case study

2.  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.
 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.

3. Past Present
 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

4.  Diamond Manufacturing Industry
 Cut and Polished Diamonds
 Retailing of Diamond Jewellery
 Government Initiatives and Regulations for the Gems and Jewellery Industry in
India.

6. Established presence
 Founded as a single company cutting and polishing diamonds for the jewellery
trade at Surat, Gujarat, in 1966, the Gitanjali Group became, many times over, a
pioneer among major diamond and jewellery houses.
 First major diamond and jewellery house to be launched and run by modern
entrepreneurs rather than dynastic jewellers. An authorised DTC Sightholder and
loyal customer – and a modern multinational business run on innovative insights.
Leading brands

7. Industry
Rivalry
Potential
New Entry
Buyers
Substitutes
Supplier

8. 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.
 Expanding manufacturing capabilities in Mumbai and at special economic zone in
Surat to address increasing demand.
 Net Worth is 2,914.27 crore Rs. So we can say that it is financially very strong
company.
 Sight holder status with DTC through a promoter group company.

9. 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 jewelry because increasing disposable income of people.

10. 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.

11. Marking Cleaving Sawing Cutting Polishing

12.  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.

13.  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

14.  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.

15.  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.

16.  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.

17. 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.

18. 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.
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.

19. 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

20.  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).

21.  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.