Case Study

on
Gitanjali – A Gem in India’s 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 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 withJewellery being sold on a per piece basis
labor charges
 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
 Expansions
•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
• Further integration within the jewellery
value chain
• Higher margins in retail business
• Higher value addition
Diversification
•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 across India
•To partner for developing real estate
infrastructure
•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

INDUSTRY COMPETITORS

SUPPLIER BUYERS

RIVALRY AMONG EXISTING

FIRMS

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.
 Priority – Impact Matrix
High priority High priority Medium priority
Resistance from suppliers Emergence of new Changing tastes of
and decrease in technology consumers.
availability of diamond . Diamond processing and
Fluctuation in prices of cutting.
material.(gold,diamnd)

High priority Medium priority Low priority

Change in exim rates Defragmented Indian
And trade policies market.

Medium priority Low priority Low priority

Extinction of gold mines Disaster and mishaps
Economic slowdown
 VALUE CHAIN
Diamond Polishing Diamond Distribution Shopping Experience

Rough Distribution Jewellery Jewellery Retailing

Manufacturing

Jewellery Branding
Direct From Mines Jewellery Whole Selling
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.
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.
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
Current Scenario Of Gems and Jewellery Industry
• 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.
Thank You…..