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"The government should financially support the setting up of skills development units and Gems and Jewellery parks" suggests Sanjeev Agarwal, CEO, Gitanjali Exports Pvt Ltd.

24 july 2017

sanjeev_agarwal_xx.jpgSanjeev Agarwal has a unique combination of experience encompassing FMCG, Banking & Finance and the Luxury Retail Sectors with Unilever, Cadburys and Deutsche Bank.

Sanjeev’s next move to World Gold Council as Managing Director (India-subcontinent) saw him work on a number of market & category development initiatives…conceptualizing and creating an “all India gold buying day” on ‘Akshaya Tritiya’ and ‘retailing of gold coins’ through the Bank branches and the Post Office in India.

Sanjeev has also held positions such as Chairman FICCI (Federation of Indian Chamber of Commerce) Gems & Jewellery Committee; Chairman of the Indo-Armenian Joint Business Council; Honorary Managing Director of the World Silver Council; was on Panel of Advisors to the Government of India on the gold policy matters and many others...

With Gitanjali Gems Group, Sanjeev has been spearheading a number of new business initiatives both in India and the overseas market, including the development of a unique ‘point of sale’ - a diamond & jewellery ATM machine. He recently launched a “concept’ precious metal called – Lumineux Uno – which is a combination of the 4 precious metals (Gold, Silver, Platinum and Palladium) for a US-based body called ‘The Leading Jewellers of the World’.

Here Sanjeev speaks at length to Rough & Polished about the Indian G&J industry, Gitanjali Group as well as all the challenges that the industry is facing currently.

Please give us an overview of your company; it’s growth graph over the years; and its present standing as a major jeweller in the country. How many stores does your company have pan India? Any plans for more in the future?

Established in 1966, its activities are spread across the entire value chain of the jewellery business from rough diamond sourcing, cutting, polishing and distribution, to diamond and gold jewellery manufacturing, branding and retailing in India and overseas.

Gitanjali pioneered the jewellery retail revolution in India by launching ‘Gili’, India’s first jewellery brand way back in 1994.

Over the last two decades, the Group has expanded across the globe and today has operations in USA, UK, Belgium, Italy, the Middle East, China, Singapore and Japan. In fact, it is amongst the top 5 jewellery retailer in the US with 110 stores under the brand name “Samuels”.

Gitanjali Gems Group it has an extensive global retail network of about 3,000 points of sale including own stores, shop-in-shops (SIS), retailers and franchise outlets.

Over the last decade, the Group has also entered the field of e-commerce, and now has a full-fledged presence in the rapidly growing online market spanning different formats and operational models.

Gitanjali is one of the early adopters of an omnichannel strategy with a strong retail presence both in the real and virtual world.

Each year Gitanjali sees a planned expansion of its network with newer stores, including some new formats, in existing markets, as well as a gradual entry into new regions and markets. It has also been a pioneer in experimenting with new retail formats such as the development and launch of a jewellery ATM machine.

What's your views about the Indian domestic jewellery industry at the present?

The Indian jewellery industry has traditionally been predominantly in the unorganised sector with over 3,50,000 jewellery retailers spread across the entire nook and corner of the country. The Indian jewellery sector traditionally also played a role of a “Banker” in the rural and in the semi-urban markets- providing finance to the farmers as well as the retailers against the pledge of their gold and selling additional gold jewellery to the same target customers at the time of harvesting and festive season.

The front end jewellery retailing in India has seen a dramatic change in structure, with the organised retail, now accounting for 28% of the total domestic market of US $ 42 billion as compared to the market share of less than 7% of the market size of US $ 17 billion a decade back. This has been possible primarily because of changes in consumer buying habits wherein customers are looking for wearable jewellery instead of heavy “locker” jewellery. The concept of branding & organised retail has also found preference amongst the young Indian buyers who have shifted from smaller towns to metros, because of their work requirements and hence have limited connect with the traditional family jeweller.

However, the manufacturing of gold jewellery has primarily remained in the unorganised sector with “Karigars” working independently and manufacture & supply jewellery to retailers at very competitive prices.

With the introduction of Goods & Services Tax (GST) the compliance & audit trail of the entire retail sector (including the jewellery sector) will increase significantly, giving further impetus to organised retail.

What are the challenges that you think the G&J sector is facing right now?

The Indian Jewellery sector is of a size of US $ 87 billion accounting for 6-7 % of India GDP & 15% of India’s exports and the 3rd largest employment generator after agriculture and textiles. However, the government has been providing very limited support to develop this sector further in comparison to its investment into textile and leather sectors. Because of the fact that the entire raw material to produce for gold and diamonds, has to be imported and paid for foreign exchange, the policies for this sector keeps changing, based on the country’s current account deficit (CAD) pressures. There is a need for long term consistent policy for the healthy growth & development of the sector.

Because of gold’s unique position as a jewellery and store of value there are multiple government agencies regulating the sector from Reserve Bank of India, Directorate General of Foreign Trade (DGFT), Ministry of Commerce, Ministry of Finance, Ministry of Consumer Affairs, Bureau of Indian Standards (BIS), etc., because of which contradictory rules get framed many times. Because of this policy anomaly, Federation of Indian Chambers of Commerce and Industry (FICCI) has been recommending the need to have a “Gold Board” with representatives from each of the government regulatory arms to reduce the inconsistency in policy making.

