A Project report On
Gems and jewelry industry
Submitted to:
Submitted by:
Ms. Gagandeep kaur
anu gagaan
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Index particular
Page no.
Industry overview Types of gems Gold and silver SWOT Government regulations
3-7 7-14 14-16 17-18 19-24
Best diamonds brands Major players
24-27 28-29
Rajesh exports ltd. Asian star jewels ltd. Financial reports
30-34 35-36 37-45
Comparative analysis Jobs and career in jewelry industry
46-47 48-51
Future of jewelry industry Exports of gold and diamond Market share of gold and diamond
52-53 54-56 57-58
conclusion
59-60
bibliography
61-62
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INDUSTRY OVERVIEW
Gems and jewelry industry Precious metals and gemstones have been an integral part of the Indian civilization since its recorded history. Gems and Jewelry (G&J) has been consumed by Indians for ages for both its aesthetic as well as
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investment value. India has the distinction of being the first country to introduce diamonds to the world. The country was also the first to mine, cut & polish and trade in diamonds. The Indian G&J industry can be classified into various sub segments like diamonds, colored stones, gold and silver jewelry, pearls, etc. However, the two major segments in India are gold and diamonds. India dominates the diamond processing trade with 11 out of 12 diamonds being cut and polished in India. India also dominates the gold and silver consumption globally with consumption of approximately 700 tonnes (gold) p.a. A major foreign exchange earner, the industry is also notable in providing employment to 1.5 mn people directly and indirectly. The industry is characterized by a significantly large unorganized sector, labour-intensive operations, high working capital & raw material intensiveness, gold price volatility and export orientation. The demand for gold and diamond jewelry is driven by festivals, weddings and gifts, the increasing affluence of the middle class population and the increase in per capita spent on luxury items. Though India plays a dominant role in the G&J industry in terms of processing and consumption, mining of gold and diamond is amongst the lowest in the world. India imports gold and rough diamonds along with other precious metals. Gold is purchased from countries like Switzerland, South Africa, Australia and UAE, and rough diamonds are sourced from Belgium, UK, Israel and UAE. There is an impact on the demand for gold given the record high price of gold in the last couple of years, but consumers have remained bullish on the precious metal and there is an increased investment-related demand for gold. The key drivers for growth in the industry are increasing disposable income, conscious marketing efforts, rising young population with the urge to spend on jewelry since it’s regarded a fashion accessory. Indian G&J players are recognizing the importance of diversifying their business to emerging markets like China and the Middle East and not completely relying on the US as was the case before the financial crisis. However, it will be difficult to replace the US which is still the largest diamond market in the world. We now expect emerging market countries to be the engines of future growth for the diamond market as the demand from developed countries will remain subdued for some time to come. Based on the gradual recovery in the global markets, CARE Research has investigated some of the leading indicators that signal a growing momentum in the Indian G&J sector. Factors like significantly lower inventory levels as compared to the period of financial crisis, a huge jump in export numbers, lower unemployment levels and stable rough diamond prices, all reveal a resurgence in the sector which was so critically impacted during the financial crisis when demand from developed countries plummeted. The report elucidates facts on the Indian Gems & Jewelry Industry, supplemented by the latest available data. Emphasis is laid on the following topics to accomplish the report. * Evolution and the current state of the industry. * Product profile of various categories of gems and jewelry like diamond, gold, silver and colored gemstones. * Industry characteristics elaborated with respect to raw material, labour and working capital intensiveness, unorganized sector, export orientation and branding & certification. * Demand-supply scenario and detailed discussion on demand drivers, increasing affluence and middle class population and shift in buying patterns.
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* Extensive coverage on export & import trade with the latest three-year data on product-wise and countrywise exports of gems and jewelry and product-wise imports of gems and jewelry. * Cost analysis analyzing raw material cost and interest cost. * A brief note on duty structure and government regulations in the industry. * SWOT analysis and Porter’s Five Force model.
INDIAN JEWELRY INDUSTRY The gems and jewelry 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 jewelry and diamonds.Gold jewelry forms around 80 per cent of the Indian jewelry market, with the Balance comprising fabricated studded jewelry that includes diamond and Gemstone studded jewelry. Besides, India is world's largest cutting and Polishing Industry for diamonds, well supported by government policies and the banking sector with around 50 banks providing nearly $3 billion of credit to the Indian diamond industry. A predominant portion of the gold jewelry manufactured in India is consumed in the domestic market. However, a major portion of the rough, uncut diamonds processed in India is exported, either in the form of polished diamonds or finished diamond jewelry. The largest consumer of gold worldwide, India is also the leading diamond cutting nation. Gold and precious gems have played a pivotal role in the Indian social fabric and economy. Precious gems and jewelry are a part and parcel of Indian traditions and customs. Gold has traditionally been valued in India as a savings-and investment vehicle and even today, continues to be the second most popular instrument after bank deposits.Gems and jewelry is one of the fastest growing sectors in the Indian economy with an annual growth rate of approximately 15 per cent. The gems and jewelry industry accounts for nearly 20 per cent of the total Indian exports and employs over 1.3 million people, directly or indirectly. The Gems and Jewelry (G&J) market essentially comprises of sourcing, processing, manufacturing and selling of precious metals and gemstones, such as, Gold, Platinum, Silver, Diamond, Ruby, and Sapphire etc. The G&J market is a significant contributor to the Indian economy, based on the size of the domestic market and through its contribution to the country’s exports. India is the largest consumer of gold (around 20 percent of global consumption) and also the largest
Brief History Before the liberalization of the Indian economy in 1991, only the Minerals and Metals Trading Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to import gold. The abolition of the Gold Control Act in 1992, allowed large export houses to import gold freely. Exporters in export processing zones were allowed to sell 10 percent of their produce in the domestic market. In 1993, gold and diamond mining were opened up for private investors and foreign investors were allowed to own half the equity in mining ventures. In 1997, overseas banks and bullion suppliers were also allowed to import gold into India. These measures led to the entry of foreign players like DeBeers,Tiffany and Cartier’s into the Indian market. In the 1990s, the number of retail jewelry outlets in India increased greatly due to the abolition of the Gold Control
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Act. This led to a highly fragmented and unorganized jewelry market with an estimated 100,000 workshops supplying over 350,000 retailers, mostly family owned, single shop operations. In 2001, India had the highest demand for gold in the world; 855 tons were consumed a year, 95% of which was used for jewelry.
Structure of the Industry: India’s G&J industry is highly unorganized and fragmented with 96 percent of the total players being family owned businesses. The gold processing industry has around 15,000 players, with only 80 having revenues over USD 5 million. India is also home to around 450,000 goldsmiths,100,000 gold jewellers along with 6,000 diamond processing players and 8,000 diamond jewellers.The value chain of the industry starts from sourcing and mining of the metals and extends to jewelry retail. While India is not a major miner of previous metals and stones, the country’s inexpensive and well skilled workforce makes it a world leader in processing of diamonds. The country’s jewelry retail sector is also expected to evolve with a shift among consumers towards branded jewelry, driven by greater quality consciousness. India was one of the first countries to start making fine jewelry from minerals and metals and even today, most of the jewelry made in India is hand made. The industry is dominated by family jewellers, who constitute nearly 96 per cent of the market. The country at present has a small but growing organized sector.Organised players such as Tata with its Tanishq brand, have, however, bee growing steadily to carve a 4 per cent market share. India was the first country to introduce diamonds to the world, the first to mine,cut and polish them as well as trade them. The cutting and polishing of diamonds and other precious stones is one of the oldest traditions in India and the country has earned a considerable reputation both in the domestic and international markets for its skills and creativity. In the global diamond market today, Indian diamonds account for 55 per cent share in value terms, 80 per cent share in caratage (weight) terms and 90 percent share in volume terms. Today there is a ready availability of an entire range of diamonds in nearly every size, quality and cut.India offers the twin advantages of skilled labour and low cost in the area of gemstone processing. India's significance in the global gems and jewelry industry can be largely attributed to its strength in diamond processing. The export industry mainly comprises of small-to-large units based in various special economic zones (SEZs), export processing zones (EPZs) and in Electronics Exports Processing Zone (SEEPZ).
