Post on 25-Dec-2015
transcript
INTRODUCTION India is a leading player in the global
gems and jewellery market
The gems and jewellery industry
occupies an important position in the
Indian economy. It is a leading foreign
exchange earner, as well as one of the
fastest growing industries in the country
The two major segments of the sector in
India are gold jewellery and diamonds.
Gold jewellery forms around 80 per
cent of the Indian jewellery market,
with the balance comprising
fabricated studded jewellery that
includes diamond studded as well
as gemstone studded jewellery.
The Indian gems and jewellery
industry is competitive in the world
market due to its low cost of
production and the availability of
skilled labor. In addition, the
industry has set up a worldwide
distribution network, of more than
3,000 offices for the promotion and
marketing of Indian diamonds.
• Diamond distribution was dominated by a few
major diamond mining companies worldwide
among which Diamond Trading Corporation
(DTC) was the largest diamond distributor. It
accounted for approximately 50 % of
worldwide diamond distribution.
• Though Indian exports in cut and polished
diamonds was growing, it was restricted to
lower-sized and lower-valued diamond
market. European manufacturers dominated
the higher-valued diamond market.
•India was among the largest
importer of gold in the world and its
sale was sensitive to income level
and price level. Also it was
dependent on the purchases based
on faith in the retailer.
•Tanishq and Gili were among the
earliest jewellery brands in India
and later there came a shift in
consumer preferences towards
diamond jewellery as it was
positioned as affordable and
contemporary.
Indian Retail Jewellery Overview
Yesterday Today
Unbranded Branded
Silver & Gold
jewellery
Gold & Diamond
jewellery
Investment Investment +
Fashion
Traditional design Fashionable &
innovative design
Marriage & festival
is peak season
Wearability and gifts
Jewellery sold on
commodity basis
with labor charges
Jewellery being sold
on a per piece basis
Conti…Major Players: Tanishq Jewellery
Vaibhav Gems Ltd.
Classic Diamond (India) Ltd.
Shrenuj & Company Ltd.
Goldiam international Ltd.
Su-raj Diamonds & Jewellery Ltd.
Rajesh Exports Pvt. Ltd
Gitanjali Gems Ltd
GITANJALI GEMS LTD.Business Overview
Established presence
The company is one of India’s largest integrated diamond and jewellery
companies Established in 1986. Sight holder status with DTC through a
promoter group company
Sophisticated and scalable diamond and jewellery manufacturing facilities
Approximately 1,246 retail outlets in India and 143 outlets in the U.S.
Leading brands
• Ramping up the retail chain
• Expanding stores in India
• Acquisitions including
,Samuels Rogers
-and Tri Star
• Plans to make further
inorganic growth
. . -in the U S & Far east
• Expanding manufacturing
capabilities to
address increasing demand
• Gitanjali Lifestyles to focus on
Manufacture and distribution
Of luxury and lifestyle products
• 200 Developing acres gems &
Jewellery
SEZ in Hyderabad
• Plans to develop more SEZs
focused on
gems & jewellery across India
• To partner for developing real
estate
infrastructure
Expansions Diversification
• Further integration within the jewellery value chain• Higher margins in retail business• Higher value addition
•Leverage its key strengths•Large opportunity for incremental revenue•Diversify business model
Michael Porter’s Five Force Model for Jewellery Industry
POTENTIAL NEW ENTRY
INDUSTRY COMPETITORS
RIVALRY AMONG EXISTING FIRMS
BUYERSSUPPLIER
SUBSTITUTES
Inter-Firm Rivalry High
• Two types of rivalry.
Inside India
• Large presence of unorganized
sector. 0.2 Million Gold jewelers
and over 8,000 Diamond jewelers
Outside India.
• International rivals Such as,
China
• Threat from producing nation
like S.A. & Russia.
Bargaining Power of Suppliers
Medium
• In jewellery industry the suppliers
are S.A., UAE, Australia, US, Congo,
Botswana, Russia, DTC.
• Few Alternatives of cutting &
polishing.
• Skilled labor
• Bargaining power of India is
enhanced because India is largest
consumer of gold jewellery.
Bargaining Power of Buyers Low
Divided in two types
• 1. Domestic buyers &
2. Foreign buyers
• As investment (Demand increase)
• Bargaining power of Indian
exporter is high because Majority
of the world's rough diamond
production is cut and polished in
India.
Threat of Substitutes: Low
• Substitutes are Real assets,
Stock market, & Bank deposits
& mutual fund investment and
Other types of jewellery like
imitation jewellery, bagasra
jewellery, stone jewellery etc.
• Second preferred investment
behind bank deposits
• Status and standard of living
increase so demand is
increasing at high rate.
Barriers to entry Low to
Medium
• Low capital requirement
• Government subsidy
• EXIM policy & government’s
rules-regulations are high
• Skilled manpower is essential
• Advanced technology required
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.
High priorityResistance from suppliers and decrease in availability of diamond .Fluctuation in prices of material.(gold,diamnd)
High priorityEmergence of new technologyDiamond processing and cutting.
