets, De Beers Group Marketing.

The acquisition is a significant step towards moving up the industry value chain and will offer a range of
synergies to Gitanjali’s existing operations. One of the brands under the Gitanjali fold, it can leverage the
group’s well-earned reputation for ethics and values in a business where such attributes are critical to win
the trust of consumers. On the other hand Gitanjali will not only have access to the entire spectrum of
Nakshatra but also leveraging its existing brand value that will give control over the entire value chain in
the diamond jewellery business.

With 170% growth in value since its inception Nakshatra has retained its position as the most preferred
brand in the Diamond Jewellery Segment. Nakshatra also manifolds over 11 times growth in terms of
volume in the last three years, an achievement no other diamond jewellery brand can boast of. Such is
the strength of Nakshatra that 70% of retail outlets stocking the brand credit it for playing a key role in
boosting overall diamond jewellery sales and increasing consumer footfalls

The Halo of Nakshatra on floral sales is 1:4 i.e. for every one Nakshatra sold the retailer is able to sell 4
more pieces of floral jewellery.

Notes to Editor

About Gitanjali Gems & Jewellery:

Gitanjali Gems Limited, a DTC sightholder, is one of the largest integrated diamond and jewellery
manufacturers and retailers in India. Its operations include sourcing of rough diamonds from primary and
secondary source suppliers in the international market, cutting and polishing the rough diamonds for
export to its international markets, and the sale of diamond and other jewellery through GGL's retail
operations in India, as well as in international markets.

The company exports its cut and polished diamonds, and its diamond and other jewellery products to
various international markets in Europe, including to Antwerp and Italy, the United States, the Middle
East, as well as to markets in Asia, including Japan, China, Hong Kong and Thailand. GGL also sells its
branded diamond and other jewellery products under brands, such as Nakshatra, Asmi, Gili, D'Damas,
Sangini, Collection G, Gold Expressions and Vivaha Gold, in India through its network of approximately
840 outlets. The Gitanjali Group has extensive knowledge and experience with US product ranges for
over two decades.

Gitanjali Gems Limited is also playing a key role in adding capabilities to the Jewellery industry in India by
building two SEZs, including one across 200 acres in Hyderabad, one of the largest of its kind.

About Nakshatra

Launched in 2000 Nakshatra reached the iconic stage in just three years. The Nakshatra Collection has
unique floral designs with multiple diamonds encircling a single large diamond to signify the constellation
effect. Special Packaging and its own guarantee certificate promising the purity and sparkle of Diamond.
Its available in three collections Nakshatra collection, Eternity Collection & Solitaire Collection. The brand
is available in 18 Kt BIS Hallmarked Gold.

It’s offered in superior quality diamonds of 4 Different Grades certified by the most reputed International
Gemmological Institute.

Nakshatra has emerged, as one of India’s leading brand in Diamond Jewellery Segment. The continued
success of Nakshatra is a result of its constant metamorphosis. In its first year, Nakshatra was awarded
the Effie (Silver) in 2001 and in the following year the Effie (Bronze). The Effie is the most significant
award in advertising that recognize effectiveness and honours tangible results. In 2003, the Nakshatra
Utsav was awarded the Best Trade Promotions award at the McDowell’s Signature All India Promo
Awards. In 2007 Nakshatra was awarded the Retail Jeweller Award for the best TV campaign of the year.
The in-house designing team at Nakshatra is extremely innovative and comes up with fresh ideas and
concepts which have received recognition at the JCK- New Delhi Gold Souk design award 2006, the IIGJ
Awards 2007 and the Tahitian Pearl Awards 2005 and 2007.

Nakshatra is synonymous with trust and purity in a category that is fraught with questionable practices. It
e

pitomizes the expression of love and affection in women’s life.

Nakshtra has established itself as an ethical player in the market as it comes with its certificates of
authenticity and assuring transparency in the buying decision of the consumers

Overt Nakshatra brand values include beauty, radiance, class, elegance and quality. Amongst the
symbolic values are feminity, celestial splendour and mystery

The Nakshatra Collection has unique Floral designs with multiple diamonds encircling a single large
diamond to signify the constellation effect

Special Packaging and its own guarantee certificate promising the purity and sparkle of Diamond.

The Brand factory:

In 1994 the group introduced India’s first ever branded jewellery Gili. Rated as a super brand, the brand
still ranks as one of the top ten jewellery brands in the country. Over the years the group has launched
many other superior brands and today it successfully manages over five of the ten best-known jewellery
brands in India.

Gili’s primary brand value is “Genuine diamond and gold jewellery at affordable prices”. The first jewellery
brand that brought diamond jewellery within the reach of masses.

Asmi in Sanskrit means, “I am”. Every action of a woman is a passionate exposition of the intensity and
drive with which she lives her life. The Asmi Diamond Jewellery Collection is carefully crafted to
beautifully compliment and complete her.

Sangini is positioned as a brand that glorifies women in a relationship. Sangini diamond jewellery is
characterized by a bezel set centre stone being slightly larger than the others in the same piece signifying
the focal position of the woman in the man’s life.
D’damas is a generic brand that combines international quality with Indian values. D’damas is about
“Luxury and Aspirations,” “Innovativeness,” “Assurance” “Dynamism.” D’damas has been recognized and
awarded as a Jewellery Masterbrand.Under D’damas are numerous brands that have made a mark on
the Indian milieu like Forevermark Solitaire, Damas Solitaire, Glitterati, Collection G, Gold Expressions,
Vivaaha, Ballerina, Bollywood Gold, Inspirations.