GEMS AND JEWELRY INDUSTRY IN WORLD Gems and jewelry industry has the top ten highest export value that incurred employment and continuous industries such as mining, designing, making and assembling of body, producing in gem-cutting machinery, and packaging, etc. Therefore, gems and jewelry industry is an important industry of national economic development. In 2003, there are attentive policies and issues related to this industry as follows. Thailand has participated in the unpolished diamond import-export certification project under the agreement of Kimberley Process since January 1, 2003 which has confirmed that Thailand would not polish diamond from the countries that support terrorism.
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The Revenue Department has announced the VAT exemption for jewel, white gold, platinum, silver, and paradium on April 10, 2003, resulting in the increased competitiveness.The Ministry of Industry has been approved for Bangkok: Fashion City Project by the Cabinet on July 8, 2003 with Baht 1,824 million budget and 18 months operating period.Board of Investment (BOI) has increased the privileges to the entrepreneurs who have invested in Gem polis Industrial Estates with exemption of corporate tax for 8 years to the relocating and new factories, and import duty for machinery. The promoting zones have been classified as exempted 5 years for zone 1, 7 years for zone 2, and 8 years for zone 3. Research and Development Institute of Gems and Jewelry in cooperation with Asian Science and Technology University have succeeded in standardization for color comparing of 7 gems, namely emerald, topaz, garnet, topaz, tanzanite and pink sapphire. Since the colors of gems are important to pricing especially in U.S. and European markets. Such research is a part of gems and jewelry development project under the second phase of industrial restructuring plan (fiscal year 2001 – 2004) of the Ministry of Industry.
Industrial Structure The gems and jewelry industry has comprised with 2 main industries that are polishing and producing. In 2003, 849 factories have registered to the Department of Industrial Works, which over 80% of them is the small and medium industry with 58,906 employed persons. These labors are expected to be over 1 million persons from household level nationwide. The gems and jewelry industry has required many labors with skills and high expertise.
Gems and Jewelry Industry Gems Polishing Industry Diamonds Types of gems
Gems
Jewelry Production Genuine Jewelry
Artificial Jewelry
Ruby – Sapphire: - Sapphire is a gemstone of rare and expensive, which ranked first in terms of importance. For the color red and shiny and dark, and subjected to high temperature reduces the color.
Diamonds Diamond is ranked second after the sapphire in terms of importance. A pure white or yellow... And subject to high temperatures in order to make.
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Emeralds Is a type of mineral Beryl and is composed of silicate of beryllium and aluminum, is found in the mines between the rigid rocks and marble unlike most gems. To a deep dark green color, transparent, and ranks third in importance .
Sapphire Is a type of metal Alchorondaum bluecolor, consisting of underground heat and intense pressure is known as sapphire. Have all the colors except Red.. The risk to the fetus and raise him the deep blue transparent. And ranked fourth in importance .
Star sapphire A species Ambassador may be transparent or semi-transparent or white lines.
. Carnelian Carnelian dark metal and non-pure and amorphous, color, often red, sometimes yellow or green or blue or gray.. A type of quartz known as jade.
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Onyx Semi-transparent metal is chemically composed of silica hidden shape containing impurities of iron compounds... Those fitting the bug appear Garnet different colors red, yellow, and structure..
Amethyst Popularly known as: Sapphire east. The color is always purple or light or dark purple or between a metal transparent.. Violet in color because of the effects of manganese in the composition of two types of it. And the original type of amethyst quartz composed of silicon dioxide.
Turquoise Turquoise is known since ancient times, the color blue or greenish-gray greenish and sometimes turns into a green light. It is very rare and its presence in the case of amorphous and composed of aluminium phosphate, which contains the copper water.
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Topaz Known as yellow sapphire... a metal transparent golden yellow color mainly but there are types blue or brown or yellow... Crystals formed within cavities of stones, granite, schist, where there is always cruel.
Lapis lazuli Known as an old Alaohq... A stone half cream and non-transparent. A dark blue deep. This stone is extracted from Iran. Chemical composition of the double silicate, sodium aluminum mixed with iron and sulfur.
OPAL Is one of the types of gemstone translucent colors. From blue and white, black, red and green Portuguese and yellow. His meanings. A type of amorphous silica that contain water in their composition.
cat's eye Known as Black Opal (cat's eye), where by a single line of white
..
Beryl
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Known as the Emerald Egyptian. Are extracted from old mines. From different types and colors of the most important of bluish green and blue light, a transparent stone and installed a double silicate of beryllium and aluminum, hexagonal crystals.
Aquamarine Gemstone like the Emerald, which is of many colors the most famous Egyptian green, yellow and Cyprus It is a ray of Luster and not tainted by blackness, and yellowness.
Jade Is one of the kinds of gemstone like aquamarines, but it is more transparency and clarity of it, and the finest.
Tourmaline Tourmaline is characterized by unique colors .. It combines all the colors of the rainbow. So he called the name of the rainbow .
Rubellite Tourmaline Is one of the kinds of gemstone beautiful wonderful form of a colored tourmaline. glowing colors and beauty and magnificence, ranging from red to pink.
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Green Tourmaline There is a wide range of tourmaline.some of its light and the other dark. Where the color green shine among the other stones in the dark.. it is yellowish-green colors and green olive. bluish-green and dark green.The stones are very rare.
Yellow Tourmaline These different stones for the rest of the tourmaline group is very noticeable .. And Asfrarh caused by the effects of high magnesium. In order to show the color yellow wonderful to be treated in a very high temperature.
Blue Tourmaline The Blue Altermalin of the treasures of precious stones and rare.. In net for the blue color makes him a legend. It is like emeralds and Sapphire.
Kunzite Kunzite types of gemstones a solid, which is susceptible, so must be protected from heat and constant exposure to strong light as it works
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to remove the purple color gradually.
Morganite Morganite is gemstone that belongs to the group of multi-colored pearl is the best.
Bloodstone Blood stone, stone colored non-transparent, is called by that name for the popular belief that the benefit to the imprisonment of blood.
Rose quartz Rose quartz crystals are more regular and larger than the quartz.
Pearl Jewel of the most precious gems and is a pearl large masterly form of precious gemstone in terms of value and different pearls for the rest of the gems the other is the most gem minerals extracted from mines under the surface of the earth, but pearls made within the shells Maharmen Sand congeal inside the oyster and the gem mineral solid and usually reflect light, while Pearl Lin and absorbs some kind of light that is reflected also..
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Red Agate Transfer from Aristotle to the finest agate is intensified its red color and the weakness of the color yellow and unanimously most Arab sources, the ancient preference to other species and has been the people until this day on his Balemni though its origin other and release the sources of modern species of red and orange name CARNELIAN The red gold and red structure are called SARD.
Yellow agate is one of the types of agate
White Agate
Blue Agate The product, which is known as BLUE CALSIDONY which is usually injected with faint.
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Green Agate Overlooked the most ancient sources said may be due to the rarity of known species are classified pale green in the science of gemstones of modern varieties Alcalsidoni bright green color is due to the effects of nickel.
GOLD:Gold was first discovered as shining, yellow nuggets. "Gold is where you find it," so the saying goes, and gold was first discovered in its natural state, in streams all over the world. No doubt it was the first metal known to early hominids. Gold became a part of every human culture. Its brilliance, natural beauty, and luster, and its great malleability and resistance to tarnish made it enjoyable to work and play with. Because gold is dispersed widely throughout the geologic world, its discovery occurred to many different groups in many different locales. Gold was the first metal widely known to our species. When thinking about the historical progress of technology, we consider the development of iron and copperworking as the greatest contributions to our species' economic and cultural progress - but gold came first. Gold is the easiest of the metals to work. It occurs in a virtually pure and workable state, whereas most other metals tend to be found in ore-bodies that pose some difficulty in smelting. Gold's early uses were no doubt ornamental, and its brilliance and permanence (it neither corrodes nor tarnishes) linked it to deities and royalty in early
civilizations .
