Gitanjali – A Gem In India’s Crown

By
Strategic Management Group 1
 Chairman’s Desk
• “Since 1966, Gitanjali has come a long way. Our
strength and success can be attributed to our
efficient management, modern operation
systems, uncompromising quality control and
dynamic workforce, but above all, it is our desire
and vision that has accentuated our growth”.

Mr. Mehul Choksi

(Chairman, Gitanjali Gems Ltd.)
 Approach Used For Case Study Analysis

• Identifying the External and Internal Factors

affecting Gitanjali Gems Ltd.

• Initiatives By Gitanjali Gems Ltd.

• Gitanjali Gems – The Road Ahead.

 Gitanjali Gems Ltd
(Company Overview)
• Founded as a single company cutting and polishing diamonds for
the jewellery trade at Surat, Gujarat, in 1966 headed by Mr. Mehul
C Choksi (CMD).

• Offers jewellery in diverse styles: traditional, international classic,

and casual. For consumers of all age groups, tastes and budgets.

• Having won over 50 awards from the Ministry of Commerce, India

for outstanding exports of diamond and jewellery, is today over
$1000 million multinational group, and a publicly listed entity.

• Operations span the globe, all the way from USA, UK, Belgium, Italy
and the Middle East to Thailand, South East Asia China, and Japan.
 External Factors
• Type of Industry

• The Diamond Manufacturing Industry

• Gems and Jewelry Industry (India)

• Structure of Gems and Jewelry Industry in India

• Retailing of Diamond Jewelry

• Gold Jewelry
 External factors Contd...
• Branded Jewelry in India

• Government Initiatives and Regulations

• Gems and Jewelry Export Promotion Council

• Demand Conditions

• Supply Conditions

• Competition
 Internal factors
• Infrastructure

• Human Resources

• Technology

• Procurement

• Manufacturing
 Internal factors Cont…

• Marketing

• Distribution

• Customer Relationship Management

• Acquisitions & Alliances

 Type of Industry
• The Diamond Manufacturing Industry in India
is one of the largest components of the global
trade in diamonds.
• Until 18th century India was the only known
source of diamonds in the world.
• The gems and jewelry industry formed the
single largest component of merchandise
exports in the country.
 Diamond Manufacturing Industry
• The diamond manufacturing industry is dependent on
the supply of rough diamonds.

• Countries like Australia, Botswana, Russia, South Africa

are the major suppliers.

• Production wise Australia produces 25%, Botswana 22%

and South Africa 9%.

• De Beers Consolidated Diamonds Company, (SA) is the

largest diamond miner in the world contributing 40% of
global diamond production by value.
 Gems And Jewelry Industry (India)
• Gems and Jewelry Industry has played a crucial role in the
Indian economy.

• The contribution made by the Industry in terms of exports

from India stood at Rs.703.75 billion in FY 2005 for about
19.7% of Indian Exports.

• The contribution has grown gigantically by 95% where in

India exported worth Rs. 8,641.36 crores (US$ 1,941.88
million), in the month of April, 2010 showing a substantial
growth of 115.62% (91.67% in rupees term) as compared to
US$ 900.59 million (rupees 4,508.35 crores) for the same
period of the previous year.
Structure of Gems And Jewelry In India

• The structure of gems and jewelry industry

has been classified based on the
manufacturing processes and position in the
value chain:
• Gemstones.
• Jewelry.
• Pearls.
 Retailing of Diamond Jewelry
• USA, the largest consumer of retail diamond jewelry,
accounting for 48% of world’s diamond jewelry
consumption.

• India, being the largest supplier to USA in lower – sized

diamonds, also catering to Japan, second largest consumer.

• China, second largest supplier competing with India.

• Targeting these markets by setting up retail distribution

channels.
 Gold Jewelry
• In India, gold is a preferred form of jewelry and a popular
investment vehicle for savings after gold deposits.

• Majority of gold demands are met through imports

• In 2004, India accounted for 0.4% of total gold production

making it the largest importer of gold in the world.

• Indian export of gold jewelry were 17.3 billion in FY 2004 –

2005, compared to July 2010 at US$454.87 million (rupees
2,130.61 crores) shows a growth of 25.28 percent (21.04
percent rupee term) over the comparative figure of
US$363.07 million (rupees 1,760.19 crores) for July 2009.
 Branded Jewelry In India
• Branded Jewelry was a recent phenomena in India, as
most jewelry retailed in the unorganized sector.

