RAPAPORT... Founded in 1985, Kiran Gems is one of the largest manufacturers of white diamonds, and also has a significant jewelry manufacturing business. The company employs more than 31,000 skilled craftsmen and professionals.
Name: Rajesh Lakhani
Company: Kiran Gems – Vice President
Rapaport News: What prompted you to pursue a career in the diamond industry?
RL: We’re part of a family business so diamonds are in my blood. Since childhood, I was always surrounded by diamonds and diamond people. So it was a natural progression and I don’t think I could do anything else as well as diamonds.
Within our business, we have a system that helps us learn the trade from scratch, whether it is grading, diamond sorting or sitting on the wheel. We go through everything in the manufacturing process for about a half a year of training before coming into the business. I’ve been in the business for 21 years now.
Rapaport News: Does Kiran Gems have a business philosophy that guides you in your work?
RL: My uncle, Mavjibhai Patel, the pioneer of our company, believes that transparency is the most important thing. Whether you make money or not, your customer and anyone else you are dealing with should have confidence in you. The main thing is to be pure and clear in your dealings.
Rapaport News: What differentiates Kiran Gems from other companies?
RL: We’re a very well-organized company. We adhere to all the necessary ethical standards, such as De Beers Best Practice Principles. Our overall structure is very well maintained, and our structure helps our clients because we become a one-stop solution for them. We can supply them with very small goods all the way up to 3-carats and larger. We work on a regular commitment basis. So our customers have great confidence in us.
We used to be a top manufacturer of 25 pointers and then we grew to the 50 pointers, and then to manufacturing 1-carat diamonds. Today, a huge quantity of 1-carat to 2-carat diamonds and larger are manufactured by us.
We manufacture almost 6 million carats of rough every year, which is quite unique, and we sell to all the majors in every market, including the U.S., the Middle East, Europe, Australian gem stores and, of course, China. So we can say we are available everywhere and it definitely gives us an advantage.
Rapaport News: What has been the most notable change that you've seen in the industry through the course of your career?
RL: When I started out, our business, and the industry as a whole, was disorganized as things were run on old-fashioned systems. Now the IT sector has played a very significant role in the development of our company. About 15 years ago, we had one or two computers, and now we have a number of hardware servers and a number of employees with high level computer-related degrees. That’s enabled the way we do business. Our customers can go online and they can buy goods without physically coming here. The industry is no longer limited by location and it’s become a 24-hour business. A customer sitting anywhere in the world is able to buy with full confidence.
Also, in manufacturing, there is a lot of technology being used. So the industry is much more organized than before, which is definitely for the best.
Rapaport News: What is the biggest challenge facing the industry today?
RL: For the industry as a whole, the banks are tightening credit given to the trade. I can definitely see a money crunch within a few months. That includes the Indian banks, which used to be extra lenient. They want to be more conscious about who they’re dealing with and what kind of people they are. They’re not only looking at what is reflected in the books. They’re considering what kind of family they are dealing with, what kind of people are working with them and the general atmosphere at the company. The banks want to be confident that they’re giving proper financing, and not just to anyone.
Rapaport News: 2013 was a tough year for Indian diamond manufacturers when you consider the weak rupee, the domestic economy slowed, high rough prices, bank credit tightened. How did these factors affect a company like Kiran Gems, and how was 2013 for the company?
RL: For Kiran, 2013 was a very smooth year. We kept working and selling to our clients as usual. We didn't see any big change when it comes to our relationship with our banks.
The rupee doesn't affect us because we are spread worldwide. The weaker rupee definitely affects local jewelers who are selling here in India, but it hasn’t affected us because we are global. Last year, the U.S. retail market was doing well, which was an asset.
Another factor was the availability of our diamonds and diamond jewelry products. Our portfolio of products is diversified rather than being focused on one market with one product. We're in multiple segments with multiple products in multiple markets. So that lowered the risks and economic challenges.
Rapaport News: What are your expectations for the overall diamond market in 2014?
RL: I expect that the market will continue to grow this year. We’re in a much healthier position than a decade or two ago when the U.S. was the main market that we relied on. Today, there are many other centers that have decent market share. So we’re in a healthy position as an industry.
Rapaport News: What trends do you see in the rough market?
RL: The industry wants a decent supply, so they will help add value to diamonds. In the long run, we can definitely see a huge order of rough stones and I think that well organized companies like Kiran Gems can grow from this.
We use rough in different ways. For example, in jewelry, there are many categories, such as bridal and fashion jewelry, which have been doing well for years, but we’ve tried to expand beyond that. Our unity jewelry has an Asian setting, which consists of a cluster of smaller stones that appears about two-and-a-half times the size of a solitaire and is available for consumers at a very reasonable price. So we give consumers many options.
Rapaport News: What should the industry do to combat the occurrence of undisclosed synthetic diamonds being mixed in parcels of natural goods and instill confidence in natural diamonds?
RL: Firstly, I wouldn't consider it to be a diamond. We only trade natural diamonds and we support the growth of the natural diamond market. I believe media like Rapaport, trade bodies like India’s Gem and Jewellery Export Promotion Council and the bourses in Israel, the U.S. and Belgium should also support the natural diamond business. There shouldn't be any doubt to the consumer or retailer that something fishy is going on.
At Kiran, and also at the bourses in Israel and Mumbai, we already have CVD-detection machines, and more machines and technologies will come out in the near future.
We want to be more conscious about what we buy and make sure every stone is coming from an ethical source and is a natural diamond.
The industry will have to follow a similar kind of system in the future. Currently, you don't hear of too many cases happening in the industry, but if we are not aware, it is going to happen again and again, which will affect the attitude of our retailers. They don't want to buy from just anybody in the market, they want to make sure that they are buying from decent manufacturers or suppliers who give all the assurances and have all the facilities available to them.
Rapaport News: We're hearing that India's manufacturing capacity has dropped in the last few years or that factories are reducing manufacturing. Is that the case?
RL: I don't think it is reducing, but it is shifting from one hand to another. The industry has seen a big shift over the years. Companies have to adapt and change to stay relevant. If you don't believe in the latest systems and technologies and have a pattern of working with reliable distribution channels, then it is not going to help you at all. Manufacturing is shifting according to the needs of the market.
Rapaport News: What role do you see innovation and technology playing in the future for your business?
RL: In the past few years, we have seen major changes influenced by technology. We also invested millions of dollars into IT because if you are not up to the mark, then you might be missing something. You may not be able to get the proper yield from the stones and you’ll have to keep adding value as much as possible. So for the future, we are always ready to adopt any technology that comes in.
All our internal processes have an IT base. This especially affects our certified goods, which we can market online from top to bottom. Any of the stones in our online inventory can be presented with full specifications and background information, which is enabled by recent technology.
Rapaport News: What advice would you give to someone starting out in the diamond industry?
RL: Focus on adding value for the client.
Rapaport News: How do you envision your business 10 years from now?
RL: Maybe 10 years is too long to say. We already bought our head plant that will drive operations in the short term. We have a new 225,000 square feet factory in Surat being developed that will be ready in the next two to three years and then we’ll be manufacturing almost 10 million carats of rough annually. So our plans are well set for the next 5 years.