Silver Silver is known by the mankind since Pre-History, and its discovery is estimated happened to shortly after that of copper and gold. The oldest reference to the element appears in the book of Genesis. The Egyptians considered gold to be a perfect metal, and gave it the symbol of a circle. Since silver was the closest to gold in perfection, it was given the symbol of a semi-circle.. The Romans called silver argentum, keeping this as the international name of the element, from where its chemical symbol derives. Its malleability and ductility make it ideal for ornamental purposes. It was also used for paying debts, in personal and religious places decoration and in utensils of the wealthiest houses.
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SWOT ANALYSIS
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SWOT analysis of gems and jewelry industry Strengths: One million craftsman associated with it. their skills can be harnessed for designing and making modern jewelry. -Abundance ofcheap and skilled labor in India. - Excellent marketing network spread across the world. - Supportive government industrial/ exim policy. Weaknesses: High domestic interest rates compared to elsewhere - Small firms lacking technological/ export information expertise. - Low productivity compared to labor in china, Thailand and srilanka. As the major raw material requirements need to be imported, companies normally stock huge quantities of inventory resulting high inventory carrying costs. Opportunities: -new market in Europe and Latin America - Growing demand in south Asian & far east countries. - Removal gold control act. Threats: - China, Sri Lanka and Thailand's entry in small diamond segment - Infrastructural bottlenecks, frequent changes in exim policies, irregular supply of gold. - Over dependence on single-channel supply chain. Decisions of De Beers and Argyle's terms for renewing their supply contract
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GOVERNMENT INITIATIVES OR REGULATIONS
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Regulation and policy regarding gems and jewelry industry
Gems & Jewelry Export Promotion Council (GJEPC): Established in 1966, the GJEPC is the apex body of the Indian gems and jewelry industry, and has around 6,500 members across India. The primary goal of the Council is to introduce the Indian gems and jewelry to the international market and to promote their exports. The Council provides market information to its members regarding foreign trade inquiries, trade and tariff regulations, rates of import duties, and information about jewelry fairs and exhibitions. The roles played by the GJPEC are broadly highlighted below: Trade Facilitator The Council promotes the Indian gems and jewelry industry in the international market. It organizes international jewelry shows, hosts trade delegations, and undertakes image-building exercises through advertisements, publications and audio-visual means. Advisory Role The Council also aids better interaction and understanding between traders and government. The Council takes up relevant issues with the government and agencies connected with exports. It also submits documents for consideration and inclusion in the EXIM Policy. Nodal Agency for Kimberley Process Certification Scheme GJEPC works closely with the Indian government and the traders to implement and oversee the Kimberley Process Certification Scheme; in fact, the Council has been appointed as the nodal agency in India under the Kimberley Process Certification Scheme. Training and Research The GJEPC runs many institutes that provide training in all aspects of manufacturing and design in Mumbai, Delhi, Surat and Jaipur. Varied Interests The Council publishes many brochures, statistical booklets, trade directories and a bi-monthly magazine Solitaire International, which is distributed internationally as well as to its members. Gem & Jewelry Trade Council of India (GJTCI): The GJTCI was founded in 2000, and is tasked with resolving any issue arising from trade in gems and jewelry. It plays an important role in showcasing the Indian gems and jewelry to the international as well as the domestic market. Like the GJEPC, GJTCI also provides information to its members through a monthly newsletter, various educative and trademotivational events such as seminars, workshops, exhibitions, festivals etc. The Bureau of Indian Standards: The Bureau of Indian Standards (BIS), the National Standards Body of India, is a statutory body set up under the Bureau of Indian Standards Act, 1986 and is responsible for hallmarking gold jewelry in India. Deregulation of Gold in India In the pre-liberalisation period (prior to 1991), severe restrictions on the export and import of gold from and into India were imposed. During that time only the State Bank of India (SBI) and the Metals Trading Corporation of India (MMTC) were allowed to import gold. The reasons for imposing these restrictions were:
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To reduce demand for, as well as availability of gold To alter the savings preferences of the population in favour of investments other than gold/silver To stop smuggling of gold To conserve foreign exchange resources To prevent generation of or to unearth black money. It was thought that since gold was one of the most obvious choices for keeping undeclared/ill-gotten income and wealth, a policy to restrict supply of gold would be effective in curbing black money. Several schemes that restricted the export and import of gold were launched in various forms between 1947 and 1963, but the control regime finally took shape with the implementation of the Gold Control Act 1968. This Act did not allow goldsmiths to receive more than 100 grams of standard gold for manufacturing jewelry. Further, a certified goldsmith was not allowed to possess a stock of more than 300 grams of primary gold at any time. The quantity of primary gold possessed by a licensed dealer was limited between 400 grams and 2 kg, depending on the number of artisans employed. There was a legal ban on gold transaction between dealers. The government abolished the Gold Control Act when the balance of payment crisis occurred in 1990, after which the large export houses could import gold freely. Exporters in the export processing zones were allowed to sell 10% of their produce in the domestic market. In 1993, gold and diamond mining were opened up for private investors and foreign investors were allowed to own half of the equity in mining ventures. In 1997, overseas banks and bullion suppliers were also allowed to import gold into India. These measures led to the entry of foreign players such as De Beers, Tiffany and Cartier into the Indian market. Foreign Direct Investment Policy At present, the Indian government allows 100% foreign direct investment (FDI) in gems and jewelry through the automatic route. For exploration and mining of diamonds and precious stones FDI is allowed up to 74% under the automatic route. For exploration and mining of gold and silver and minerals other than diamonds and precious stones, metallurgy and processing, FDI is allowed up to 100% under the automatic route. Kimberley Process (KP) The Kimberley Process came into force when the South African diamond producing nations met at Kimberley in South Africa in May 2000. The Kimberly Process was set up to discuss ways to stop the trade in ‘conflict diamonds’ and to ensure that diamond purchases did not fund violence. As of November 2008, the KP had 49 members, representing 75 countries. The Kimberley Process Certification Scheme (KPCS) was implemented in India on January 1, 2003 to verify the legitimacy of the import / export of rough diamonds as per the UN resolution and to curb the entry of conflict diamonds into the global trade flow. The system of verification and issuance of KPC is administered from the Mumbai and Surat offices of GJEPC. In India’s Foreign Trade Policy 2009-14, the following measures related to the Kimberley Process Certification Scheme (KPCS) have been adopted: No import or export of rough diamonds shall be permitted unless accompanied by the KP certificate as specified by the GJEPC.