• Tanishq & Gili were among the earliest jewelry brands in

India.

• Branding of jewelry in India was adopted from the

international markets, positioned as lifestyle and
personality statement.

• Introduction of Value Added Services like Certification of

Gold & Diamonds and Life Time return and buy – back
schemes gave a boost to branded jewelry in India.
 Major Players
• Titan Industries Ltd.  -  Launched its jewellery brand Tanishq in 1995. Plant at Hosur (near Bangalore)   set
up with an investment of around Rs. 70 crs. Has the capacity to produce 150,000 pieces of jewellery
annually. They are the only player in the market offering 22 carat jewellery

• Su-raj Jewellery (I) Ltd. - A  member of the diamond exporting Su-Raj group, launched its collection of
diamond studded and 22 K plain gold jewellery ‘Forever’

• Group Beautiful - Diamond exporter, market Tiffany in India. Launched its own studded 18 K range –
Dagina

• Gitanjali Jewels - A jewellery exporter. Started retailing 18 carat (K) pieces in India under the brand    
name Gili in 1995 and a 24 K brand ‘Prima Gold’ in association with a Thai company (Pranda).Currently has
40 outlets in 10 cities

• Cartier - Claims to be the largest jeweller in the world, entered India with Ravissant, Delhi - franchise  
agreement

• Chand Mehar - Part of the Delhi’s premier family of jewellers, Mehrasons. Launched Enchante     branded
jewellery in May 1996

• Tiffany - The top end retailer from New York, entered India last year - showroom in Mumbai

• Speed Marketing Services - Sell Swiss made ARY Rainbow Hearts 24 K gold pendants since March 1997
 Government Initiatives and Regulations
• Duty – free imports of rough diamonds.

• Waiver of customs duty on colored, rough gemstones and semi – processed,

half – cut and broken diamonds.

• Exim Policy 2002 – 07 focused on exports of gems and jewelry through market
active initiatives schemes, duty free adjustments.

• Reduction of import tariff on cut and polished diamonds and gemstones from
15% to 5%.

• Under Industrial Policy & FEMA, FDI investment up to 100% was permitted in
gems and jewelry Industry.

• Under Foreign Trade Policy 2004 – 2009, cutting and polishing of gems and
jewelry was treated as manufacturing for the purposes of exemption under
section 10A of the Income Tax Act.
Exim Policy 2009 – 2010 (Gems & Jewelry)

• STCL Limited, Diamond India Limited, MSTC Limited, Gem &

Jewelry Export Promotion Council and Star Trading Houses (for
gem and jewelry sector) have been added under the list of
nominated agencies notified under Para 4A.4 of Foreign Trade
Policy for the purpose of import of precious metals.

• Import restrictions on worked corals have been removed to

address the grievance of gem and jewelry exporters.

• Authorized person of Gem & Jewelry units in Export Oriented

Units shall be allowed personal carriage of gold in primary form
up to 10 kgs in a financial year subject to RBI and customs
guidelines.
 Gems and Jewelry Export Promotion Council (GJEPC)

• The Government of India designated the

Gems and Jewelry Export Promotional Council
as the importing and exporting authority in
India.

• The GJEPC targeted exports were worth $20

billion by 2007, which increased by $28.41
billion by 2009 – 2010.
 Demand Conditions
• Demand depends on various factors such as:

– Economic growth

– Employment levels

– Income levels

– Tax rates

– Credit availability

– Styles offered by various gems and jewelry producers also effects market demand.
– Promotion is the key success factor for various brands.

• Seasonal Purchases play a vital role in this Industry.

 Supply Conditions
• Price fluctuations in process of precious metals and
precious and semi – precious stones.

• Monopolistic approach to restrict supply of rough

diamonds throughout the world (i.e., Cartels).

• Increase in price of diamonds adversely affected

consumer demand causing decline in sale.

