case study on geetanjali gems final
TRANSCRIPT
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Submitted To: Submitted By:
Aarti Dhanrajani Amit Chaturvedi
Lecturer, BPIT Sushant Kaushik
Prayag Anand
Vinay Kundra
Sumit Kumar
Pooja bagri
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India is a leading player in the global gems and jewellery market
The gems and jewellery 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 jewellery and diamonds.
Gold jewellery forms around 80 per cent of the Indian jewellery market, with
the balance comprising fabricated studded jewellery that includes diamond
studded as well as gemstone studded jewellery
The Indian gems and jewellery industry is competitive in the world market due
to its low cost of production and the availability of skilled labor. In addition, the
industry has set up a worldwide distribution network, of more than 3,000 offices
for the promotion and marketing of Indian diamonds
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Diamond distribution was dominated by a few major diamond mining companiesworldwide among which Diamond Trading Corporation (DTC) was the largest
diamond distributor. It accounted for approximately 50 % of worldwide diamond
distribution
Though Indian exports in cut and polished diamonds was growing, it was restricted
to lower-sized and lower-valued diamond market. European manufacturers
dominated the higher-valued diamond market
India was among the largest importer of gold in the world and its sale was sensitive to
income level and price level. Also it was dependent on the purchases based on faith in
the retailer
Tanishq and Gili were among the earliest jewellery brands in India and later there
came a shift in consumer preferences towards diamond jewellery as it was positioned
as affordable and contemporary
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Yesterday Today
Unbranded Branded
Silver & Gold jewellery Gold & Diamond jewellery
Investment Investment + Fashion
Traditional design Fashionable & innovative design
Marriage & festival is peak season Wearability and gifts
Jewellery sold on commodity basis
with labor charges
Jewellery being sold on a per piece basis
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Major Players:
Tanishq Jewellery
Vaibhav Gems Ltd.
Classic Diamond (India) Ltd.
Shrenuj & Company Ltd.
Goldiam international Ltd.
Su-raj Diamonds & Jewellery Ltd.
Rajesh Exports Pvt. Ltd
Gitanjali Gems Ltd
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Established presence
The company is one of Indias largest integrated diamond and jewellery
companies Established in 1986.
Sophisticated and scalable diamond and jewellery manufacturing facilities
Approximately 1,246 retail outlets in India and 143 outlets in the U.S.
Leading brands
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Ramping up the retail chain
Expanding stores in India
Acquisitions including Samuels, Rogers
and Tri-Star
Plans to make further inorganic growthin the U.S. & Far-east
Expanding manufacturing capabilities to
address increasing demand
Gitanjali Lifestyles to focus on
Manufacture and distribution
Of luxury and lifestyle products
Developing 200 acres gems & Jewellery
SEZ in HyderabadPlans to develop more SEZs focused on
gems & jewellery across India
To partner for developing real estate
infrastructure
Expansions Diversification
Further integration within the jewellery
value chain
Higher margins in retail business
Higher value addition
Leverage its key strengths
Large opportunity for incremental
revenue
Diversify business model
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GENERIC BUSINESS LEVEL STRATEGY
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M.PORTERS FIVE FORCEMODEL FOR
JEWELLERY INDUSTRY
POTENTI
NEWENT Y
INDUST Y COMPETITO S
RIV R Y MONG EXISTING
FIRMS
BUYERSSUPPLIER
SUBSTITUTES
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INTER-FIRMRIVALRY : HIGH
Two types of rivalry:
Inside India
Large presence of unorganized sector. 0.2 Million Gold jewelers and over
8,000 Diamond jewelers
Outside India
International rivals Such as, China
Threat from producing nation like S.A. & Russia
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BARGAINING POWEROF SUPPLIERS:
MEDIUM In jewellery industry the suppliers are S.A., UAE, Australia, US,
Congo, Botswana, Russia, DTC.
Few Alternatives of cutting & polishing.
Skilled labor
Bargaining power of India is enhanced because India is largest
consumer of gold jewellery.
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BARGAINING POWEROF BUYERS: LOW
Divided in two types:
1. Domestic buyers &
2. Foreign buyers
As investment (Demand increase)
Bargaining power of Indian exporter is high because Majority of the world's
rough diamond production is cut and polished in India
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THREATOF SUBSTITUTES: LOW
Substitutes are Real assets, Stock market, & Bank deposits & mutual
fund investment and Other types of jewellery like imitation jewellery,
bagasra jewellery, stone jewellery etc.