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The export and import of rough diamonds to and from Venezuela has been prohibited by the Indian government owing to the voluntary separation of Venezuela from the KPCS. Government Initiatives to Boost the Sector Measures taken by the government in the Union Budget 2009-10: Customs Duty on Gold and Silver Customs duty on serially numbered gold bars (other than tola bars) and gold coins to be increased from Rs 100 per 10 gram to Rs 200 per 10 gram. Customs duty on other forms of gold to be increased from Rs 250 per 10 gram to Rs 500 per 10 gram. Customs duty on silver to be increased from Rs 500 per kg to Rs 1,000 per kg. These increases will also be applicable when gold and silver (including ornaments) are imported as personal baggage Central Excise Duty Excise duty on branded articles of jewelry to be reduced from 2% to nil. All categories within HS code 71 except the ‘diamonds whether or not worked but not mounted or set’ (HS code 7102) and certain sub-categories within HS code 7104 and 7106 currently have an excise duty rate of 16%. The category ‘diamonds whether or not worked but not mounted or set’ (HS code 7102) currently does not attract any excise duty. Sub-category ‘Piezo-electric quartz’ (HS code 71041000), silver (including silver plated with gold or platinum) in powdered form (HS code 71061000), unwrought (HS code 71069100) and other (HS code 71069290) do not attract any excise duty. Fiscal Stimulus Measures (December 2008) The Reserve Bank of India announced certain fiscal stimulus measures in December 2008 to revive the Indian economy during the onset of the global financial crisis. The following measures were announced for the Indian gems and jewelry sector: Increasing the post-shipment Rupee export credit period from 90 days to 180 days from November 28, 2008 Increasing the pre-shipment rupee export credit period from 180 days to 270 days from November 15, 2008 Providing an interest subvention of 2% up to March 31, 2009, subject to minimum rate of interest of 7% per annum, to make pre and post-shipment export credit for gems and jewelry more attractive Allowing exporters to avail refund of service tax on foreign agent commissions of up to 10% of FOB value of exports. They will also be allowed refund of service tax on output services while availing of benefits under Duty Drawback Scheme Banks will charge interest rate not exceeding Benchmark Prime Lending Rate (BPLR) minus 4.5% on pre-shipment credit up to 270 days and post-shipment credit up to 180 days on the outstanding amount for the period December 1, 2008 to September 30, 2009. Export Facilitation Measures by the Ministry of Commerce and Industry Further, in February 2009, the gems and jewelry sector got a special boost from the Ministry of Commerce with the following announcements: Gems and jewelry, diamonds and precious metals were given a special boost by the Ministry of Commerce and Industry, the Export Promotion Council for Gems and Jewelry and Star Trading Houses (in the gems and jewelry sector). Besides, the Diamond India Ltd, MSTC Ltd and
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STCL Ltd were added under the list of nominated agencies notified under Para 4 A.4 of foreign trade policy for the import of precious metals.Surat, Gujarat has been given the recognition of a town of export excellence, because it is home to thousands of diamond units that employ many diamond workers. The authorized persons of gems and jewelry units in export-oriented units will be allowed to carry personal carriage of gold in primary form up to 10 kg in a financial year subject to the RBI and customs guidelines. Import restrictions on worked corals have been removed to address the grievance of gem and jewelry exporters. Foreign Trade Policy 2009-2014 Foreign Trade Policy has identified the gems and jewelry sector as a thrust area with prospects for export expansion and employment generation. The highlights of the policy are: Import of gold of 8 carat and above allowed under replenishment scheme subject to import being accompanied by an Assay Certificate specifying purity, weight and alloy content. Duty Free Import Entitlement (based on FOB value of exports during the previous financial year) of consumables and tools, for: Jewelry made out of: Precious metals (other than gold and platinum) – 2% Gold and platinum – 1% Rhodium finished silver – 3% Cut and polished diamonds – 1% Duty free import entitlement of consumables for metals other than gold, platinum will be 2% of FOB value of exports during the previous financial year. Duty-free import entitlement of commercial samples shall be Rs 300,000. Duty free re-import entitlement for rejected jewelry shall be 2% of FOB value of exports. Import of diamonds on consignment basis for certification/ grading and re-export by the authorised offices/agencies of Gemological Institute of America (GIA) in India or other approved agencies will be permitted. To promote export of gems and jewelry products, the value limits of personal carriage of gems and jewelry products in case of holding/participating in overseas exhibitions increased to US$ 5 mn and to US$ 1 mn in case of export promotion tours. Further, the limit in case of personal carriage, as samples, for export promotion tours, has been increased from US$ 0.1 mn to US$ 1 mn. Extension in number of days for re-import of unsold items in case of participation in an exhibition in the US increased to 90 days. In an Endeavour to make India a diamond international trading hub, diamond bourses will be planned. Gems and jewelry units may sell up to 10% of FOB value of exports of the preceding year in Domestic Tariff Area (DTA), subject to fulfilment of positive Net Foreign Exchange (NFE). In respect of sale of plain jewelry, recipient shall pay concessional rate of duty as applicable to sale from nominated agencies.
In order to boost the gems and jewelry sector, the value addition norms were reduced in the FTP 2009-14. Earlier, owing to abrupt fluctuation in gold prices, exporters were unable to comply with the previous high value addition norms.
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Special Economic Zones (SEZ) In order to boost foreign trade and investment, the Indian government introduced the SEZ policy in April 2000 under the Export-Import (EXIM) policy. Under the policy, the government allowed companies to set up units in SEZ to manufacture goods or provide services that facilitated a hassle-free environment for exports. However, it was the SEZ Act 2005 – passed in February 2006 – that laid down regulatory frameworks and rules for setting up and for the operation of SEZs. With extended tax holidays up to 15 years – from previous tax holiday of 10 years, the SEZ Act managed to generate considerable level of interest; as a result, the number of SEZs witnessed a sharp rise in a matter of few years. The Act envisages promoting exports of goods and services, promoting FDI, creating employment, generating economic activity and most importantly, developing infrastructure. To promote the exports of gems and jewelry, the government has set up various SEZs with specific incentives. Some important government policies relating to SEZs in the gems and jewelry sector are highlighted below: No import or export of rough diamonds will be permitted unless the shipment parcel is accompanied by the Kimberley Process Certificate issued by the Development Commissioner. Cut and polished diamonds and precious and semi-precious stones (except rough diamonds, precious or semiprecious stones having zero duty) shall not be allowed to be taken outside the SEZ for subcontracting. A gem and jewelry unit may receive plain gold or silver or platinum jewelry from the Domestic Tariff Area or from an EOU or from a unit in the same or another SEZ in exchange of equivalent content of gold or silver or platinum contained in the said jewelry after adjusting permissible wastage or manufacturing loss allowed under the provisions of the Foreign Trade Policy read with the handbook of procedures. The DTA Unit undertaking sub-contracting or supplying jewelry against exchange of gold or silver or platinum shall not be entitled to export entitlements .
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BEST DIAMONDS BRANDS OF INDIA
Best Diamonds of India A diamond is forever. Indian society has unanimously agreed with this statement generations ago. The shine of diamond sales are soaring high in the recent days. Nakshatra Diamonds The world-renowned Nakshatra diamonds were launched in 2000, with an equally dazzling Aishwarya Rai as its brand ambassador. In the present scenario Nakshatra diamonds occupy a leading position in the fashion diamond jewelry segment.. Nakshatra diamonds claim to shine your glamor and love life. They have aptly put their slogan as "brightest circles of light." Elegant and graceful Nakshatra diamonds are the epitome of passion, attitude and independence.
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Adora Diamonds Adora Diamonds were launched in India in July 2003 by Mumbai based Concept Jewelry (India) Ltd. On the present day the still expanding retail network centers of Adora expands to 117 outlets in 47 cities of India. Adora means glory in Spanish and claims that its diamond collection is themed on love. Adora diamonds are for adornment of every moment, occasion, and phase of life through its up and downs. The Swaranjali signature collection of living legend Lata Mangeshkar is a unique feature of Adora diamonds. Each piece of Swaranjali collection is conceptualized and approved by Lata Mangeshkar and bears her laser printed signature. Tanishq Diamonds Tanishq diamonds are India's largest, most desirable and fastest growing Jewelry brand in India. Tanishq, launched in 1995, is the Jewelry business group of Titan Industries Ltd. On the present day Tanishq has 84 outlets in 61 cities of India. Tanishq diamonds embark the aspiration of emerging Indian women who uses tradition rather than being used by it. Tanishq diamonds bring together the work of Karigars, who specialize in different ways of making the Jewelry. Tanishq diamonds comprises fashion and style in tradition bound category through its innovation. Kiah Diamonds World's largest volume manufacturer of diamonds-Sheetal manufacturing Company (SMC) launched its exquisite Kiah diamond collection in October, 2004. Kiah diamonds are claims to be for celebrating womanhood. The brand name 'Kiah' means beautiful place. On the latest Kiah diamonds have won the Best Showroom in the DTC Diamond Season for 2005-2006. Nirvana Diamonds Nirvana Diamonds from Fine Jewelry (I) Ltd. was launched in 1987 in India. Nirvana diamonds are targeting at fashion conscious, modern and independent thinking women. Internationally acclaimed Nirvana diamonds are manufactured by using state-of-the-art technology. As a proof of their quality Nirvana
was
among
one
of
the
brands
to
offer
lifetime
warranty
to
its
consumers.
