Navneet Goenka-Vice Chairman and Managing Director, Goenka Diamonds & Jewels

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. India is the world’s biggest gold buying nation and the value of the gems and jewellery sector’s exports from India is estimated at around USD 26 billion. However, there are certain challenges which are being faced by this industry. These challenges include the prevalence of a huge unorganised segment which is hampering the ability of the Indian gems and jewellery industry to emerge as a world-class supplier along with the loss of the market for gems and jewellery exports due to recession and global economic slowdown, a tremendous increase in the prices of gold and rough diamonds, and the possible emergence of China as a rival in the long term due to cheap labour and the growing domestic demand in that country. 

The main factor which has helped us in registering consistent growth over the years is our continued focus on the manufacture and export of larger-sized diamonds termed as solitaires wherein the competition is less and the realisation is more. The other factors include diversifying our export markets from the US to the emerging and faster markets of Far East Asia such as Hong Kong, Malaysia, Indonesia, Israel, Dubai, Korea, etc and entering the local branded jewellery retail market in India through our two brands viz. G-Wild and Ceres. 

As already stated, one of the reasons for us to register consistent growth over the years has been our strategy to enter the local branded diamond jewellery retail market in India through our two brands viz. G-Wild and Ceres. While the Ceres brand targets the top-end segment of the society, the G-Wild brand focuses on internationally designed diamond jewellery, targeting the youth. The average realisation per piece of the Ceres brand is in excess of Rs 50 lakh and we don’t have any competitors in this segment, thus resulting in higher revenues and margins. Our product profile includes rings, earrings, pendants, bracelets, necklaces, etc which are manufactured using polished diamonds, precious and other semi-precious stones which are set in gold. Our in-house team along with some select freelance designers undertakes the designing of jewellery for our brands. We currently have a presence in retail through eight retails stores which we plan to increase to 25 by FY12.

To improve our margins we have continued to focus on manufacturing, processing, and export of larger-sized diamonds, entered the retailing of premium diamond-studded jewellery which enjoys higher margins and have improved our backward linkages by increasing our presence in Russia through our subsidiary. We are now an integrated company having a presence across the various segments of the value chain. We source roughs from a variety of suppliers, including our subsidiary, process them for exports and also for manufacturing our branded jewellery. We retail the jewellery through our stores under our own brands. By having a strong presence across the value chain, we are able to minimise the risks and optimise the profitability of our operations. 

Going forward, we plan to increase the integration as we expand the operations of our Russian subsidiary and increase our retail network. Our Russian subsidiary will help us to increase our sourcing from Russia, which is one of the largest producers of rough diamonds in the world. We plan to benefit from the favourable government policies in Russia towards local companies and the immense experience of the management team of the subsidiary in order to lower the cost of procurement from Russia, which would in turn lower our overall material costs and thus improve our margins. Similarly, our presence in retail would be increased through the establishment of 19 more stores till the end of FY12. All the stores will be company-operated. This increased presence would allow us to tap newer markets, increase jewellery sales and boost our profitability. The above steps will thus increase the margins and profitability of the company in the coming years. 

Our entry into the branded jewellery segment is a strategy to capture the shift of the Indian market from traditional jewellery to internationally styled branded segment. In order to emerge as a leading retail jewellery player, it is essential for us to create and establish reputed brands. For increasing our brand’s awareness, we are undertaking a marketing campaign across various media channels. Currently we are focusing on establishing these two brands and may introduce new brands in line with the trends and customer preferences. 

We use advanced technology and equipment in our manufacturing facilities to enable us to process rough diamonds in the most efficient and optimal manner and allow us to design the highest quality jewellery. Customer trust and satisfaction are the two most important factors in the retail branded jewellery trade. Towards this end, we have made efforts to get ourselves certified as an ISO 9001:2000 company which stands for product quality assurance system. Further, a majority of the diamonds used in CERES jewellery are certified by the Gemological Institute of America (GIA), a globally renowned certification institute. We also run a buy-back scheme for our jewellery wherein we buy back the jewellery originally sold to our customers after deduction of the making charges. All the above measures together have contributed positively towards establishing our brand reputation in the market. 

In the retail segment we expect to be among the top five brands in the market in value terms.