• Changes in currency exchanges influence cost of inputs

and outputs. Ex: U.S.A $.
 Competition
• Current & Political Competitors Include:

– Independent Jewelry Stores

– Retail Jewelry Store Chains

– Wholesale diamond traders

• Competition based on:

Quality
Design
Availability
Pricing
 In India…
• Primary Competitors:

• Mehrasons Jewellers (Delhi)

• Tribhuvandas Bhimji Zaveri (Mumbai)

• B.C. Sen and P.C.Chandra (Kolkata)

• G.R.Thanga Maligai (Chennai)

• C. Krishnaiah Chetty (Bangalore)

• Tanishq (set – up in 1994 gave tough competition by way of reducing

manufacturing costs, quick deliveries, reduced inventory holding, quicker
communication and elimination of logistics costs and quicker lead time.
 In India Contd……
• Laxmi Dia Jewel Pvt Ltd , Surat was the second largest exporter of
polished diamonds.

• Rajesh Exports Ltd (Bangalore) was the world’s largest gold jewelry
manufacturer and the country largest exporter of gold jewelry.

• Swarnmandir Jewel Designer (Karnataka) was known for its

exclusive designer series (916) handicraft gold jewelry.

• Platinum Guild International (Platinum Jewelry Brands) (“Dew

Drops”).

• Zirconium Jewelry was gaining popularity by Brand “Ishtaa”.

 Gitanjali Gems Ltd (Infrastructure)
• Specialized factories in different parts of the world.

• Diminco Pacific Manufacturing Co Ltd (China)

• Gemsiam Manufacturing Co Ltd (Thailand)

• Hai Duong Diamond Factory (Vietnam)

• Gec (Gujarat, Mumbai)

• Modern manufacturing facilities (Mumbai)

• Special Economic Zone (Gujarat)

• Diamond Cutting & Polishing (Mumbai)

• Santacruz Electronic Export Processing Unit (Mumbai)

• Two Modern Jewelry Manufacturing Facilities (Mumbai, Hyderabad)

 Gitanjali Gems Ltd (Human Resources)
• 2,300 employees as on 2005

• Out of which 1,800 employees at manufacturing facilities

• More than 250 employees in retail operations

• 410 full – time employees

• Out of which 117 employees at Corporate office

• Senior Management with significant Industry experience was instrumental in the consistent growth in
revenues and operations.

• Employee motivation and empowerment were the key to competitive advantage.

• Regular Staff Training Programs

• Leadership Programs

• Performance Enhancement Programs

• Benefits to employees included medical expenses, housing or rent assistance, annual leave and travel
allowance, PF, healthcare, schooling, pension and group gratuity .
 Gitanjali Gems Ltd (Technology)
• Achieved an International first by perforating
heart cut diamonds and making them
available in affordable process between Rs.
1,000 to 6,000.

• It took two years and 250 carats value at Rs. 2

crore for Gitanjali Laser House to perfect the
technology.
 Gitanjali Gems Ltd (Procurement)
• Operations and revenues were dependent upon availability of rough
diamonds.

• World's know sources were Angola, Australia, Botswana, Brazil, Canada,

Ghana, Russia, South Africa.

• Procurement at competitive prices from Diamond Trading Company

(DTC), De Beers, S.A from London and South Africa to a selected groups
or “Sight Holders”

• Gitanjali’s employees attended offerings of rough diamonds held by

DTC periodically at London.

• At Sight, they purchased a “series” of composite rough diamonds at

DTC’s stated price.
 Procurement Contd…
• In 2000, DTC announced significant changes in
its approach to rough diamond marketing by
stopping open market purchases, alter its
market control and pricing policies by way of
“Supplier of choice” marketing programs.

• Gitanjali was able to combat these changes by

broadening the sales base and implemented
strict inventory, pricing and purchase controls
back home.
 Gitanjali Gems Ltd (D Manufacturing)

• Diamond Manufacturing was a Labor Intensive

process requiring specialized knowledge and
skills.

• Steps Involved in Diamond Manufacturing:

• Marking, Cleaving, Sawing, Cutting, Polishing.

Gitanjali Gems Ltd (Jewelry Manufacturing)

• Steps involved in Jewelry Manufacturing:

• Designing, Model making and Mould making,

waxing and wax setting, casting, sprue
grinding, filling, polishing, metal setting,
rhodium polish.
 Gitanjali Gems Ltd (Marketing)
• Offering a comprehensive range of diamonds and other jewelry products
aimed at:

• Various jewelry categories.