D'damas Diamonds D'damas Diamonds are part of Gitanjali Digico Group and one of the earliest diamond houses established in India in 1966. On the present day D'damas Diamonds offer highly modernized diamond cutting and polishing
facilities
at
five
locations
in
India.d’damas
is
the
best
diamonds.
26
27
MAJOR PLAYERS IN JEWELRY INDUSTRY
Rajesh exports ltd.: Rajesh exports ltd is the world’s largest gold manufacturing company. It was incorporated in 1985 having its head office in Bangalore. they are world low cost jewelry producers, having manufacturing facilities from refining to retailing. Asian star jewels pvt. Ltd.: A' Star Jewelry is the domestic jewelry manufacturing division of Asian Star Company Limited- a Diamond Trading Company Sight holder™. Asian Star is one of the world's leading diamantine, with interest in diamond manufacturing, jewelry manufacturing and retailing .
28
Gitanjli jewels: it is founded as a single company, cutting and polishing diamond to the jewelry trade at surat, Gujarat in 1966. The gitanjli group became, many times over, a pioneer among major diamond & jewelry products. It has won 50 national and council awards from the ministry of India. Asmi group: Asmi jewelry India Private Limited operates as a subsidiary of Gitanjali Gems Limited and it is one of the top manufactures and retailers of wide range of gold and diamond jewelry for women. It has 500+ retail outlets in India which includes stand alone stores, leading franchisees and established anchor shop-in-shop and leading retailers. Suashish Jewelry Ltd: Suashish Diamonds Limited is a public limited company incorporated on October 05, 1988 under the Companies Act, 1956 Promoted by Ramesh Kumar S Goenka, Suashish Diamonds (SDL) was incorporated in Oct.'88 which imports rough diamonds, cuts and polishes them, and then exports them. Its clientele is spread across the US, Japan, Europe, east Asia and Israel. It is a privileged sight holder of the Diamond Trading Company (DTC), London, whereby it enjoys an uninterrupted supply of raw materials at competitive rates. SDL has been granted Star Trading House status under the export-import policy of the Government of India. It has established a 100% subsidiary Suashish Diamonds in Hong Kong.
29
RAJESH EXPORTS LTD.
Rajesh exports India ltd. Rajesh Exports Limited (REL) headquartered in Bangalore, India manufactures gold & diamond jewelry. REL exports its products world wide and distributes them within India to the wholesale jewelry market. REL also retails its products through its own network of retail jewelry showrooms Shubh Jewelers spread across India.
30
World's largest Jewelry manufacturing facility World's largest manufacturer of gold Jewelry World's lowest cost Jewelry producer Fully integrated from Refining to Retailing Leading retail Brands across India Government recognized Premier Trading House India's largest exporter of gold jewelry No 1 Investor Friendly Company in India India's Second Fastest Growing Company Overview "Rajesh Export Ltd's (REL) objective is to establish itself firmly as a leader in the global jewelry market by manufacturing and marketing the finest quality jewelry to consumers across the world. To achieve this objective REL will put in all required efforts and consequently emerge as a global leader in the field of jewelry" Global Strengths through Indian Innovations REL is headquartered in Bangalore, India Incorporated in 1990 REL began operations as a gold jewelry manufacturing and export company Since inception REL has emphasized on Research and Development. REL has introduced several new designs and concepts of jewelry to the international market. REL has evolved as a powerhouse in design, development and distribution of gold jewelry. REL has one of the world’s largest jewelry design database of 29000 designs. REL is currently the largest manufacturer of gold jewelry in the world. REL is the lowest cost gold jewelry producer in the world REL has developed several innovative technologies and processes in the manufacture of jewelry REL has its presence in the entire jewelry cycle beginning from refining of Gold to retailing jewelry. REL is a professionally managed company committed to the highest standards of corporate governance. REL securities are widely held, with some of the world’s top institutions being the share holders The securities of REL are listed and traded in India on the NSE and BSE History
31
Promoters in retail jewelry business since 1970 1985 - Brothers Rajesh Mehta and Prashant Mehta joined family retail jewelry business. 1989 - Rajesh Exports was established as a partnership firm to manufacture and export jewelry 1990 - Rajesh Exports established the first organized gold jewelry manufacturing facility in India. 1991 - Rajesh Exports established India’s first R&D facility in the jewelry sector. 1994 - Rajesh Exports emerged as the largest exporter of jewelry from India. 1995 - Initial Public Offer (IPO) of securities to fund expansion of manufacturing facility 1995 - IPO overwhelmingly subscribed and REL securities listed and traded on the BSE & NSE 1996 - REL successfully implemented the expansion plan. 1999 - REL plans to set up world’s largest manufacturing facility 2002 - REL completes the construction of the World’s Largest manufacturing facility. 2003 - REL begins commercial production in the new manufacturing facility 2006 - REL achieves sales of USD 1.5 billion. 2007 - REL establishes branded retail chain stores under the name of “Laabh Jewelers” Management REL is managed by a Board of Directors comprising of experienced people in the jewelry trade and also professionals from other relevant areas. The Board of Directors are responsible for all major decisions. The Board of Directors are assisted by a well defined hierarchy comprising of some of the most experienced Professionals in the jewelry field. The Directors have ultimate responsibility for the management and administration of the affairs of the company. The Articles of Association of the Company provide that, the number of Directors shall not be less than three and not more than twelve. The company may, subject to the provisions of the Articles of Association and the Companies act, alter the minimum or maximum number of Directors by approval of its Shareholders. Not less than two thirds of the total number of Directors shall be, elected Directors who retire by rotation. At each annual general meeting of the Company, one-third or such of the directors for the time being who are liable to retire by rotation, shall retire from office. A retiring Director is eligible for re-election. Infrastructure Over the period of years, REL has built the finest infrastructure for manufacturing, marketing and distribution of world class jewelry. Manufacturing Marketing REL has established reliable international marketing network which has a reach in North America, Europe, Asia & Australia. REL also has set-up a domestic marketing network across most of the Indian states. Facilities Refining & Alloying Manufacturing The manufacturing facility is specifically designed to control the wastage of Gold. Advanced and practical Gold recovery procedures are employed to achieve the lowest Gold wastage in jewelry production in the world.
32
Research & Development Research and Development (R&D) is the core focus of the company. REL has an advanced R&D department comprising of senior designers, metallurgists, chemists and specialized artisans. Distribution REL manufactures seventy tones of Gold jewelry and other gold products per annum. These products are distributed globally and in the domestic market in India. Over the years REL has set-up a reliable distribution network across the world and in India. New York, Chicago, Dallas, Toronto, London, Paris, Zurich, Dubai, Sharjah, Muscat, Kuwait, Singapore, Kuala Lumpur and Sydney.. ..Products REL manufactures a wide range of jewelry. The R&D division tracks the changes in the jewelry markets, the changes are analyzed and based on the analysis designers create designs. The designs on the drawing board are prototyped by senior artisans. The products so created are displayed to the selection committee which decides on the inclusion of the products in the design portfolio. The existing design portfolio is also constantly monitored to eliminate out of trend designs. REL currently has a design portfolio of 29,000 active designs. The design portfolio is divided in to three basic types of products:Asian Jewelry Designs REL specializes in ASIAN JEWELRY and manufactures almost all types of Asian Jewelry in 22cts, 21cts and 18ct. .