Desire Desire Lifestyle is a diversified product range that addresses the lifestyle needs to reflect the style
and upcoming trends among the masses. Capitalising on the strength and flexibility provided by Italy’s
industrial districts, world renown for their excellence in the development of luxury products. The Group’s
aim is to become one of the leading players in the accessible luxury market worldwide by further
developing its product offering, its brand portfolio, and its global distribution network

This case study examines the lessons learned by a ‘commodity marketer’ who fundamentally
changed the value that customers placed on its commodity offering and made it an essential part
of customers’ lives. Specifically, it offers the reader useful lessons in:

 How end-users and buyers have different motivations, and choosing whom to sell to is
critical
 Why customers appreciate a brand even in a commodity market
 How emotional connect is critical to building brands, even at the worst of times

In

Search of
 Salvation
One day in September, 1938, Harry Oppenheimer, Jr. could already make out the distinct façade
of the N.W. Ayer & Son building a short distance to the northwest, as he walked through the
square. Though he was seeing it for the first time, there was no question that this was the right
place. Home to the first advertising company in the United States, the ten year old building was
already considered a fine example of Art Deco architecture.

Although only in passing, Oppenheimer thought to himself that it seemed like a somewhat ironic
relic of the not-too-distant past as it had only been completed a year before the Crash of ’29,
when everything took a nosedive as the Depression set-in. He also couldn’t help feeling a little
hopeful; perhaps the awe he felt looking at the grand building as he approached it was an
auspicious sign. He hadn’t travelled all the way to Philadelphia from South Africa, however, to
reflect on modern architecture. He had come to enlist the services of what was considered the
most experienced advertising agency in America in order to save his family’s jewels – the
DeBeers diamond company.

Hard

Times

for

Hard

Rocks
Like so many other luxury product firms, since the onset of the Depression, DeBeers had fallen
on very hard times. Diamonds were simply not a viable commodity in such a climate. Demand
was so low that the company had to reduce production from over 2 million carats before 1930 to
only 14 thousand carats by 1933 – less than one percent of the prior volume! Despite having cut
production to a trickle, there was a stockpile of unsold diamonds by 1937 – people simply
weren’t buying!

As a wholesaler, DeBeers primarily focused its attention on selling its products to large
manufacturers, who then worked with the jewelers, who in turn worked with individual shops.
The diamonds would eventually end up on the tennis bracelets of sporty young wives, or the cuff
links of debonair entrepreneurs, but it was the companies in the supply chain who did the
actually buying from DeBeers. And they simply weren’t buying. Why would they? If business
men weren’t inclined to splurge on jewelry for themselves or their wives, what reason would
there be to stock-up in bulk?

Earlier in the decade, his father had attempted to reinvigorate the market by shutting down their
major mines to promote scarcity and cut back on costs. Since diamond prices in Europe had
collapsed, he believed that an artificial scarcity would make them more valuable and get the
company better prices.

While the move cut costs, sales simply didn’t pick up after this move. Many European countries
such as Germany and Italy had no tradition of diamond rings being gifted at an engagement or
any other event. In other countries such as the U.K, diamonds were seen as super-expensive
objects meant for a small aristocracy. And now, with a major war brewing in Europe, luxury
items like diamonds would be even less in demand. The company was in trouble – serious
trouble. They were barely afloat as it was. Oppenheimer decided that he would need to place all
his eggs in the American basket. Not just that, the new market would have to be dealt with very
differently.

Make

them

beg
 for

more!
Despite the failure of his father’s plan, Oppenheimer still felt that it had been a step in the right
direction. It hadn’t gone far enough, though. While the plan had focused on making the diamond
rarer (and therefore something to be coveted), it hadn’t done anything to stir demand among the
people who would ultimately buy it. Oppenheimer felt absolutely certain that the end-customer
was where they needed to focus their energies. If consumers wanted to buy diamonds, retailers
would soon be begging DeBeers to give them more stock!

And that’s precisely why he was now passing through those huge bronze doors as he entered 210
West Washington Square. Oppenheimer, Jr. was going to remake DeBeers from a mining
company that sold wholesale gems to manufacturers, into a company that sold diamonds to
consumers.

etting the

truth

from

the
 horse’s

mouth
Over the next several days Oppenheimer and a top team of N.W. Ayer’s ad execs and
copywriters began working on this task. As they sat at a desk in the firm’s office overlooking the
square they probed the relationship between the end-customer and diamonds. If they were
going to talk to customers directly and get them to buy more, they needed to know what buttons
to press. What, for instance, was so significant about diamonds? Why did people buy them? Who
wore them and why? How did they make the recipient feel? In those days, consumer research
wasn’t common, but Oppenheimer felt these answers to these questions would give them the
breakthrough they needed. He offered to pay for the cost of the research.

As the team worked together, they thought about the current mood around the world and where
diamonds fit into that picture. With the dark clouds of the war brewing on the American and
Asian horizons, and Europe already under the heavy hand of totalitarianism and bloody conflict,
people the world over were thinking of their loved ones, caressing their treasured keepsakes as
they prayed for their safety and better days to come.

DeBeers research suggested that in over 90% of cases, it was young men who bought
engagement rings. This implied that there was already a relationship between diamonds and
romance. The retailer may be the one to buy the diamond from DeBeers directly, but it was that
young wife who saw her husband as she glanced at the delicate bracelet around her wrist. A
diamond wasn’t a rare gem – it was a symbol of love and family. Now they had to work on
making that association even stronger. With war all around, DeBeers had to convey that
diamonds were more essential than ever.