And, in what ways can the Indian government support the industry to help it grow?

The government should financially support the setting up of skills development units and Gems and Jewellery parks and provide the necessary infrastructure & equipment for the “Karigars” to upgrade their skill. The government should also look at the ways of exposing the “Karigars” to the requirements of the international buyers so that they can fine-tune their skills and designing as per the requirement of the international audience also.

Although India has been exporting US$ 43 bn worth of jewellery majority of the exports is in the form of cut & polished diamonds only and there is not a single Indian brand of jewellery in the international market. With the level of skills and craftsmanship already available in India, the government should increase the support for development and exports of value-added and branded jewellery.

What transformations have you seen over the years in terms of diamond/colour stone/gold content, design in the Indian market? How important is the diamond content in your jewellery, which is known for exclusive designs incorporating precious coloured stones?

There have been remarkable changes in the jewellery industry over the years and this is reflected in the type of products available today as per the evolving buyer tastes.

Principally, jewellery is no longer seen ONLY as an investment and for special occasions. Daily wear jewellery – lighter, more affordable and contemporary in design – has emerged as an important segment. Even for larger pieces bought for special occasions, the relative importance of design has grown; while investment is still an important driver, greater weight is being given to design and style.

There is a definite switch from just plain “yellow” gold jewellery to jewellery studded with diamonds and also with semi-precious stones.

Do you foresee a future where less caratage gold jewellery will be accepted in the Indian market? Especially in diamond and precious stones studded jewellery, which is considered more as an heirloom?

Consumers have already accepted a shift to 18k gold when it comes to purchasing jewellery for daily wear and casual social occasions. Even the larger diamond pieces for special occasions have to be crafted in 18k.

We also see a willingness to look at 14k diamond studded jewellery for entry level consumers purchasing their first diamond jewellery.

Within the higher caratage, there is a shift to less gold in each piece. Innovative techniques are used to create gold ornaments that are lighter; precious and semi-precious stones are used along with polki diamonds in such pieces.

What’s your opinion on the Government's recent plan to ban exports of 24 ct gold jewellery? How do you see this panning out in due course for your company? How will this benefit the jewellery business/industry on the whole?

According to me, the impact of Governments recent plan to ban exports of 24 ct gold jewellery is quite negligible. Not many countries consume or purchase 24 ct gold jewellery because 24 ct gold jewellery in the form of 24 ct is very delicate and hence not really wearable on a regular basis. The only place where there is 24 ct gold jewellery consumption is China, that too for gifting in Chinese traditional weddings, as a part of the trousseau. So, 24 ct gold jewellery exports could be some element of misuse of the export policy benefits.

Your comments on the current domestic market as far as diamond jewellery demand is concerned. And what is the trend, especially in quality/size of polished diamonds demand in today’s market?

After the dramatic double-digit growth in diamond jewellery consumption that was seen in the first few years of the millennium, the growth pattern has been slower, but steady over the past few years. We also see that diamonds are now growing in popularity beyond the metros.

And how do you predict jewellery sales will be during Diwali this year in the domestic market, given all the challenges it has faced during recent times. Any special design/offer from your company for the festival?

2016 was a difficult year for the Indian jewellery industry because of the 43 days strike followed by demonetization of the Indian currency. In light of this, we expect 2017 Diwali/ festive period to be much better than the previous year.

Gitanjali has a width of merchandise to meet all consumer needs and a depth of coverage across geographies and retail formats that make the products easily accessible.

Constant innovation is the key to our success, and we will be unveiling our new products and lines at the IIJS trade show in July.

Jewellery with the New Age precious metal LUMINEUX UNO GOLD which is an amalgamation of gold, platinum, palladium and silver was introduced to the Indian market last year is also expected to be a big seller.

Your views on online jewellery business in general. Do you have an online presence? If so, how is your company faring in your online venture?

A web presence, including e-commerce, has become critical for retail operations today to cater both to consumers who buy online as well as those who do research via the Internet before actually making a purchase at a physical store.

Gitanjali Gems was also one of the early movers in the online space over a decade ago, and now has a full-fledged presence in the rapidly growing online market spanning different formats and operational models. Marquee brands have already adopted e-commerce through own sites, Nakshatra.world, Gili.com, Asmidiamonds.com etc, as well as being highly visible in marketplaces like Jewelsouk.com, Amazon, Snapdeal etc.

The strong omnichannel retail strategy is supported by a comprehensive social media presence, which enhances transparency to new levels for the jewellery industry and engages with consumers, especially the Millennials, creating a two-way flow of information and ideas.

Your take on the Government’s GST; its effect on the gems & jewellery industry in general; and on gold jewellery in particular. How do you look forward to implementing this new change in your business going forward?

The entire concept of GST will bring transparency in business dealings not only for the jewellery sector but across each and every product category sold in the country and hence it is definitely long overdue.

There always has been a perception of lack of transparency in the jewellery sector in India, because of its unique way of operations. The GST would create an audit trail across the entire value chain and hence help in positively changing the image of the sector also.

There would definitely be hiccups, especially amongst the smaller manufacturers and retailers, but if 155 million Indians have been able to successfully use WhatsApp and other messenger services they would also be able to overcome the technical challenge with regards to GST requirements.

Aruna Gaitonde, Editor-in-Chief of Asian Bureau, Rough & Polished


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