Can you comment on big players in the jewellery industry such as PC Jewellers, Tanishq, TBZ etc?

Client is keen to understand Company Structure and Culture of the organization?

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 Cartiers into the Indian market.
In the 1990s, the number of retail jewellery outlets in India increased greatly due to the abolition of
the Gold Control Act.

Gems and Jewellery Industry Analysis

 UAE, US, Russia, Singapore, Hong Kong, Latin America and China are the biggest importers of
Indian jewellery.
 US, Hong Kong and UAE accounted for 75 per cent of the total gems and jewellery exports from
India during FY 2016-17.
 The exports stood at US$ 30.67 billion between April 2017-February 2018.
 Exports of gold coins and medallions stood at US$ 1,899.82 million and silver jewellery export
stood at US$ 3,332.95 million during April 2017-February 2018.

India's gems and jewellery sector is one of the largest in the world contributing 29 per cent to the
global jewellery consumption. The market size of the sector is about US$ 75 billion as of 2018 and is
estimated to reach US$ 100 billion by 2025. The sector is home to more than 300,000 gems and
jewellery players, contributes about 6-7 per cent to India’s Gross Domestic Product (GDP) and
employs over 4.64 million employees.

India's gems and jewellery sector contributes about 15.71 per cent to India’s total merchandise
exports. The overall net exports of gems and jewellery stood at US$ 32.71 billion during FY18
registering a compound annual growth rate (CAGR) of 5.83 per cent over FY05; whereas gems and
jewellery imports increased at a CAGR of 7.97 per cent from US$ 11.63 billion in FY05 to US$ 31.52
billion in FY18.

India is the largest manufacturer of cut and polished diamonds in the world and exports 75 per cent
of the world’s polished diamonds. Today, 12 out of 14 diamonds sold in the world are either polished
or cut in India. India exported US$ 1.99 billion worth of cut and polished diamonds on April 2018.

India is the largest consumer of gold in the world. Rising middle class population and increasing
income levels are the key drivers for the demand of gold and other jewellery in India. Gold demand
in India rose 11 per cent year-on-year to 737.5 tonnes in 2017.
The Government of India launched the Gold Monetisation Scheme to reduce the country’s reliance
on gold imports to meet the domestic demand.

Industry Structure:
The abolition of Gold Control Act in 1992 led to a highly fragmented and unorganized jewellery
market with an estimated 100,000 workshops supplying over 450,000 retailers along with 6,000
diamond processing players and 8,000 diamond jewellers, mostly family owned to the extent of 96%
of total players, single shop operations.

The gems and jewellery market in India is home to more than 300,000 players, with the majority
being small players. Its market size is about US$ 75 billion as of 2017 and is expected to reach US$
100 billion by 2025. It contributes 29 per cent to the global jewellery consumption.

The country at present has a small but growing organized sector. Organised players such as Tata with
its Tanishq brand, have, however, been growing steadily to carve a 4 per cent market share.

The Gems and Jewellery sector is witnessing changes in consumer preferences due to adoption of
western lifestyle. Consumers are demanding new designs and varieties in jewellery, and branded
jewellers are able to fulfil their changing demands better than the local unorganised players.
Moreover, increase in per capita income has led to an increase in sales of jewellery, as jewellery is a
status symbol in India.

Companies such as PC Jewellers, PNG Jewellers, Popley and Sons, are planning to introduce a virtual-
reality (VR) experience for their customers. The customer will have to wear a VR headset, through
which they can select any jewellery, see the jewellery from different angles and zoom on it to view
intricate designs.

In the coming years, growth in Gems and Jewellery sector would be largely contributed by the
development of large retailers/brands. Established brands are guiding the organised market and are
opening opportunities to grow. Increasing penetration of organised players provides variety in terms
of products and designs. Online sales are expected to account for 1-2 per cent of the fine jewellery
segment by 2021-22. Also, the relaxation of restrictions of gold import is likely to provide a fillip to
the industry. The improvement in availability along with the reintroduction of low cost gold metal
loans and likely stabilisation of gold prices at lower levels is expected to drive volume growth for
jewellers over short to medium term.

Key Brands in the Indian Jewellery Segment:

The following are some of the major brands in the Indian Jewellery segment:

Gili: In 1994, Gili Jewellery was established as a distinct brand by Gitanjali Jewels, soon after the
abolition of the Gold Control Act by the Indian government. Gili offered a wide range of 18-carat
plain gold and diamond-studded jewellery.