They set about this task by

strongly associating diamonds
with the courtship process.
Movie stars were roped in to
wear diamonds and fashion
magazines talked about the
diamonds that celebrities had
been gifted as ‘a symbol of
love’. DeBeers also introduced
subtle cues to highlight that the
larger and finer the diamond, the
better it reflected a man’s love for his woman. This allowed the company to move the American
market towards better quality (and higher priced) diamonds.

(Repositioned)

Diamond

is
 Fore

ver
Over the next several years, DeBeers began to regain its former success as people came to view
diamonds as the ultimate symbol of love. By 1941, the downward trend in retail sales had been
entirely reversed, and in just three years, sales of diamonds in the United States rose 55%.

In the early 40s, the company acted to further strengthen the positioning it had adopted.
Diamonds were now seen as a symbol of love, but to get even more people to buy one, they also
had to convince them that diamonds were good value in themselves. It was a campaign in 1948,
that did this and forever changed DeBeers and the diamond industry as a whole. It was in that
year that Frances Gerety, a copywriter for N.W. Ayers, struggling to capture this new meaning,
scrawled the message “a diamond is forever” on the bottom of a picture of two honeymooning
lovers.

The company had already created a solid-foundation for themselves by establishing a

relationship with the end-customer. Now, Gerety developed a slogan that suggested that
diamonds were immortal. Not only could the wearer take pleasure in them, she could also pass it
on to her children as a family heirloom and an everlasting symbol of love. It was simple, to the
point, and a powerful message that appealed directly to the buyer – it was the ultimate tagline.
Interestingly, the DeBeers name or logo did not feature in this campaign. The company reasoned
that since it controlled the bulk of diamond mining, any growth in the market would
automatically be to its advantage.

Diamond

s for
 Lasting

Success
With this campaign and other initiatives supporting the same message, Oppenheimer Jr. and
N.W. Ayer’s went on to successfully oversee one of the greatest company resurrections in
business history. DeBeers not only remade public understanding of the meaning of what a
diamond represented, but they also spearheaded the birth of a new tradition – the diamond
engagement ring.

While diamond rings had been exchanged in the

past, it was after Gerety penned her famous line that
no bride-to-be was to be found without a sparkling
diamond gleaming on her finger. It was also
DeBeers that set the standard of two months salary
on these rings, which so many young men eagerly
work towards setting aside. By 1960, the company
found that many young people, who could not
afford a diamond ring at the wedding, would still
save up to buy one a little later. They repeated the
American success in other countries around the
world.

Today, sixty years later, the company continues to

thrive and controls about 40% of the world
diamond market. This is actually a come down from
the days when DeBeers controlled 80% of the
world diamond trade. In the 1990s, however, as
many other companies entered the market, DeBeers
continued to take its demand-led approach further
and started focusing on quality diamonds from its
own mines rather than surfeit quantity due to representing numerous others.

Since 2000, the company has launched “Forevermark”, a global diamond brand promising
quality and integrity (ethical mining and trading practices) in an attempt to gain a premium for its
own diamonds. In 2008, DeBeers made gross profits of $1.2 billion, a slight increase over the
previous year in difficult circumstances. Its long-term association with romance and love still
makes it a preferred supplier for retailers and it enjoys better profitability than when it dominated
trade and had to constantly work on creating scarcity. Today, DeBeers continues focusing on
maintaining and strengthening the meaning of diamonds and translating it to newer, fast-growing
markets such as India and China.

The Indian Consumer is changing. More aware, more discerning and wanting the best of brands,
this consumer wants it all and is ready to experiment.It is no surprise then that diamonds as a
category has grown tremendously. The past decade has seen a gradual shift towards diamonds.
Diamonds are being perceived as being fashionable, trendy and modern. India as a country has
always been jewellery-centric.Here is a list of the topmost diamond jewellery brands in India
today which women choose to wear :

 Tanishq

Having embarked on the retail journey a decade ago, Tanishq is the largest jewellery retailer in
India. With a strong presence in 70 cities across India, unmatched collections and assured purity,
Tanishq has quickly become the first choice of discerning customers.Although there are several
small scale unorganized jewellery markets, Tanishq is the first and only jewellery brand to have
organized mass jewellery retail chains across the country.

 Nakshatra
Nakshatra is a brand renowned for being the first branded diamond jewelry range in the country
and it has produced some great designs.Nakshatra Diamonds were launched in the year
2000.Today, the brand has become one of the leading fashion diamond jewelry brands in India,
which is patronized by the women belonging to almost all the segments of the society. The
reason for this is their amazing designs, combined with the reasonable price range.

 D’Damas

One of the predominant forces in the jewellery retail franchise sector, D’damas offers Indians a
vast array of world class gold, diamonds and other jewels. Prospective franchisees are sought
throughout.D’damas the flagship brand from the house of Gitanjali Group, is one of the largest
manufacturers of diamonds in India.D’damas range comprises ornaments like pendants, earrings,
chains, necklaces, bangles, bracelets and sets.

 Asmi
Asmi in Sanskrit means “I AM” It is jewellery for the new age Indian woman, celebrating her
new found economic & social independence. For her, self indulgence & self rewards are needs
that co-exist with her family, social or professional responsibilities.The brand aims to fulfill
every woman’s innate need for self expression while lauding her inner fire.Asmi Jewellery has a
contemporary delicate and feminine look.

 Nirvana

Nirvana is a range of exquisitely crafted diamond jewellery launched in Indian in 2002 by Fine
Jewellery Ltd., one of India’s largest exporters of Diamond Jewellery.It has been launched with a
view to the new age customer who buys jewellery as a fashion statement, rather than just a mere
valuable. It is not just in the field of design that the company has been innovative and
contemporary.