•
EARRINGS
•
PENDENTS
•
CHAINS
•
NECKLACES
•
NECKLACE SETS
•
BANGLES
•
BRACELETS
Western Jewelry Designs REL’s mainline of activity has been manufacture of Asian jewelry. Over the last six years REL has conducted extensive research in Western jewelry and REL has developed several unique designs to suit the western taste.:
•
EAR RINGS
•
RINGS
•
PENDENTS
•
CHAINS
33
•
NECKLACES
•
BRACELETS
Diamond Jewelry Designs REL has conducted extensive research to develop a range of diamond jewelry. Some of the finest designers both in India and abroad have contributed to the range of exclusive diamond designs.
•
EARRINGS
•
RINGS
•
PENDENTS
•
BRACELETS
.
34
ASIAN STAR JEWELS LTD.
35
ASIAN star jewels ltd.
Asian Star Jewels Pvt. Ltd. is a subsidiary of Asian Star Company Limited- a Diamond Trading Company Sight holder™. Asian Star Company Limited, is one of the leading world diamantaires with interest in diamond manufacturing, jewelry manufacturing and retailing. Asian Star Jewel’s exclusively caters to the international market and crafts carefully chosen stones into the most exquisitely designed jewelry of high standards. The organization is a professionally managed firm with a goal to deliver the best products on time, every time. The company is strongly focused about market expansion, having a track record of developing contemporary designs that cater to a client's specific requirements across all product categories. Asian Star Jewels Pvt. Ltd. is a subsidiary of Asian Star Company Limited- a Diamond Trading Company, every time. The company is strongly focused about market expansion, having a track record of developing contemporary designs that cater to a client's specific requirements across all product categories.
Infrastructure Asian Star Jewells’s manufacturing operation at SEEPZ in Mumbai has a production capacity of 300,000 pieces per annum. Our sophisticated infrastructure is harnessed with state-of-the-art equipment and technology, specially imported from Germany and Japan to produce a range of machine-made and hand-made jewelry. An efficient in-house product development team uses the best technological support services such as CAD/CAM, to deliver strikingly beautiful jewelry which captures the essence of contemporary and traditional designs. Services Asian Star Jewells’s strong brand image and reputation is evident from its prominent clientele in major countries across the globe such as USA, Canada, Spain, Italy, Germany, France, South America, Australia and Gulf, whose unwavering faith shows through the repeat business. We believe in adding value to our business proposition by providing our customers with the best services available in the industry. We have a customized Quality Control System and a Grading System in place to meet specific requirements of our clients.
36
FINANCIAL REPORTS
37
Balance sheet of Rajesh Exports ltd.
Particulars Mar 2011 SOURCES OF FUNDS Share Capital 295.26 Share warrants & Outstanding 0.00 Total Reserve 15672.49 Shareholder's Funds 15967.75 Secured Loans 24153.91 Unsecured Loans 1150.05 Total Debts 25303.96 Total Liabilities 41271.71 APPLICATION OF FUNDS : Gross Block 863.36 Less: Accumulated Depreciation 149.58 Less: Impairment of Assets 0 Net Block 713.78 Lease Adjustment A/c 0 Capital Work in Progress 0 Pre-operative Expenses pending 0 Assets in transit 0 Investments 34.18 Current Assets, Loans & Advances Inventories 3773.41 Sundry Debtors 15805.46 Cash and Bank 78152.48 Other Current Assets 82.20 Loans and Advances 6868.70 Total Current Assets 104682.26 Less : Current Liabilities and Provisions Current Liabilities 63954.22 Provisions 212.51 Total Current Liabilities 64166.73 Net Current Assets 40515.52 Miscellaneous Expenses not written 0 off Deferred Tax Assets / Liabilities 8.22 Total Assets 41271.71 Contingent Liabilities 1393.92
Mar 2010
Mar 2009
Mar 2008
265.82 0.00 11176.25 11442.07 17582.63 3280.30 20862.93 32305.00
257.01 0.00 8881.34 9138.35 15413.46 3919.72 19333.18 28471.53
250.61 0.00 7638.60 7889.22 5898.91 3809.30 9708.22 17597.43
836.63 130.03 0 706.61 0 0 0 0 44.18
756.09 112.23 0 643.86 0 4.97 0 0 3849.12
657.12 95.01 0 562.11 0 4.41 0 0 1363.03
4135.05 6120.64 66537.63 0 8695.69 85489.02
1742.93 5472.70 55374.29 0 7652.61 70242.53
2458.25 5042.73 50023.69 0.00 2380.37 59905.04
53626.01 317.04 53943.05 31545.97
46091.65 185.58 46277.23 23965.30
44142.65 102.81 44245.46 15659.58
0.03
0.06
0.08
8.22 32305.00 466.78
8.22 28471.53 0.83
8.22 17597.43 1150.30
Balance sheet of Asian star ltd.
Particulars
Mar 2010
Mar 2009
Mar 2008
38
SOURCES OF FUNDS Share Capital Share warrants & Outstanding Total Reserve Shareholder's Funds Secured Loans Unsecured Loans Total Debts Total Liabilities APPLICATION OF FUNDS : Gross Block Less: Accumulated Depreciation Less: Impairment of Assets Net Block Lease Adjustment A/c Capital Work in Progress Pre-operative Expenses pending Assets in transit Investments Current Assets, Loans & Advances Inventories Sundry Debtors Cash and Bank Other Current Assets Loans and Advances Total Current Assets Less : Current Liabilities and Provisions Current Liabilities Provisions Total Current Liabilities Net Current Assets Miscellaneous Expenses not written off Deferred Tax Assets / Liabilities Total Assets Contingent Liabilities
106.71 0.00 3343.68 3450.40 5225.38 398.90 5624.28 9074.67
358.71 0.00 3092.72 3451.43 5076.00 195.00 5271.00 8722.43
358.71 0.00 2937.30 3296.01 5338.97 87.50 5426.47 8722.49
1664.77 245.47 0 1419.30 0 31.42 0 0 39.53
1626.36 172.02 0 1454.34 0 12.85 0 0 130.61
1145.63 106.69 0 1038.94 0 201.67 0 0 289.00
3096.17 4079.42 833.92 0 1151.56 9161.08
2688.45 3890.33 750.41 0 503.88 7833.07
2826.17 4142.46 882.18 0 790.24 8641.05
1083.73 243.07 1326.81 7834.27 0 -249.85 9074.67 0
178.90 296.50 475.40 7357.66 0 -233.05 8722.43 0
777.94 571.82 1349.76 7291.29 0 -98.41 8722.49 10.05
GRAPH
39
total assets 35000
32305 28472.53
30000 25000
17597.43
20000
rajesh exports ltd. a star jeweletrs ltd.
15000 10000
9074.67
8722.43
8722.49
2010
2009
2008
5000 0
share capital 400
358.71
358.71
350 amount
300 265.82
257.01
250.61
250 200 150
rajesh exports ltd. a star jeweletrs ltd.
106.71
100 50 0 2010
2009
2008
year
40
cash & bank balance 70000 66537.63 55374.29
60000 amount
50000
50023.69
40000
rajesh exports ltd.
30000
a star jeweletrs ltd.
20000 10000
833.92
750.41
882.18
2010
2009
2008
0 year
Financial ratios of Rajesh exports ltd.