Tanishq: In 1984, Questar Investments Limited (a Tata group company) and the Tamil Nadu Industrial
Development Corporation Limited (TIDCO) jointly promoted Titan Watches Limited (Titan). Initially
involved in the watches and clocks business, Titan later ventured into the jewellery businesses and
started its jewellery division under the Tanishq brand.
Carbon: In early 1991, the Bangalore based Peakok Jewellery Pvt. Ltd., (Peakok) was incorporated. In
1996, within the Peakok fold a new brand of 18-carat goldbased jewellery called Carbon was
launched.

Oyzterbay: Oyzterbay which began operations in March 2001 seeks to build a national brand in the
jewellery industry in India and aspires to be the largest branded jewellery company in the country
with a chain of 100 stores and several hundred-distribution points.

Trendsmith: Mumbai-based Tribhovandas Bhimji Zaveri (TBZ), which had been in the jewellery
business since 1864, saw tremendous scope in the branded segment and opened its new concept
store 'Trendsmith' in Mumbai in December 2001.

Reliance Retail is planning an aggressive entry into the jewellery retail market. It will open between
400 to 500 jewellery retail outlets across the country.

Damas Jewelry, one of the world’s leading jewelry retailer entered India in 2003 with a 50-50 joint
venture with Gitanjali Gems Ltd. It is one of the largest jewellery retail outlets in the world and is
adding 16 new stores to the 12 stores it currently has in India.

Swarovski, the global crystal goods manufacturer and marketer, plans to set up 30 stores by 2009, up
from the current 13.

The Gitanjali Group has bought 'Nakshatra', the premium brand of jewellery promoted by Diamond
Trading Company (DTC)

Mumbai-based Vardhaman Developers plans to build four more jewellery malls in the city.

Dubai-based Joy Alukkas has recently opened its largest showroom in Chennai.

Viswa and Devji Diamonds, a partnership between the Indian group and the top jewellery retailer in
UAE, opened its first diamond retail outlet.

Gitanjal Gems Ltd opened its first luxury jewellery mall in Gurgaon, where a number of international
brands have started their retail business.

Gold Souk India has plans for opening 100 Souks in 100 months.

Policy Initiatives & Investments:

FDI Policy
100% Foreign Direct Investment (FDI) through automatic route is allowed in the sector.
The cumulative Foreign Direct Investment (FDI) inflows in diamond and gold ornaments in the period
April 2000 – December 2017 were US$ 1,111.52 million, according to Department of Industrial Policy
and Promotion (DIPP).

Exports
The net exports of Gems and Jewellery during FY 2015-16 was USD 39.28 billion. The export of cut
and polished diamonds stood at USD 21 billion in FY 2015-16 as against USD 17 billion in FY 2012-13.

Fiscal incentives:
• Customs duty on import of Imitation Jewellery increased from existing level of 10% to 15% with
the view to protect local manufacturers (Budget 2016-17).
• In order to provide clarity, section 10AA of the Income-tax Act has been amended to provide a
sunset date of March 31, 2020 for commencement of activity of manufacture or production of
any article or thing or providing services by a unit located in a Special Economic Zone (SEZs) for
availing the deduction under the section.
• The Small Scale Industry (SSI) eligibility limit has been raised from INR 12 crore to INR 15 crore
• SSI exemption limit has been raised to INR 10 crore as against INR 6 crore in a financial year.

Major Investments & FDI Inflows:

3.6 times growth in FDI equity inflow in Diamond, Gold & Ornaments from USD 95.17 million (April
2012 - March 2014) to USD 338.72 million (April 2014 - March 2016). During April 2016-December
2016), a total of USD 121.21 million has been received as FDI equity inflow in Diamond, Gold &
Ornaments.

Details of major FDI equity inflow are provided in the table below:

Skill development:
• Under the Pradhan Mantri Kaushal Vikas Yojana (PMKVY), which was launched in July 2015, 70,205
people have enrolled for training out of which 51,569 have been certified.
• Under Recognition of Prior Learning (RPL), a sub-component of PMKVY, 22,640 artisans have been
certified across the country.
• Gem & Jewellery Skill Council of India (GJSCI) is working towards development of 310 National
Occupational standards (NOSs), which specifies the standard of performance the individual has to
meet.
• In December 2016, the foundation stone for the fifth centre of Indian Institute of Gem & Jewellery
(IIGJ) was laid in Varanasi, UP. The other four centres are located in Mumbai, New Delhi, Jaipur and
Kolkata. IIGJ offers several courses in Jewellery Design, Manufacturing & CAD, extending from 6
months to 1-year, with emphasis on job training.
• GJSCI certified India’s third Centre of Excellence at Mallapuram, Kerala on August 29, 2016. This
centre in Kerala is upskilling artisans by providing access to a state of the art facility and offering
training by qualified trainers.
• An exclusive gems & jewellery sector online job portal (www.gjscijobs.com) was launched by GJSCI
on August 4, 2016 to bridge the gap between employers and workers in the industry.