 Gili
Gili, the first branded jewellery of India, started in 1994 when jewellery was treated as a
possession but Gili with the clear image of future needs, shifted this paradigm “from
occasionally… to the need of every occasion”.A team of people, with a vision and passion to
venture into the jewellery market led to the establishment of the brand that you discern,
distinguish, and devour as Gili today.

 Kiah

Kiah diamond jewellery, from the house of Sheetal Group, has created an exquisite line of
jewellery for women.A collection of alluring diamonds studded in white and yellow gold, it is an
assortment of pendants, rings and earrings. Designed to depict versatility, each jewellery piece
has been created based on in-depth research, conducted to find the prevalent design preferences
amongst young people.

 Orra
A light called Orra is a leading diamond jewellery brand of the nation today. A legacy that
spanned decades can now be summed up in one word – Orra. A word that epitomises the person
it was created for. Her spirit, her grace, her grit and most importantly, the invisible glow that
surrounds her persona.It is a brandname that focussed on a woman’s nurturing spirit as well as
her soaring ambitions.

 Sangini

The Diamond Trading Company announced the launch of its new collection – Sangini Diamond
Jewellery (SDJ), in the year 2004, the perfect expression of love from a husband to his wife.
What better way to express it than through a gift that speaks a thousand words. Sangini
understands the delicacy of the emotional bond that exists between a couple and has come out
with an entire collection that highlights this emotion.

 Adora
Adora diamond jewellery is themed on love and celebration of life. Adora was launched in July
2003 by Mumbai-based Concept Jewellery (India) Pvt. Ltd. Adora is now established as an
accessible brand, both affordable and high-end, that rises above the concept of jewellery and
approaches the bigger concept of lifestyle expression. In other words, Adora was conceived and
launched as a brand with a high aspirational value backed by the highest degree of customer
trust.

Paradigm shift: from mass to class luxury 

With the upsurge of the foreign players’ entry into India the branded diamond jewellery is getting established and is
making its own identity in the market, creating a move from lower to medium range of product-line, i.e., daily wear or
light weight jewellery. Considering increased competition as a result of entry of large number of foreign players in
luxury jewellery retail, domestic brands are also converting and upgrading them from the mass to class luxury retail. 

According to Anil Prabhakar, Vice President (Business Development), Gitanjali Lifestyle, “At this particular stage of
luxury jewellery business, India does not require further customisation as the customers have built up their taste over
a period of time which is very subjective.” He further elaborates, “Though there are Indian designers and
manufacturers to give the taste of traditional and Indianised jewellery, it is not true that the consumers never prefer to
purchase a jewellery piece designed by foreign designer. Starting from Milan to Paris to Mumbai, the savour of the
customers remains more or less the same who prefer world class design.”  

More market penetration

Recognising the potential of the emerging luxury jewellery market, large numbers of players are venturing into this
gem and jewellery retail sector. Also, franchising is likely to be one of the credible business models among the
retailers. There are brands like Gitanjali, Orra, Cygnus and Tanishq who have already successfully expanded through
franchise route. Reliance Jewel has an aggressive plan to open over 300 stores in 5 years across the nation.
Swarovski also aims to add over 25 outlets by the end of 2009. Future Group-owned Navras is also foreseeing to
have around 100 in-stores in Big Bazaar by 2011. Darpan Gupta, Owner, Mangatrai, a Hyderabad-based company
admits to expand to towns to sustain in the market, However, the big players still cherish a mindset to expand their
retail chains in the metros. He says, despite having the potential of the customers of tier I or II cities to buy luxury
jewellery, they end up purchasing the merchandise from the main metros.

IMPLICATIONS OF END OF MULTI-FIBRE AGREEMENT (MFA) FOR

TEXTILES AND GARMENTS INDUSTRY IN INDIA
 
 The MFA has governed the world trade in textiles and garments since 1974. It has been
the main instrument for protecting the domestic textile industry of the US and the EU from the
increasing competition from developing Countries and was meant to be a transitional measure to
provide time to their industry to adjust.
The MFA resulted in restricting the size of the textile industry in the exporting countries
with natural competitive advantage in the area, as no country could export more than the quota
allocated to it. At the same time, MFA was not applicable to trade between the rich developed
countries and to exports from the Least Developed Countries. Textile industry therefore
developed in these countries like Bangladesh and Mexico to exploit the lack of quota restrictions.
This, besides restricting the size of the market and avenue of growth for the countries with
comparative advantage also perpetuated an inefficient production structure in the world textiles
and garment industry.
 
The Opportunities for India
The completion of phasing out of the MFA on 1 st January 2005 would expand the size of
the market available to the countries that have been restricted by the quotas till now. The size of
the world textile and garment export market is projected to grow to about $ 655 billion by 2010,
which is worth $ 400 billion currently.
India will be one of the principal beneficiaries of the large market available in the post
MFA. It is estimated that India’s share in total world textiles and garments exports can reach
8.0% by 2010 from the present 3.9%.
India’s market share of textiles and garments is going to jump substantially in both the
US and EU which are its principal exports market. According to a study of the WTO, India’s
market share in textiles in the EU is estimated to increase to 11% from the present 9% after the
elimination of quotas. For the garments sector the market share is expected to increase by 50%
from 6% to 9%. In the case of USA, India’s market share in garments is estimated to quadruple
to 15% in post MFA from the present 4%.
 
