Q. What are the demand drivers for branded jewellery in India in the current economic scenario?

A. Brands provide an assurance of quality in terms of materials, design and service and are preferred by contemporary consumers for this reason. The brand provides the ‘trust factor’ which is an integral part of jewellery purchases and was the primary reason why traditionally jewellery was only purchased from the family jeweller.

A number of factors are driving the growth of the branded jewellery sector which includes strong performance of the Indian economy, rise in the number of high net worth individuals and an increasingly youthful population with high disposable incomes. Moreover, the changing lifestyle and culture of this section, which has a greater exposure to global fashion and tastes (both directly and indirectly through media) etc, influence their jewellery buying pattern. Branded jewellery, and particularly branded diamond jewellery also has an aspirational value catering to the rising desires and wants of the upwardly mobile segments. Further, the rise of modern retail sector has also made it easier for sale and distribution of branded jewellery. Finally we see that the investment motive in purchase of jewellery is decreasing and design and style are gaining importance as purchase drivers. Today, diamonds are also viewed for their investment potential, so branded diamond jewellery which combines both these factors is gaining popularity.

Q. What are the current and emerging trends in Indian branded jewellery market and what is the share of Gitanjali owned brands among the branded jewellery market in India?

A. The Indian branded jewellery market is growing far more rapidly than the overall jewellery market due to all the factors enumerated above. Branded jewellery products are a perfect fit for the opportunities offered by the rapid development of modern retail formats like malls, lifestyle stores etc.

Most of the branded offerings are in the diamond jewellery segment, with only a few plain gold and coloured stone studded brands. There are brands for different niches and price points which range from very high end designer jewellery for special occasions to the more affordable collections for daily wear.

Branded jewellery was initially stronger in the metros and Tier I cities, but in the last few years there has been strong growth in the Tier II and Tier III towns and cities as well.

Gitanjali has a 60% share of the overall branded jewellery market.

Q. What are the new areas of growth and opportunities for the sector as well as the company?

A. Overall there are multiple opportunities for players in the branded jewellery segment. With the changing demographics and the rapid development of modern retail spaces, the Tier II and Tier III towns and cities have a great potential. Moreover, there are amazing opportunities to develop new niche brands catering to particular tastes, segments or price points.

Gitanjali is expanding its retail footprint and one of the important aims is to integrate the jewellery sales within the larger luxury – lifestyle retailing segment. This is a new area of growth that Gitanjali is catering to with its high end luxury store format – Giantti.

The entry into the mid sized department store segment with Maya lifestyle stores is another opportunity – there is an entire section of branded jewellery under the banner of Maya Jewellery.

At the other end of the spectrum, Gitanjali has launched branded lines in the lower end fashion jewellery segment with lines in silver and cubic zirconia (CZ). Another area of growth is the introduction of foreign brands into the Indian market and Gitanjali has been one of the pioneers of this, bringing in some of the best known names like Stefan Hafner, Poratti, La Nouvelle Bague etc.

Gitanjali is also exploring the development of branded jewellery lines in association with well known fashion designers and other lifestyle brands, and recently launched the ‘Queenie for Giantti’ line by fashion icon and designer Queenie at the Lakme Fashion Week.

Q. How do you foresee the export opportunity for Indian jewellery retailers? What are the emerging markets for India (especially diamond jewellery)?

A. Indian jewellers should explore and develop new markets to reduce their dependence on the US market. At the same time, they must also strengthen their position within the existing markets like the US with the aim of increasing market share by moving up the value chain. One of the important moves of the Indian players must be towards developing their own retailing and branding activities in these markets.

The US market continues to be important because of its sheer size, and Japan, though witnessing a slow down is also a large consumer. Europe and the Middle East are also important. East Europe and some South American countries are showing good potential. However, the two markets that hold out real promise are China and India.

Q. What is the share of gems and jewellery export in the total revenues of the Gitanjali group?

A. Exports (loose diamonds as well as jewellery) account for about 55% of Gitanjali’s total revenues.

Q. Could you please discuss why India’s presence is largely restricted to the smaller-sized and lowervalued diamond market as oppose to higher value diamonds?

A. India, historically, developed as a cutting centre for smaller sized and lower valued diamonds, but for the last one and a half decade or more, many of the larger companies have moved into cutting diamonds of larger sizes and fancy shapes/cuts. India is now seen as a centre that can provide diamonds of virtually all sizes, shapes and colours.

However, this does not mean that the smaller sized and lower valued diamonds are no longer cut in India. A large part of the industry continues to work with the sizes and qualities that the Indian industry started with.

Q. Do you think India has a comparative advantage with respect to other countries regarding the cost of cutting and polishing diamonds? What is the comparative cost of processing diamonds in India, China and other countries?

A. Yes, India has more skilled and cost effective labour when it comes to diamond polishing. However, the Chinese industry is in some ways more technologically advanced and has the advantage of a superior infrastructure in the industrial areas as compared to India.

Q. What measures should be taken to boost the Indian gems and jewellery sector?

A. The measures that should be taken are:

• Finance is a key to the development of the industry particularly easy availability of dollar finance at internationally competitive rates
• Liberalisation of gold imports for steady supply to manufacturers
• Innovative financing methods (like asset based financing) for better credit availability and to facilitate increased downstream activities
• Entry into the higher value addition activities like branding and retailing
• Provision of better infrastructure in manufacturing centres and development of sector specific SEZs

Q. What is Gitanjali Group’s business model and strategy for growth?

A. Aggressive expansion and diversification strategy including:

1. Expansion of retail presence and brand portfolio
2. Ramping up manufacturing infrastructure to cater to increased demand
3. Diversification into distribution of lifestyle and luxury products business
4. Setting up of gem and jewellery SEZs
5. Achieve higher margins by moving up value chain

Q. What are the company’s future plans in terms of expansion and diversification?

A. The company plans to greatly increase its retail footprint and firmly position its jewellery retail operations within the larger luxury-lifestyle space. It will aim to add an additional 1.25 to 1.50 mn sq feet of retail space by FY 2010-11 with the focus on revenue sharing model and prime catchment areas. Gitanjali has already partnered with various leading mall developers under the revenue sharing model. Retail Expansion will be in EBO (exclusive brand outlet), MBO (multi brand outlet) and Large Multi Format Store categories.

Gitanjali is already developing a 200 acres gems & jewellery SEZ in Hyderabad, and is exploring possibilities of setting up SEZs at other locations.

Internationally, the focus is on consolidating the retail presence in the US, and the company is now not planning any other international expansions. However, it continues to remain open to expansion in newer markets through mergers and acquisitions should a very attractive opportunity present itself.