Medium priorityChanging tastes of consumers.
High priorityChange in exim ratesAnd trade policies
Medium priorityDefragmented Indian market.
Low priority
Medium priorityExtinction of gold minesEconomic slowdown
Low priority Low priorityDisaster and mishaps
Priority – Impact Matrix
VALUE CHAINDiamond Polishing
Direct From Mines
Rough Distribution
Diamond Distribution
Jewellery Manufacturing
Jewellery Whole Selling Jewellery Branding
Jewellery Retailing
Shopping Experience
Finance
• The company’s operations running
across the whole value chain so
finance is the very much important
factor. Working capital
requirement is much more. The
company is having finance from
various sources like shares, bank
loan, and credit line. Infrastructure
• The company is having latest
technological manufacturing
plants. Its branded showrooms &
other outlets are having good
infrastructure. It is also having
plants in special economic zone at
various places
Procurement
• The company procures its raw
materials, machinery & other
ancillary things from recognized
sources. The company is having good
creditability with supplier. It has to
maintain its relations with different
sight holder for procurement of
diamond for jewellery making.Technology
• The company is using latest technology in processing means jewellery manufacturing & also in designing. The company is having business in so many countries so that it has to pay attention over the designing, manufacturing etc. with the high technology to satisfy buyer’s needs
. Human resources
• As of September 30, 2005, the Company had 410 full-time employees, of which approximately 117 employees were employed at its corporate offices in Mumbai. In addition, as of September 30, 2005, its subsidiaries, joint ventures and associate companies employed in the aggregate more than 740 employees, including 250 employees in its retail operations.
KEY SUCCESS FACTOR (KSF)
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.
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.
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.
Technology Related factor:
• Gitanjali has expertise in cutting,
polishing the diamonds and in
designing the jewellery
(specifically in small design).
• Presence across the whole value
chain : The first & foremost
success factor for the company
is of its presence across the
entire value chain
Human Resource and Top
Management related factor:
• Visionary leadership and a deep
management team
• Strategic Acquisition of Tri-Star :
Manufacturer and global
distributor of Canadia® brand
diamonds and diamond jewellery
in various countries, such as
Australia, Canada, England,
Ireland, Northern Ireland, New
Zealand, Scotland, and the United
States
• The industry registered exports worth US$ 15 billion in April-December 2008 (Provisional), compared to US$ 14.9 billion in the corresponding period of 2007, registering a growth of .59 per cent.
• Export of cut and polished diamonds grew from US$ 10.9 billion in 2006-07 to US$ 14.2 billion in 2007-08, witnessing a growth of nearly 68 per cent.
• The total gems and jewellery exports from India stood at US$ 20.8 billion in the financial year 2007-08, against US$ 17.1 billion in the previous year, witnessing a growth of 22.27 percent. The sector accounted for 13.41 per cent of India's total merchandise exports.
• More than 100,000 skilled and unskilled labors being laid-off due to poor demand from the US market. In fact, India’s jewellery sales to the US declined over 20 per cent even during the holiday season, i.e. Christmas and New Year.
• The domestic jewellery demand has also decreased by over 20 per cent.
• Positive government policies such as 100 per cent Foreign Direct Investment (FDI) in gems and jewellery through the automatic route, has further provided an impetus to the booming gems and jewellery industry.
Current Position of Gitanjali Jewelers
• Gitanjali Gems reported that consolidated net profits fell 42 percent to INR 291.52 million ($5.97 million) in the third fiscal quarter ending December 31, 2008 as a result of the company’s diamond and jewelry segments contracting during the period.
• Gitanjali’s third quarter net sales fell 11 percent to INR 11.109 billion ($227.55 million), as diamond revenues declined 19 percent to INR 5.366 billion ($109.98 million).
•
• The company noted a 17 percent decline in revenues at its India operations during the quarter and a 7.8 percent drop in revenues from the rest of the world.
• For the first nine months of the fiscal year, Gitanjali’s net profit fell 6 percent to INR 1.195 billion ($24.48 million). The company’s diamond business saw pre-tax profits fall 16 percent during the period, while its jewelry unit profits grew 27 percent. Group net sales rose 8.3 percent to INR 36.207 billion ($741.56 million).
Future Perspectives
• As per Research and Markets, the
gold processing industry in India
although, has around 15,000 players,
Only 80 players generate revenues
over US$ 5 million. Therefore, there
is high growth potential for Indian
gems and jewellery in the global
market.
• Furthermore, in spite of the fact that
India is not a major miner of
precious metals and stones, the
country’s inexpensive and skilled
workforce are one of the best in the
world for processing of diamonds,
which makes the country a favored
destination with the exporters.
• Additionally, there is a huge
potential in promoting traditional
Indian designs and styles. There is
a massive demand for hand-made
jewellery, especially in ethnic
Indian designs, from the sizeable
Indian emigrant population in the
Middle-East, South-East Asian
countries, the US and Canada
among others.