India’s comparative advantage
India is placed in an advantageous position to exploit the larger market available in the
post MFA regime. This is because India has a comparative advantage in textiles and garments,
which emanates from the low wage costs and access to domestically produced fabrics and other
inputs.
A study of revealed comparative advantage of various countries in textile and garments
done by WTO shows that India’s comparative advantage is higher than China and South East
Asia in both textiles and clothing. In textiles India’s advantage stands at 4.67 as compared to
3.18 of china. In garments too it is marginally higher at 3.90 compared to 3.64 of China. The
figures for comparative advantage in textiles for Indonesia, South Korea, Malasiya, Philippines,
Thailand and Vietnam are 1,98, 2,49, 0.36, 0.41, 1.16, 1.12 respectively as compared to 4.67 of
India’s.
The other strengths of the Indian textile industry, which would provide it a strong base
for accelerating the growth post MFA are: (i) the easy availability of almost all raw materials
from fiber to yarn to fabrics and others domestically. (ii) There are big players who can do
everything under one roof. Thus, exploiting the economies of scale available in post MFA. This
is going to be one of the most important factors in determining India’s competitiveness. (iii)
India has a well-developed fashion design industry, which can cater to the rapidly changing
fashion trends and demands. (iv) India has a large base of skilled workers.
Thus, India has all the requisites for maximization of the gains from the emerging
opportunity.
 
The present constraints
However, despite our inherent comparative advantage the study of the costs suggests that
the Indian garment and textile industry has a high cost structure, which would come in the way
of maximizing the gains from the opening of the market. For example, South East Asian
countries and China who are India’s main competitors have a lower labour cost. Unskilled labour
costs as percent of gross output of garment industry for India is 21.1% as against only 9% in
Vietnam, 15% in Korea and 18.2% in China. This is higher than even some developed countries.
(USA-21.0%, Italy-14.3%). The same is the case with the textiles sector too. The skilled labour
costs too are higher than South East Asian countries. It is 2.8% for India as against 1.6% for
china, 1.6% for Vietnam and, 2.3% for South Korea.
Since a large portion of our exports is from the lower priced segment where labour
intensity is high, it is important to improve the efficiency and productivity to increase the cost
competitiveness of these segments. It is only then that India can compete in this segment where
competitiveness is driven by lower costs.
The industry is also suffering because of very slow technological up gradation. This is
one of the reasons for lower efficiency and productivity in the Indian textile and clothing
industry. Also the quality of Indian products suffers, especially in the standardized mass
production market.
This fact comes out clearly in the study of capital costs. The proportion of capital costs to
gross output is 6.7% in India textile industry and 7.8% in garment industry. This is lower than
that of its main competitor China, where capital costs form 12.2% of gross output for clothing
and 12.0% for textiles. The lower capital costs are reflecting the low capital utilization in the
textiles and clothing industry. Therefore, this lower capital costs do not provide any competitive
advantage to India.
The focus segment
The garments segment is where maximum growth of exports is projected. This segment
provides the highest per unit realisation and has high value added content. The garments
segment broadly comprises the high-fashion garments, low quality mass-produced / standardized
products and low to medium priced segment.
A dominant role is played by big retail companies these days like WAL-MART or
companies like NIKE and ADDIDAS, most of whom do not have their own manufacturing units
but outsource from mainly the developing countries. Retailers accounted for more than 1/2 of
total garment imports in the EU. The retail market today has become concentrated and has
considerable buying power thus should be the focus area for the Indian garment exporters.
 
 
 
Challenges before the textile and garment industry
The study of the supply chain of the garment industry indicates that it is a demand-pull-
driven market. The information flow starts from the customer and forms the basis of what is to
be produced and when. With rapid advance in use of information technology in supply and stock
management most firms want supplies only at the time when needed. They do not keep stocks.
IT has also allowed firms to know latest fashion trends very quickly. This enables them to reduce
supply time in meeting new demands. Thus, the Indian exporters have now to meet very rigid
delivery schedules. This is going to be the real challenge before the Indian textiles and clothing
industry in the post MFA regime.
Some other suggestions for the textiles and garment industry are given as under:
 
 
        Infrastructure is a major bottleneck for exporters in meeting delivery schedules. The
maximum waiting time at Indian ports is still 8 to 12 days. Roads, ports and power
infrastructure needs to be up graded on a war footing.
 
        Improving India’s competitiveness requires modernization of the Industry,
especially the decentralised power loom sector, which accounts for 60% of the fabric
production. One estimate puts the amount required for the modernization of the Indian
textile and garment industry at Rs.150000 Cr. The high interest rate structure in the past
have created huge non-performing portfolios making it difficult for manufacturers to
secure fresh credit for technological up gradation. One solution could be a credible debt
restructuring exercise to reschedule past debt of the industry at a revised lower rate of
7-8 percent to improve company balance sheets and enable access to fresh credit.
Irritants in the TUF for textiles should also be suitably removed so that the fund
could be used for effecting modernization of this industry.
 
        There is a need to simplify the language of the laws to make them easily
comprehendible to industrialists and reduce chances of discretionary interpretations.
 
        At present government issues 50 to 60 notifications on an average throughout the
year, which directly or indirectly has an impact on the textile industry. This unnecessarily
complicates matters creating procedural hassles and leading to delays. The government
must restrain from issuing notifications throughout the year and keep them to the
minimum required.
 
         Similarly, unexpected changes in policy should be avoided, like the recent reduction
in rates in the DEPB scheme, as it creates an environment of uncertainty for exporters at
the time of negotiating contracts.
 
        While improving quality and efficiency, a proactive marketing of the “made in
India” brand as a quality product is a must for cornering a bigger share of the world
market.
 
