Reviving Business

RAPAPORT... This was perhaps one of the most difficult years for the world economy — ever. From automobiles to real estate to stock exchanges and, of course, the gems and jewelry industry – the loss suffered was not anticipated. As we step into 2010, the gems and jewelry industry is hoping for a major correction and the industry associations in each country are taking measures to ensure the same. In India, the Gems and Jewellery Export Promotion Council (GJEPC) is on the go as well, with a host of initiatives to bring back the sparkle. In addition to efforts by GJEPC, each player in the industry is also trying his best to revive lost business and explore untapped markets.

Market Dynamics
No major market movements were seen in the month of November. One new initiative was the first Indo-Euro Jewellery Summit, which was organized to bring together leading Indian jewelry manufacturers and eminent jewelry retailers from Europe. The event was held in Mumbai in the third week of November. Jewelry chains from France, Germany, Spain and the U.K. participated in the summit.

Sharing his overview of the market dynamics in November, Yogesh Bulchandani from Blue Gems said, “The markets have seen an upward trend since June/July, with stocks and properties rising and diamond discounts declining and demand and sales increasing gradually. However, at the September Hong Kong show, most of the sellers shot up their prices — probably in response to the turnout of Indian and Chinese buyers — but the increase in the prices was not in proportion to the sales, which were just gradually increasing.” Bulchandani further noted that “Most buyers were being cautious, so the sellers did not have as great a show as they had expected.”

“But the season was good for most in the local market, with demand and sales showing improvement,” continued Bulchandri. “Buyers are still cautious, but there is a sense of optimism at the way the season is shaping up post-Diwali. And the wedding season is just round the corner. Still, at least until the end of the year, that feeling of uncertainty will remain since many worry that this increase may be just another bubble.”

Movement of Goods
Regarding the movement of goods within India, the buying pattern is showing a gradual shift across regions. In Mumbai, where G to I, VVS was more popular, the trend is now shifting toward H to J, VVS to VS. In the southern region, where DIF was in major demand, a preference is being seen for F to G, VVS and in North India, where sizes had been popular, the market has slowed somewhat. According to Bulchandani, consumers in Delhi and Kolkata are slowly shifting preferences from K to L, SI to I to J, VS. “The Indian markets in time will probably be consuming, at the maximum, G to J and VVS to VS,” he noted.

New Initiative
Reliance Industries Ltd. (RIL), owned by Mukesh Ambani, has launched an initial diamond prospecting survey of a 695-square-mile area in Madhya Pradesh (MP). As reported in The Times of India, RIL has been given two reconnaissance permits (RPs) — licenses for preliminary prospecting to establish whether there are mineral deposits in an area — and has signed an agreement with the state government to search for diamonds.

Looking Back
In any look back on the year 2009, there would be unanimous industry agreement that the first two quarters were the most difficult. Bulchandani explained that “The third quarter has been good so far, with a gradual increase in sales and demand and people stabilizing their credit and payables and consolidating their inventory; 2010 should be better. However, until the international markets, especially America and Europe, stabilize, which looks unlikely for the next one to two quarters, the markets will remain volatile and that will cause people to be cautious.”

Rajiv Mehta, chief executive officer (CEO) and chief operating officer (COO) for Dimexon Diamonds, suggested corrective measures that industry players should consider for the year ahead. “Focus on flexibility and agility in terms of quickly responding to the volatile market dynamics,” Mehta advised. “Also, it is important to focus on creating more differentiated and niche product offerings, with an aim to add value to the entire pipeline elements. We have all been riding on a surge of wave for a long time, so now the time has come to do a reality check.”

“We at Dimexon strongly feel that the current times are the time to consolidate our businesses and fine-tune our business practices, making our product offerings much more attractive,” continued Mehta. “Our prime focus is on understanding, on a more profound level, who our committed buyers are and the markets in which they operate — and all this while achieving economies of scale. There is a great opportunity for us to make decisions now that will be tough but good for everyone in the years ahead. “

The Marketplace

• Diamantaires reported a strong opening following the Diwali vacation, with most retailers reporting good sales.
• Asking prices were up by 3 percent to 5 percent following the Diwali holiday.
• The domestic market is busy, due to demand from the ongoing wedding season.
• Movement is very good in smaller piqué goods below 0.18 carats.
• Activity is strong across the board in 4-grainers.
• Shortages exist in G-I color in 0.50 carats+.
• Overall production has not yet resumed in India and most manufacturing companies are not working at full capacity.

Article from the Rapaport Magazine - December 2009. To subscribe click here.