• Different customers and price segments.

• During various festive and social occasions by offering custom made

jewelry.

• Branded jewelry enjoyed significant brand equity which gave Gitanjali a

competitive edge.

• The sub collection “D Damas” was particularly noted for Wedding and
general collection.
 Marketing Contd…
• The company was under the process of registering 24 trademarks in India in connection with
braded jewelry lines.

• Innovative designs and product lines enabled Getanjali to develop brand and increase retail
sales.

• Gili brand was introduced in 1994 and was among the first branded jewelry introduced in
India.

• DTC permitted Gitanjali another three site holders and this paved way for launching the new
products under the “Nakshatra” brand.

• In 2004, Gili was selected as the “Super Brand” by the Indian Consumer Super brand Council.

• In 2004, the company began selling branded gold jewelry to different consumer segments (in
association with World Gold Council) under the brand names “Collection G, Gold expressions,
and vivaha Gold.

• In 2001, Gitanjali launched the buy – back scheme for diamonds.

• Aggressive Marketing Campaigns by way of Advertising.

 Gitanjali Gems Ltd (Distribution)
• Independent sales and distribution network for diamonds and jewelry products.

• Promoter group companies outside India played major role in developing strong
relationships with customers in the international markets.

• Wholesalers acted as procurement agents for jewelry retailers in the

international market .

• Back home gitanjali has a strong sales and distribution channel by way of
exclusive distributors, direct sales to large departmental stores and reputed
jewelry lines, and direct sales to and customers through retail operations.

• 12 retail outlets were established as franchisees.

• Gili brand was sold though an independent distribution network through

regional offices and operations were handed through retail outlets in host
stores (Shopper’s stop)
 Gitanjali Gems Ltd (Customer Relationship
Management)
• Gitanjali identified specific customer requirements and
delivered on such requirements effectively within the
shortest time frame.

• CRM enable Gitanjali to reduce payment risks.

• International customers visited diamond manufacturing

facilities in India and placed orders of certain
specifications.

• Participation in trade shows & fairs.

Gitanjali Gems Ltd (Acquisitions & Alliances)
• The Company had strategic alliance with World Gold Council.

• Gitanjali was a DTC sight holder since 1967.

• In 2001, the firm entered into a 50% joint venture in the form of D’Damas Jewelry
Private Ltd with Damas Jewelry LLC (Dubai).

• The company acquired 99.04% equity interest in Fantasy diamond cuts private ltd in
2005.

• Hyderabad gems SEZ was incorporated in 2005.

• Gitanjali gems has 2 associate companies Gili India (60% equity interest) and Brightest
Circle (33.34%).

• In 2005, Gemplus, Prism, Giantti were amalgamated into the company.

• Gitanjali has five subsadries namely, mehul impex, hyderabad gems. Gitanjali expots,
fantasy diamonds, CRIA jewelry.
 Initiatives By Gitanjali Gems Ltd.
• Increase market share in the diamonds and jewelry business in India.

• Maintain focus on international markets.

• Develop branded jewelry lines.

• Expand retail operations.

• Expand product offerings and maintain high quality customer service.

• Increase product capacity.

• Pursue strategic acquisitions and alliances

 Gitanjali Gems – The Road Ahead.
• The Indian gems and jewelry sector is expected to cross US$ 26 billion by
2012, driven by availability of huge base of skilled labor and improving
lifestyle, according to a research report .

• Due to various government efforts and incentives, coupled with private

sector initiatives, the Indian gems and jewelry sector is expected to grow
at a Compound Annual Growth Rate of around 14 percent from 2009 to
2012.

• The consumption of diamond jewelry in India is expected to touch US$

6.41 billion in 2012.

• State-run National Mining Development Corp (NMDC) plans to produce

close to 100,000 carats of diamonds from the Panna diamond mines in
Madhya Pradesh by 2010-11.
 Bibliography
• http://www.gitanjaligroup.com/home.html

• http://www.commodityonline.com/news/India-gems
-and-jewellery-export-jumps-by-95-28409-3-1.html

• http://www.commodityonline.com/news/India-gold-j
ewellery-export-jumps-by-25-31388-3-1.html

• http://www.infodriveindia.com/Exim/DGFT/Exim-Poli
cy/2009/default.aspx
THANK YOU