        There is a possibility that the developed nations may resort to innovative non-tariff
barriers as environmental conditions, social clauses, safety standards etc, to protect their
industry. Therefore, it is important that the Indian industry should go in for quality
certifications and adopt best practices. More importantly, the government and the
industry should regularly interact to track such cases and undertake remedial measures.
 
        The competitive ability in high-quality fashion garments would be determined by the
ability to produce designs that captures the tastes and preferences, better still influence
such tastes and preferences. At the same time one has to be cost effective. India is quite
favourably placed in terms of designs in high fashion segment but quality will be the
determining factor. Therefore, this segment requires investment in quality control, R&D
in design and product development and, improvement in dyeing and packaging
technology to reduce the rejection rate, which is around 5%. An effective government-
industry-institution partnership should be evolved to address this issue.
 
        Competitiveness of the Indian industry, especially the garment sector, is going to
depend on their efficiency of supply chain management. This requires investment in and
maximum use of IT and systems like ERP, MIS etc.
 
With the industry tightening its belt and government providing an export friendly
facilitative environment, India can very well exceed the target of achieving US $50 billion
exports by 2010.
 
An expired international agreement that set quotas on the textiles and clothing developing countries could
export to developed countries. The purpose behind the Mulit-Fibre Arrangement was to allow developed
countries time to adjust to competition from developing countries, which could produce the same textile
products much more cheaply. It was thought that developing countries could flood the markets in
developed countries with less expensive textiles, which would have had a negative effect on the
developed countries' economies. Critics of the Arrangement argued this hampered development. It was in
effect from 1974 through the end of 2004. It is formally called the Agreement on Textile and Clothing

SPECIAL FEATURE: MAHARASHTRA KALEIDOSCOPE

Brand appeal

A SPECIAL CORRESPONDENT

Branded jewellery has found a niche for itself in the tough Indian market, and its
increasing growth rates show that before long it will corner a significant share of
the jewellery market.
PAUL NORONHA

A replica of the Koh-i-Noor diamond created by De Beers, at an exhibition in

Mumbai.

WITH the retail industry in India burgeoning, several companies have made inroads into the
traditional jewellery industry, selling the product that was never really "marketed" in
"brand" new ways. So much so that branded jewellery is the new mantra in the market,
having rapidly acquired a niche over the past few years.
Some of the companies have even cleverly played on Indian customs and tradition to
advertise and establish their brands. Jewellery is now marketed for every occasion; even
Valentine's Day calls for "a special something [read diamond] for a special someone".

In spite of pessimism about the marketability of branded jewellery in a country rooted in

buying ornaments from the traditional goldsmith, 30 brands were launched in 2004.
However, this does not take away from the fact that India is a tough market. According to
Mehul Choksi of the D'Damas and Gitanjali Group, branded jewellery has witnessed more
than 50 per cent growth in the last three years. The diamond branded jewellery, he says, is
especially impressive with the segment witnessing a 20 per cent rise annually as against 10
per cent a decade ago.

Although branded jewellery accounts for less than 10 per cent of the Rs.40,000-crore
jewellery market, a study has concluded that it is growing in popularity at a tremendous
pace of 20-30 per cent annually. Such is the potential of this industry that the consulting
firm McKinsey estimates the branded jewellery market in India to grow at the rate of 40 per
cent per annum to touch Rs.10,000 crores by 2010.

Big drivers of this kind of jewellery are the numerous malls opening across the country with
the emergence of an affluent class following the successful growth of the new economy
companies. In the past decade, the country has seen a section of the population gaining
exposure to designer wear, fashion accessories and globally branded products. "Why not
have access to them?" asks Rima Khan, a brand executive. "Of course jewellery is harder to
brand but it has done well given the tough competition," she says.

One of the reasons branded jewellery is doing well is that now anyone can walk into a mall,
window shop and decide at their own what they would like to buy. The entire culture of
shopping has changed with attentive and helpful attendants and well-displayed products.
"You no longer have the sales staff who look at you and decide whether you are worth
serving or not. Everyone is a potential customer in the new market," says Rima Khan. Yet
the most important part of branded jewellery is that you can get a piece of jewellery with a
diamond for as little as Rs.1,500. And as branded is equated with quality, you are assured
of a good product. "Suddenly jewellery has become accessible and affordable for all income
brackets."

The shift was visible in 2004 when more than 30 players entered the market. Today there
are more than 50 brands, endorsed by models, film actors, sports celebrities and other well-
known faces. Some designs of these brands are so popular that local jewellers have begun
to copy them. "While it is a compliment to the industry that people like the product, it could
also affect the company because the cost may be lower," says Rima Khan.
 PAUL NORONHA

Television anchor Mandira Bedi unveils a promotional offer at a Tanishq boutique.

The growth in diamond jewellery has been particularly remarkable. According to Diamond
Trading Company (DTC), the sales and marketing arm of the De Beers Group, "the demand
for diamonds has never been stronger". India is one of the fastest growing markets in the
world. The diamond market in India is over $1.4 million.

India is still largely a gold-dominated market, DTC says. But as these brands sell diamonds
at prices that range from as low as Rs.1,500 a piece, diamonds have become relatively
affordable. "Research conducted world-wide shows that nothing is more desirable than a
diamond. Almost 94 out of 100 women polled want the real thing," according to DTC. What
helps the growth of diamonds is that gold or platinum is not seen as competition. The stone
complements the metal or the other way round.

The growth in the market for diamond jewellery brands in India is actually in direct
response to DTC's Supplier of Choice strategy, which aims to grow consumer demand for
diamond jewellery in the context of the expanding competitive luxury goods sector. DTC's
Supplier of Choice encourages clients to operate efficient and value-added distribution
channels. "It plans to stimulate advertising and marketing investment to the levels that a
luxury product like diamond jewellery deserves," according to DTC.