Second preferred investment behind bank deposits
Status and standard of living increase so demand is increasing at high
rate
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BARRIERS TO ENTRY : LOW TOMEDIUM
Low capital requirement
Government subsidy
EXIM policy & governments rules-regulations are high
Skilled manpower is essential
Advanced technology required
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SWOT ANALYSIS OF GITANJALIJEWELLERY LTD.
Strengths: Large integrated diamond & jewellery player and having an international presence.
Pioneers of branded jewellery in India
Strong marketing & distribution network. Strong retail presence in India and in U.S.
112 distributors and 1246 outlets in India and 143 outlets in U.S Strong brand equity and broad product range Such as, Gili, Asmi, Nakshatra,
Sangini, Ddamas, Vivaaha, Maya, Giantti, Desire, Samuels etc.
Visionary leadership (Acquiring Nakshatra, Samuels, Rogers etc.)
Expanding manufacturing capabilities in Mumbai and at special economic zone in
Surat to address increasing demand
Net Worth is 3,460.37 million Rs. So we can say that it is financially very strong
company
Sight holder status with DTC through a promoter group company
Highly skilled, qualified and motivated employee
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Weaknesses:
There may be conflicts of interest between them and certain of their Promoter groupcompanies.
As the major raw material requirements need to be imported, companies normallystock huge quantities of inventory resulting high inventory carrying costs.
Technology is less improved compared to China and Thailands company.
Opportunities:
New markets in Europe & Latin America.
Growing demand in South Asian & Far East countries.
Industry moving from a phase of consolidation.
Expansion possibilities in lifestyle and luxury products in India like watches, leathergoods, Platinum jewellery because increasing disposable income of people.
SWOT ANALYSIS OF GITANJALIJEWELLERY LTD.
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Threats:
International Competition:-China, Sri Lanka and Thailand's entry in smalldiamond jewellery
Increase in the price of Gold & Diamonds
Other local competitors. According to the data 97% jewellery sales are by family
jewelers Threat from producing nation like S.A. & Russia
SWOT ANALYSIS OF GITANJALIJEWELLERY LTD.
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High priorityResistance from suppliers
and decrease in availability
of diamond .
Fluctuation in prices of
material.(gold,diamnd)
High priorityEmergence of new
technology
Diamond processing and
cutting.
Medium priorityChanging tastes of
consumers.
High priority
Change in exim rates
And trade policies
Medium priority
Defragmented Indian
market.
Low priority
Medium priority
Extinction of gold mines
Economic slowdown
Low priority Low priority
Disaster and mishaps
PRIORITYPRIORITY IMPACTMATRIXIMPACTMATRIX
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VALUE CHAINDiamond Polishing
Direct FromMines
Rough Distribution
Diamond Distribution
Jewellery
Manufacturing
JewelleryWhole SellingJewellery Branding
Jewellery Retailing
Shopping Experience
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Finance:
The companys operations running across the whole value chain so finance is the
very much important factor. Working capital requirement is much more. The
company is having finance from various sources like shares, bank loan, and credit
line
Infrastructure:
The company is having latest technological manufacturing plants. Its branded
showrooms & other outlets are having good infrastructure. It is also having plants
in special economic zone at various places
Procurement:
The company procures its raw materials, machinery & other ancillary things from
recognized sources. The company is having good creditability with supplier. It has to
maintain its relations with different sight holder for procurement of diamond foreweller makin
VALUE CHAIN (CONTu)VALUE CHAIN (CONTu)
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Technology:
The company is using latest technology in processing means jewellery
manufacturing & also in designing. The company is having business in so many
countries so that it has to pay attention over the designing, manufacturing etc. with
the high technology to satisfy buyers needsHuman Resources:
As of September 30, 2005, the Company had 410 full-time employees, of which
approximately 117 employees were employed at its corporate offices in Mumbai. In
addition, as of September 30, 2005, its subsidiaries, joint ventures and associate
companies employed in the aggregate more than 740 employees, including 250
employees in its retail operations.
