The message for the New Year from the Gem and Jewellery Export Promotion Council (GJEPC) to the Indian diamond industry is to curtail manufacturing in response to reduced market demand. “Curtail your production and do not indulge in any speculative purchase of rough that could harm you in the long run. This will ensure a smooth sail,” advised Vasant Mehta, chairman of GJEPC. The past year did manage to provide some respite for the diamond industry in India compared to the situation that existed in 2008. Still, the industry players are not yet too confident of sales picking up in 2010 in light of the continuing negative demand in the American market.
Message from GJEPCCommenting on the industry’s performance in 2009 and expectations for 2010, Mehta shared that “After the way we successfully sailed though 2009 in spite of it being a recessionary phase, we expect to do well in 2010.” The reason for a decent 2009, according to Mehta, was the decline in manufacturing and production to reflect demand, saving the industry from overproduction and stockpiled unsold goods. In hindsight, Mehta said the best action initiated by the GJEPC in 2009 — one that worked well for the Indian diamond industry — was scheduling a month’s break in the purchase of rough to bring into better balance the supply–demand ratio of rough and polished goods.
“On the advice of the council members, we stopped the purchase of rough for more than a month,” recalled Mehta, “and that appears to have benefited the industry to a great extent. It took care of the demand-supply ratio and helped the players sell off their stockpiled inventory before taking in new orders. This particular step was taken at a perfect time, which helped us take control of the market situation before it got worse. The first quarter of 2009 saw a decrease in market demand by almost 80 percent, which was an alarming situation but, thankfully, everything soon came under control.”
As for the emerging markets, Mehta stressed looking at China and Russia and possibly the Middle East, although, due to the real estate crisis in the Middle East, demand there has again taken a step back.
“We are trying our best to target all the emerging markets and we want the industry to actively participate in all the initiatives being undertaken by GJEPC,” said Mehta. “The local market is vibrant right now and it is time for the industry players to grab opportunity domestically. As for the major activities that the council will concentrate on in 2010, we are looking forward to the Basel show and the Hong Kong show to rope in new buyers and target new markets.”
As for expectations from the government in the year 2010, Mehta stressed the need for a new convention center to be built as soon as possible, possibly in Mumbai, along with revision of the tax structure to help the diamond industry prosper.
Market DynamicsAfter making successful international acquisitions, Gitanjali Group has begun eyeing acquisitions in the domestic market. In a recent move, the group announced the acquisition of a 75 percent stake in Salasar Retail Pvt. Ltd., a successful chain of midsize department stores across India. Gitanjali plans to relaunch the Salasar chains as “Maya by Gitanjali Lifestyle” and the company expects an additional turnover of about $200 million from “Maya” stores over the next three years.
In other marketing moves, Shrenuj recently formed a joint venture with Israel’s SWA Trading for developing and marketing diamond sports jewelry to soccer fans. According to a report in The Economic Times, the joint venture will design and manufacture special diamond cuts for such clubs as Inter Milan, Manchester United, Real Madrid and Barcelona. Vishal Doshi, executive director of Shrenuj, was quoted as saying, “These are special cut diamonds for creating three new varieties of product dedicated to sports only. We are encouraged by the overwhelming response from various sports clubs and sponsors from Europe and the Middle East where this game is widely popular.”
In light of Dubai’s economic turmoil, GJEPC has put on hold its $40 million Anant jewelry promotion plan for West Asia. Plans were for funds for the promotion to be raised from the Dubai government.
The Marketplace
- Movement was good until mid-December. The second half of the month was slow compared to the first half.
- Activity in December slowed from the previous month, due to the growing price differential.
- Overall, shortages are seen in most categories, mainly in G-I color.
- Activity is strong in lower piqué goods.
- Demand continues to be good in 4-grainers.
- Sellers are asking 3 percent to 5 percent more, due to frequent increases in rough prices.
Article from the Rapaport Magazine - January 2010. To subscribe click here.