As a pioneer in the industry, DTC says it is encouraging the development of multiple

competing diamond jewellery brands for the benefit of the entire industry. "DTC believes
that strong brands are an essential ingredient in the transformation of the market for
diamonds. As in any industry, multiple competing brands create category excitement and
bring new consumers to the market. This is especially true of luxury goods. Extremely
value-conscious consumers are willing to pay a premium for brands only if the brand appeal
is high."

"Investing in diamond jewellery also makes sound financial sense," says Cherie Tandon
Saldanha, DTC India's marketing director. Of course diamonds are also rare, unique and
eternal so there are a lot of emotions associated with buying or gifting a diamond.
 PAUL NORONHA

The gold rush on the auspicious day of Dhanteras in Mumbai.

Some of the challenges the industry faces are: tough competition from the luxury goods
segment, educating consumers on this type of jewellery, and fragmentation of the market.
According to DTC, developing and establishing successful brands takes a long time. Branded
diamond jewellery, though in its nascent stage in India, has shown encouraging signs but it
still competes with other luxury goods. To build a market for diamonds, it is imperative that
quality spending is generated in the category through advertising and marketing. There
should also be an effort to transform trade to the standards required for selling diamonds.

The biggest challenge perhaps is in educating the consumer. Consumers need to understand
the four Cs - Cut, Carat, Colour and Clarity. Companies that brand their products place a lot
of emphasis on educating and therefore helping the customer make his purchase. "Buying
jewellery is a very personal thing and we need to understand what we are buying," says
Seema Thakur, an attendant in a jewellery store at a mall in Mumbai. "We have an average
of 50 people on a week day and at least 100 on a weekend who walk in and look around the
shop. If you make the product look special, for instance, appeal to a young gentleman to
buy it for a loved one, he is often interested." And the big selling point is: "If you can spend
Rs.1,000 on two music CDs, why not spend for that special person in your life."

The branded jewellery industry is still in its infancy, but increasing growth rates show that in
a short time it will corner a significant chunk of the market. Perhaps the best compliment to
the branded segment is that old jewellery showrooms have also begun to design jewellery
lines under a brand name
Strategies adopted by top three players
Tanishq:I nd ia¶ s
jewellery market is estimated to be worth Rs. 400 billion a year and the share of
the organized sector - jewellery stores and brands managed by corporate houses - stands at about
Rs. 10 billion. This small but significant niche is largely the creation of Tanishq, a path- breaking
effort that has earned a well-deserved reputation for reliability and excellence, and for introducing
pioneering concepts in an industry where tradition once ruled. The brand has a 40% share of the
organized jewellery market and a 1% bite of the overall jewellery pie.
 The company has two key marketing objectives-First, drawing new customers into its
sixty stores located across the country, and second, building long-term relationships with
the existing.
 Successful demand generation through a slew of marketing measures is, at the core of the
rapid, profitable growth, which Tanishq has witnessed during the past years.
 When Titan launched Tanishq in 1995, Titan realized that there was a huge untapped
market for branded jewellery in India. The critical success factors in the business were
quality, fashionable design, and good after sales service.
 Many potential customers thought the products were over priced and associated the brand
only with the rich.
Hence, Titan decided to change its strategy on two fronts:
‡

Value proposition
‡

Retailing.
 The Tanishq strategy for the coming couple of years relies on two things ²increasing
penetration in the domestic markets and going abroad in order to diversify its revenue
portfolio.
Gitanjali: Gili has it¶s manufacturing outlet at Andheri East. It has 256 outlets of which 3 are
exclusive stores Gili is also present in stores like AKBARALLYS, ASIATIC, CITI PLAZA, GILI
WORLD (AIRPORT), JUST IN VOGUE, LIFESTYLE, PANTALOONS, SHOPPERS' STOP,
WESTSIDE, Gili is spread throughout the cities of India. Apart from the conventional jewellery
stores, Gili is also available at up-market stores like Shopper's Stop, Lifestyle, Globus and Hi-style.
Gili is known for its Diamond Heart collection, popularised through the Valentine Day concept. This
collection can also be bought through a mail-order catalogue.
 In 1997 Gili introduced Rivaaz , a collection of ethnic Indian jewellery
Gili to attract its costumers and satisfy its consumers comes up with
strategies like:-

a) Gili promise

i.e. Guarantee of Authenticity of its products.