Particulars Operational & Financial Ratios Earnings Per Share (Rs) CEPS(Rs) DPS(Rs) Book NAV/Share(Rs) Tax Rate(%) Margin Ratios Core EBITDA Margin(%) EBIT Margin(%) Pre Tax Margin(%) PAT Margin (%) Cash Profit Margin (%) Performance Ratios ROA(%) ROE(%) ROCE(%) Asset Turnover(x) Sales/Fixed Asset(x) Working Capital/Sales(x) Efficiency Ratios Fixed Capital/Sales(x)
Mar 2011
Mar 2010
Mar 2009
Mar 2008
8.40 8.47 0.60 54.08 7.74
7.28 7.34 1.00 43.05 6.68
3.40 3.47 0.60 35.56 11.35
8.24 8.31 0.35 31.48 11.01
0.53 2.13 1.31 1.21 1.22
1.02 1.65 1.13 1.05 1.06
-0.11 2.01 0.82 0.73 0.75
-1.19 4.64 2.84 2.52 2.54
6.74 18.10 11.87 5.58 241.57 5.07
6.36 18.79 10.00 6.06 231.19 5.84
3.79 10.26 10.43 5.19 169.11 4.99
7.66 37.63 14.10 3.04 130.65 5.23
0.00
0.00
0.01
0.01
41
Receivable days Inventory Days Payable days Valuation Parameters PER(x) PCE(x) Price/Book(x) Yield(%) EV/Net Sales(x) EV/Core EBITDA(x) EV/EBIT(x) EV/CE(x) M Cap / Sales Growth Ratio Net Sales Growth(%) Core EBITDA Growth(%) EBIT Growth(%) PAT Growth(%) EPS Growth(%) Financial Stability Ratios Total Debt/Equity(x) Current Ratio(x) Quick Ratio(x) Interest Cover(x) Total Debt/Mcap(x)
19.49 7.03 105.20
11.49 5.83 97.96
16.06 6.42 138.86
31.23 7.61 171.25
12.95 12.85 2.01 0.55 -0.10 -4.73 -4.75 -0.50 0.16
16.36 16.21 2.76 0.84 -0.08 -4.59 -4.62 -0.43 0.17
7.41 7.27 0.71 2.38 -0.25 -12.22 -12.31 -1.04 0.05
9.42 9.35 2.47 0.45 -0.25 -5.46 -5.49 -1.19 0.24
11.53 43.49 43.69 28.23 15.44
54.07 26.36 26.54 121.35 114.01
45.95 -36.64 -36.83 -57.70 -58.75
24.08 78.17 78.62 103.94 -69.93
1.58 1.63 1.57 2.60 0.79
1.82 1.58 1.52 3.14 0.66
1.71 1.52 1.49 1.70 2.99
1.23 1.36 1.30 2.57 0.50
Financial ratios of Asian star jewelers
Particulars Operational & Financial Ratios Earnings Per Share (Rs) CEPS(Rs) DPS(Rs) Book NAV/Share(Rs) Tax Rate (%) Margin Ratios Core EBITDA Margin (%) EBIT Margin(%) Pre Tax Margin(%) PAT Margin (%) Cash Profit Margin (%) Performance Ratios ROA(%) ROE(%) ROCE(%) Asset Turnover(x) Sales/Fixed Asset(x) Working Capital/Sales(x) Efficiency Ratios Fixed Capital/Sales(x) Receivable days Inventory Days Payable days
Mar 2010
Mar 2009
Mar 2008
26.34 33.92 2.00 323.34 22.81
17.10 24.01 2.00 299.82 41.70
37.09 40.77 2.00 285.26 26.29
4.59 4.60 2.76 2.13 2.70
5.24 4.78 2.60 1.51 2.04
5.37 6.50 4.19 3.09 3.33
3.21 8.59 6.94 1.51 8.16 1.71
2.18 6.09 6.88 1.44 9.05 1.71
4.70 14.17 9.88 1.52 15.25 1.79
0.12 108.37 78.66 19.02
0.11 116.81 80.19 13.47
0.07 126.67 74.69 16.02
42
Valuation Parameters PER(x) PCE(x) Price/Book(x) Yield(%) EV/Net Sales(x) EV/Core EBITDA(x) EV/EBIT(x) EV/CE(x) M Cap / Sales Growth Ratio Net Sales Growth(%) Core EBITDA Growth(%) EBIT Growth(%) PAT Growth(%) EPS Growth(%) Financial Stability Ratios Total Debt/Equity(x) Current Ratio(x) Quick Ratio(x) Interest Cover(x) Total Debt/Mcap(x)
43.67 33.90 3.56 0.17 1.27 24.60 27.64 1.88 0.91
63.92 45.53 3.65 0.18 1.31 24.66 27.38 1.88 0.93
31.81 28.94 4.14 0.17 1.33 19.76 20.50 1.99 0.96
6.94 4.06 2.81 50.30 54.00
-3.84 -24.25 -29.22 -52.88 -53.89
12.16 12.07 11.51 46.42 47.73
1.63 8.45 5.60 2.50 0.46
1.53 43.78 28.88 2.19 0.45
1.65 11.11 7.75 0.43
Graph Earning per share
43
earning per share 37.09
40 35
amount
30
26.34
25 15 10
rajesh exports ltd.Sheet
17.1
20
a star jewelers ltd. 8.24
7.28 3.4
5 0 2010
2009
2008
year
yield 2.38
2.5
amount
2 1.5 1 0.5
rajesh exports ltd.
0.84 0.17
a star jeweletrs ltd. 0.18
0.45 0.17
0 2010
2009
2008
year
44
COMPARATIVE ANALYSIS
Comparison between Rajesh exports ltd. And Asian star jewelers ltd. Basis of comparison
Rajesh exports ltd.
Asian star jewelers ltd.
incorporation
Rajesh Mehta and pershant
It is a subsidiary of Asian star
Mehta incorporated this
company ltd, a diamond
company in 1970. To establish itself as a leader
trading company. This company aims at the
in the global jewelry market.
market expansion.
Aim/focus
45
production
It produces 70 tones of gold
Its manufactures nearly
jewelry and other gold
300000 pieces per annum.
products in a year. products
It deals with three types of
It mostly deals with diamond.
products: Asian, western and diamond. Export
technology
The company exports its
The company exports in the 10
products in 14 countries of the
countries of the world
world including new York,
including Spain, Germany etc.
Toronto, Italy, and Paris. The company uses new
Machinery and technology is
technology for the
imported from Germany and
improvement of its products
Japan.
and to meet its client’s requirement. Research and development.
R& D is the core focus of the
The company aims at
Corporate governance.
company.
providing the best services or
The company has highest
products to its customers
standards of corporate
having quality control system.
governance.
46
JOBS AND CAREER IN JEWELRY INDUSTRY
Which are the major job profiles in the diamond industry? The Indian diamond and jewelry industry is increasingly being corporative. A number of factors including the need for better governance, the need to form companies that can access finance on the equity markets and generally positioning Indian diamond companies for growth drives this. Hence there is a strong need for professional management and as a result the gems and jewelry industry requires qualified business, operations, IT and finance managers, accountants, marketing specialists and HR specialists. In short, this sector is competing with any other industry for qualified professionals. Alongside these roles, there is need for equally professional artisans who will be trained as gemologists, diamond sorters, planners, diamond polishers and jewelry craftsmen.
Career Opportunity in Gem & Jewelry Industry 47
Since India stands number one in the list of world’s biggest gold consumer, Gem and jewellery industry is one of the fastest growing industries of the Indian economy. This industry hence provides numerous career opportunities in various fields to those who want to be a part of this industry. The following are the career options: Designing: Those with an eye for perfection and detailing, patience, having ability to concentrate and good sense for design can opt for this field. Jewelry designers have the choice of working with the export units or jewelry showrooms. Designing jewelry for men and celebrities is also a good option for those who are talented, highly skilled and vibrant. Also designers can work on freelance basis by selling their designs to various firms. Gemology: All those who are interested in Gemology can begin their career with gem identification, gem cutting, sorting, grading and evaluation. Since 9 out of every 10n diamonds sold worldwide are cut and polished in India, diamond industry too provides a great opportunity Marketing: With the entry of big corporate like TATA and Reliance in the jewelry sector, more and more consumers are growing brand conscious. Retaining old customers and attracting new customers by the way of providing personalized products and services is where industry growing conscious about. Marketing may also include the packaging segment. Research: After acquiring some experience in this field the research scholar’s option can be taken up as a career. Various jewelry houses, export units and the institutions offering jewelry designing /making and gemology courses do invest in research in this field.