VALUE CHAIN (CONTu)VALUE CHAIN (CONTu)
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KEY SUCCESS FACTOR S
Marketing & Distribution related factor:
Strong retail presence in India and the U.S.: The company is occupying good position in
retail jewellery provider in both India as well as U.S. Gitanjali has a strong network of
distribution. Here Strong retail presence in India and in US. It has 112 distributors and
1246 outlets in India and 143 outlets in US.Strong brand equity and broad product range: It is the pioneer of branded jewellery in
India. It brand equity is too high.
Significant focus on retail and distribution network to drive growth: It also keeps in
mind distribution network which provide the product to end users. The company is
having its retail outlets also.
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KEY SUCCESS FACTOR S
Manufacturing related factor:
Sophisticated manufacturing facilities including upcoming Hyderabad SEZ:
The company is having good infrastructure facility in various special economic zones.
Gitanjali has been achieved economies of scale and learning curve effects which is
benefited in low cost production because in India skilled labor is available at cheaperrate.
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Technology Related factor:
Gitanjali has expertise in cutting, polishing the diamonds and in designing the
jewellery (specifically in small design).
Presence across the whole value chain : The first & foremost success factor for the
company is of its presence across the entire value chain
Human Resource and TopManagement related factor:
Visionary leadership and a deep management team
Strategic Acquisition of Tri-Star: Manufacturer and global distributor of Canadia
brand diamonds and diamond jewellery in various countries, such as Australia,
Canada, England, Ireland, Northern Ireland, New Zealand, Scotland, and the
United States
KEY SUCCESS FACTOR S (CONTu)
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The industry registered exports worth US$ 15 billion in April-December 2008
(Provisional), compared to US$ 14.9 billion in the corresponding period of 2007,
registering a growth of .59 per cent.
Export of cut and polished diamonds grew from US$ 10.9 billion in 2006-07 to US$
14.2 billion in 2007-08, witnessing a growth of nearly 68 per cent.
The total gems and jewellery exports from India stood at US$ 20.8 billion in thefinancial year 2007-08, against US$ 17.1 billion in the previous year, witnessing a
growth of 22.27 percent. The sector accounted for 13.41 per cent of India's total
merchandise exports.
More than 100,000 skilled and unskilled labors being laid-off due to poor demand
from the US market. In fact, Indias jewellery sales to the US declined over 20 percent even during the holiday season, i.e. Christmas and New Year.
The domestic jewellery demand has also decreased by over 20 per cent.
Positive government policies such as 100 per cent Foreign Direct Investment (FDI)
in gems and jewellery through the automatic route, has further provided an impetus
to the booming gems and jewellery industry.
CURRENT SCENARIOOF GEMS ANDCURRENT SCENARIOOF GEMS AND
JEWELLERYJEWELLERY INDUSTRY (CONTu)INDUSTRY (CONTu)
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CURRENTPOSITION OF GITANJALICURRENTPOSITION OF GITANJALIJEWELERSJEWELERS Gitanjali Gems reported that consolidated net profits fell 42 percent to INR 291.52
million ($5.97 million) in the third fiscal quarter ending December 31, 2008 as a
result of the companys diamond and jewelry segments contracting during the period
Gitanjalis third quarter net sales fell 11 percent to INR 11.109 billion ($227.55
million), as diamond revenues declined 19 percent to INR 5.366 billion ($109.98
million) The company noted a 17 percent decline in revenues at its India operations during
the quarter and a 7.8 percent drop in revenues from the rest of the world.
For the first nine months of the fiscal year, Gitanjalis net profit fell 6 percent to INR
1.195 billion ($24.48 million). The companys diamond business saw pre-tax profits
fall 16 percent during the period, while its jewelry unit profits grew 27 percent.Group net sales rose 8.3 percent to INR 36.207 billion ($741.56 million)
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FUTUREPERSPECTIVESFUTUREPERSPECTIVES
As perResearch and Markets, the gold processing industry in India although, has
around 15,000 players, Only 80 players generate revenues overUS$ 5 million.
Therefore, there is high growth potential for Indian gems and jewellery in the global
market.
Furthermore, in spite of the fact that India is not a major miner of precious metals
and stones, the countrys inexpensive and skilled workforce are one of the best in the
world for processing of diamonds, which makes the country a favored destination
with the exporters.
Additionally, there is a huge potential in promoting traditional Indian designs and
styles. There is a massive demand for hand-made jewellery, especially in ethnic
Indian designs, from the sizeable Indian emigrant population in the Middle-East,
South-East Asian countries, the US and Canada among others.
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THANKYOUu..THANKYOUu..