b) provides with certificate of Authenticity

 Gili also comes up with special offers on top selling products
 Online shopping concept is also adopted by Gili
 Gili introduced Exchange Policy& Buy Back Policy at any point of time & anywhere in
India. It helps Gili to retain their customers & forms a good relation; also customers
become Brand Loyal because of such services.
Adora Diamonds: Adora Diamonds were launched in India in July 2003 by Mumbai based
Concept Jewelry (India) Ltd. On the present day the still expanding retail network centers of Adora
expands to 117 outlets in 47 cities of India. Adora means glory in Spanish and claims that its
diamond collection is themed on love. Adora diamonds are for adornment of every moment,
occasion, and phase of life through its up and downs.The Swaranjali signature collection of living
legend Lata Mangeshkar is a unique feature of Adora diamonds. Each piece of Swaranjali collection
is conceptualized and approved by Lata Mangeshkar and bears her laser printed signature.
Adora also offers its customers a unique Certificate of Authenticity, reposing the faith and trust
evoked by patrons, also a promise of trendsetting seasonal innovations, to ensure that both diamond
ownership and gifting become a suitable and valued purchase proposition
Emerging trends in diamond industry
 Infrastructure development: 19 more special economic zones (SEZ) approved (one SEZ
specially for Surat ±in Gujarat), this would greatly facilitate export
 Setting up of the Bharat Diamond Bourse (BDB) to centrally locate diamond trading
operations and would greatly benefit the Indian industry
 Joint ventures / Alliances on the rise; indicating a shrink in the distribution chain and
Indian players have started to dominate
 Reliance Retail is planning an aggressive entry into the jewellery retail market. It will
open between 400 to 500 jewellery retail outlets across the country.
 Damas India, part of one of the largest jewellery retail outlets in the world, is adding 16
new stores to the 12 stores it currently has in India.
 Swarovski, the global crystal goods manufacturer and marketer, plans to set up 30 stores
by 2009, up from the current 13.
 The Gitanjali Group has bought Nakshatra, the premium brand of jewellery promoted by
Diamond Trading Company (DTC)
 In an endeavour to expand its retail footprint and market share, diamond and jewellery
manufacturer Gitanjali Gems has entered into an agreement with the Mineral and Metal Trading
Corporation of India (MMTC), a leading bullion trader. Gitanjali Gems would invest US$ 12.69
Major Players in the Jewelery Market
Of late, some of the world's biggest names in the jewelery and luxury items such as watches and
cuff-links are making inquiries to set up shop in India. Multi-national jewelery brands such as
Tiffany, Cartier, Zales and Harry Winston are all said to be interested in coming here following
the Government's decision to allow foreign direct investment of up to 51 per cent in single brand
retail stores. Most of these stores have been sourcing cut and polished diamond and gold items
from Indian firms. Now they are making inquiries for possible tie-ups in India.

Other existing and new foreign players are drawing plans for
expansion and launch of their operations in India:

 De Beers has got permission to survey for diamonds in Jharkhand,

 Italian luxury silverware manufacturer, Greggio Argento, will set up two exclusive stores
in Mumbai and Delhi within the next three months, through a marketing tie-up with
Gitanjali Lifestyle – a subsidiary of Gitanjali Gems.
 Swarovski, the global crystal goods manufacturer and marketer, is on an expansion spree
in India and hopes to achieve 5 to 10 per cent of the global turnovers from the country in
the next ten years. The company plans to set up 30 stores by 2009, from the current 13.
 Damas India, part of one of the largest jewelery retail outlets in the world, is adding 16
new stores to its present dozen stores in India.

Simultaneously, domestic players are also drawing aggressive plans:

 Shrenuj & Company Ltd has acquired 84.6 per cent stake in the US-based jewelery
distributor Simon Golub & Sons Inc for US$ 22.7 million.
 Kerala-based jeweller Malabar Gold will spend US$ 48 million over the next year in order
to expand its presence in southern India as well as abroad.
 Gitanjali Gems Ltd, a Mumbai-based jeweller, has incorporated a wholly-owned subsidiary
in Dubai, Gitanjali Ventures DMCC, whose main activity is trading in diamonds, precious
stones, diamond jewelery and pearls.
 Also, the Gitanjali Group has announced its foray into the luxury retail market through a
new entity ‘Luxury Connexions'. The company will invest US$ 24.5 million over three
years to set up luxury malls in eight leading cities across the country.

Two new special economic zones (SEZs) for gems and jewelery are to come up at Goregaon and
Dhulia, both in Maharashtra. Also, the state-run Minerals and Metals Trading Corp. (MMTC),
plans to establish a gems and jewelery special economic zone (SEZ) in partnership with a private
company
 million in the first phase of the joint venture.
 Gold Souk India has plans for opening 100 Souks in 100 months.
 Thai company Pranda Jewellery is foraying into retailing in India. The company, which
has introduced 99.9 per cent pure gold jewellery will be investing US$ 21.15 million
towards retail expansion in the country.
 Flawless Diamond India Ltd has planned to open 75 additional outlets within the next 24
months.
 Geneva-based luxury watch and jewellery brand de Grisogono is firming up its plans to
foray into the Indian market. It has set up its first flagship boutique for US$ 5.29 million.
The company will be adding six monobrand outlets by 2011

Mumbai: The Indian diamond market is poised to grow at 20% annually to over Rs1trillion in the next five
years on the back of improved demand, a top industry player said on Friday.

“Demand for diamond jewellery is improving world-wide and people in India are buying more diamonds
these days as it is a good mode of investment. The Indian diamond market is likely to grow at 20% to touch
Rs. 1trillion in the next five years whereas gold will grow at 8-10% year- on-year,” Vivek Jain, chief
executive of leading diamond retail chain Orra, told PTI in Mumbai.

At present, the domestic diamond market is pegged at Rs12,000 crore, Jain said, adding the total jewellery
market in the country is worth Rs70,000 crore.

Orra, a part of the $1.8 billion Belgian Group Rosyblue, is poised to grow at 20% year-on-year, Jain said,
adding it will be opening five large-format exclusive stores in the next three years at Delhi, Mumbai,
Bangalore and Hyderabad.

“We will open five large format stores (3,000 sq ft) in the next three years at an investment of Rs70 crore.
We will be raising funds through the private equity route by August this year. The process has already
started and we have shortlisted three investors,” Jain said.

The company, that has 30 stand-alone stores across 20 cities in India, exports diamonds to 15 countries,
the largest market being the US.

According to Jain, the economic downturn in the US has not affected Orra from a price point of view. The
company is expecting a double-digit growth in its exports to the US in the current year.

Jain also said the company’s same-store sales rose by 30%t month on month.