Indian diamond market as compared to the world market The Indian diamond market, which along with China, provide the major drivers of growth in global diamond jewelry consumption over the next decade. India has a long tradition of gold consumption and is starting to move towards diamonds as emerging middle class aspirations collide with improvements in disposable income. In India there are also strong regional differences in quality preferences that will provide opportunities for a wide range of diamonds.
48
Gem and jewelry trade federation and the art of jewelry magazines decided to conduct an exhibition for its consumers.
The All India Gem and Jewelry Trade Federation (GJF) and The Art of Jewelry (AOJ) Magazine signed a Memorandum of Understanding (MOU) to conduct a series of business-to-consumer exhibitions (B2C) across India. The aim of the B2C exhibitions is to reach out to the large market of jewelry consumers in India. The MOU was signed by GJF chairman C.Vinod Hayagriv and AOJ managing director Sumesh Wadhera. “This initiative will touch consumers across India and I feel immensely pleasured to have this tie-up. This event will be named ‘Best of India,’ wherein the consumers will get to see the best of jewelry from all the corners of the country under one roof,” Wadhera said. Hayagriv said, “This initiative will propel demand and help better the quality in the industry, and will also help spread education amongst the consumers.” The MOU was signed during the sidelines of South India Jewelry Show (SIJS) 2010. SIJS is a premier B2B jewelry trade show which was held March 20-22, at Sree Kanteerava Indoor Stadium in Bangalore. The Art of Jewelry Magazine The Art of Jewelry Magazine is India’s No. 1 jewelry trade magazine, providing cutting-edge information for the gem and jewelry sector. The magazine has been recognized by readers, advertisers and the trades as a premier media vehicle adhering to the highest standards for editorial, production, design, and most importantly, ethics and impartiality. The All India Gems & Jewelry Trade Federation The All India Gems & Jewelry Trade Federation (GJF) is a national trade federation for the promotion and growth of trade in gems and jewelry across India. GJF members come together to manage various aspects of fair trade practices and efficient organization of business the gems and jewelry industry. The numerous local associations already in existence do not focus on issues of the trade at a national level. Founded in 2005, the Federation unites manufacturers, wholesalers, retailers and exporters all across India. GJF members include 155 founding members, 232 lifetime members, 125 annual members, 23 board of directors and 72 governing board of directors, representing leading retailers, manufacturers, wholesalers and trade bodies of India.
49
50
FUTURE OF GEMS AND JEWELRY SECTOR
Indian Gems & Jewelry Industry to Cross US$ 26 Billion By 2012 With the availability of skilled labor and low production cost, gems and jewelry market in India is expected to grow at a CAGR of 12% during 2009-2012, says RNCOS.
51
Pre log (Press Release) - Sep 09, 2009 - A new research on the Indian gems and jewelry sector, “Indian Gems and Jewelry Market - Future Prospects to 2011”, by RNCOS, anticipates the Indian gems and jewelry sector to cross US$ 26 Billion by 2012, driven by availability of huge base of skilled labor and improving lifestyle. We have found that India has a large pool of skilled and low cost man power for its gems and jewelry industry. The country has world’s one of the best skilled manpower to design and make high volumes of exquisite jewelry at relatively low labor cost. The cost per carat for cutting and polishing diamond was US$ 10 in India as compared to US$ 17 in China and US$ 150 in Belgium. It also has the largest resource hub in diamond cutting and processing. Low cost of labor involved in production of finished diamonds has lured global attention, thereby resulting into the growth of the industry. Changing lifestyle and urbanization are also fuelling the growth in the gems and jewelry industry, mainly in branded jewelry, which is expected to grow over 40% in the coming years. Urban consumers in India have become more exposed to western lifestyles, primarily through overseas traveling. This has led to increased preference for products and designs that are popular abroad. For instance, there is a shift towards machine-made jewelry over the traditional handcrafted jewelry. “Indian Gems and Jewelry Market - Future Prospects to 2011” provides comprehensive information on gems and jewelry market in India while focusing on past and future market scenario. The report studies the past and present market trends to highlight the potential growth areas in future. It also gives an overview of the organized and unorganized market for gems and jewelry in the country. The report also takes into account the weaknesses and strengths of existing players in the market to facilitate new players to devise their strategies accordingly to gain competitive advantage. The research also includes forecast on various segments of the industry like gems & jewelry market, gold jewelry sales, share in world gold consumption, diamond jewelry sales, branded jewelry market and share of branded jewelry in the overall jewelry market.
.
52
EXPORTS OF GEMS AND JEWELRY IN INDIA
Exports During the Fiscal Year 2010-11, the total exports for gems and jewellery stood at US$ 43.1 billion as compared to US$ 29.4 billion during the fiscal year 2009-10. During the same period, the sector registered a growth of 46.5 per cent over the previous year.
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us$billion
total exports 50 45 40 35 30 25 20 15 10 5 0
43.1 29.4
2010-11
2009-10 year
Composition of Exports Cut and polished diamonds: The export of cut and polished diamonds grew manifold in 2010-11 as compared to 2009-10. In 2010-11, the export of cut and polished diamonds was US$ 28.2 billion as compared US$ 15.6 billion, recording a growth of 81.5 per cent.
cut & polished diamond 30
28.2
us$billion
25 20
15.6
15 10 5 0 2010-11
2009-10 ye a r
Colored Gemstones: Export of colored gemstones was registered at US$ 0.314 billion in 2010-11 as compared to US$ 0.304 billion in 2009-10, showing a growth of 3.5 per cent.
54
us$billion
colored gem stones 0.316 0.314 0.312 0.31 0.308 0.306 0.304 0.302 0.3 0.298
0.314
0.304
2010-11
2009-10 year
Gold Jewellery: Export of Gold jewellery alsoSource: Gem and Jewellery Export Promotion Council (GJEPC) grew tremendously in 2010-11, registering US$ 12.9 billion as compared to US$ 6.1 billion in 2009-10. A growth of 110.3 per cent was recorded.
gold jewelry
14
12.9
us$billion
12 10 8
6.1
6 4 2 0 2010-11
2009-10 ye a r
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MARKET SHARE OF GOLD AND DIAMOND
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Gold is the principal raw material for making jewelry in India. In 2007 gold had a market share of US$ 12.24 billion (Rs 550 crores), while diamond had a market share of US$ 2.56 billion (Rs 115 crores). Eighty per cent of the gems and jewelry industry in India is dominated by gold and the rest is controlled by diamond and gemstone industry. This trade in India is mainly fragmented as 96 percent of total business comes from unorganized sector.
Graph
market share 600
550
rs(in crore)
500 400 gold
300
diamond
200
115
100 0 2007 year
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CONCLUSION
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Conclusion: The Indian gems and jewelry industry is highly fragmented with a large number of private sector companies. India is one of the largest exporters of gems and jewelry. India is the polishing capital of the world. India's Position in Gems and Jewelry Sector Gems and Jewelry is one of India’s leading foreign exchange earning sectors. Gem & Jewelry sector accounted for 16.7 per cent of India’s total Merchandise Exports. Volume of exports pegged at US$ 43.1 billion as of March 2011. At present, India exports 95 per cent of the world's diamonds India is the most technologically advanced diamond-cutting centre in the world. There is an impact on the demand for gold given the record high prices of gold in last couple of years, but consumers have remained bullish on the precious metals and there is an increased investment related for gold. US is the largest diamond market in the world. In India there are so many companies in this sector who exports or imports the gold, diamond and precious metals like gitanjli group, Rajesh exports, and asmi group. And different popular brands for diamond like nakshatra, tanishq, kiah etc. After studying the balance sheet and financial ratios of the two different companies, it is concluded that the Rajesh exports ltd. has a higher capital then the Asian star. The total assets, cash, and bank balance of Rajesh exports ltd. Is more than the Asian star jewels ltd.
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BIBLIOGRAPHY
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Websites: www.money.livemint.com www.money.rediff.com www.rajeshindia.com www.astarjewels.com www.itsmyascent.com www.ibef.org www.blog.aspira.com
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