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CASE STUDY
ON
GITANJALI A GEM IN INDIAS CROWN

Submitted To:

Submitted By:

Prof. Rakesh Gupta

Kumari Sweta

Lipi Agrawal

Sukalpa Datta
Sushma Kumari
Vikas Sharma
Vipin Khandelwal
Introduction

India is a leading player in the global gems and jewellery market

The gems and jewellery industry occupies an important position in theIndian

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 inIndia are gold jewellery and diamonds.

Gold jewellery forms around 80 per cent of theIndian jewellery market, with the
balance comprising fabricated studded jewellery that includes diamond studded
as well as gemstone studded jewellery.

TheIndian 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 ofIndian 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.

ThoughIndian 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 inIndia 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 GEMSLT D.

BusinessOverview

Established presence

The company is one ofIndia¶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 inIndia and 143 outlets in the U.S.

Leading brands
‡Ramping up the retail chain
‡Expanding stores inIndia
‡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

‡Developing 200 acres gems & Jewellery

SEZ in Hyderabad

‡Plans to develop more SEZs focused on

gems & jewellery acrossIndia

‡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

Generic Business Level Strategy
Michael Porter¶s Five Force Model for Jewellery Industry

POTENTIAL

NEW ENTRY

INDUSTRYCOMPETITORS

RIVALRY AMONG EXISTING

FIRMS

BUYERS

SUPPLIER

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 ofSuppliersMedium

In jewellery industry the suppliers are S.A., UAE, Australia, US, Congo, Botswana,

Russia, DTC.

Few Alternatives of cutting & polishing.

Skilled labor

Bargaining power ofIndia is enhanced becauseIndia 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 ofIndian exporter is high becauseMajority of the world's rough

diamond production is cut and polished inIndia.

Threat ofSubstitutes:

Low

Substitutes are Real assets, Stockmarket, & Bankdeposits & mutual

fund investment andOther types of jewellery like imitation

jewellery, bagasra jewellery, stone jewellery etc.

Second preferred investment behind bankdeposits

Status and standard of living increase so demand is increasing at

high rate.

Barriers to entry

Low toMedium

Low capital requirement

Government subsidy

EXIMpolicy & government¶s rules-regulations are high

Skilled manpower is essential

Advanced technology required

SWOT ANALYSIS OF GITANJALIJEWELLERY LTD.

Strengths

Large integrated diamond & jewellery player and having an international

presence.

Pioneers of branded jewellery inIndia.

Strong marketing & distribution network. Strong retail presence inIndia and

in U.S. 112 distributors and 1246 outlets inIndia 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 inIndia 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 priority

Resistance from suppliers and

decrease in availability of

diamond .

Fluctuation in prices of

material.(gold,diamnd)

High priority

Emergence of new

technology

Diamond processing and

cutting.

Medium priority

Changing tastes of

consumers.

High priority

Change in exim rates

And trade policies

Medium priority

Defragmented Indian market.

Low priority

Medium priority

Extinction of gold mines

Economic slowdown

Low priority

Low priority

Disaster and mishaps

Priority ±Impact Matrix

VALUE CHAIN

Diamond Polishing

DirectFromMines

Rough Distribution

Diamond Distribution

Jewellery

Manufacturing

JewelleryWholeSelling

Jewellery Branding

JewelleryRetailing

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 inIndia and the U.S.: The company is occupying good
position in retail jewellery provider in bothIndia as well as U.S. Gitanjali has a
strong network of distribution. Here Strong retail presence inIndia and in US.It
has 112 distributors and 1246 outlets inIndia 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 inIndia skilled labor is available at
cheaper rate.
TechnologyRelated 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

HumanResource and TopManagement 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, NorthernIreland, New
Zealand, Scotland, and the United States
Current Scenario Of Gems and JewelleryIndustry
‡

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 fromIndia 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 ofIndia'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 DirectInvestment

(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 toINR
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 toINR 11.109 billion
($227.55 million), as diamond revenues declined 19 percent toINR 5.366
billion ($109.98 million).

The company noted a 17 percent decline in revenues at itsIndia 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
toINR 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 toINR 36.207 billion

($741.56 million).
Future Perspectives

As per Research and Markets, the gold processing industry inIndia although,
has around 15,000 players, Only 80 players generate revenues over US$ 5
million. Therefore, there is high growth potential forIndian gems and
jewellery in the global market.

Furthermore, in spite of the fact thatIndia 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 traditionalIndian designs

and styles. There is a massive demand for hand-made jewellery, especially in
ethnicIndian designs, from the sizeableIndian emigrant population in the
Middle-East, South-East Asian countries, the US and Canada among others.
Thank You«..
Case Study on Geetanjali Gems

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