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Sustainability is the only way forward - Rahul Jauhari

18 may 2020

rahul_jauhari_xx.pngRahul Jauhari, Sr Vice President of Global Sales & Marketing, Star Rays, has forged ahead professionally for more than 14 years garnering experience in Business Development, Luxury Lifestyle Consultancy, Market Analysis, Global Fashion / Luxury trend study, Strategic Planning, Merchandising, Product Sourcing/ Pricing Strategy, Profit Centric Operations and much more.

For the last 2-plus years as Sr Vice President Rahul has been handling Star Rays’ marketing adeptly across the globe. Before this, he was Commercial Director, India of HRD, and also Sr Manager - International Business at Gitanjali Gems Ltd. Rahul also has a range of degrees under his belt like IT-Computer Science; Diamond Grading – GIA; Marketing Management – NMIMS; and an Executive Program in Luxury Management- IIM, Bangalore.

Here, in an Interview with Rough & Polished, Rahul Jauhari speaks about Star Rays, a major Indian diamond company’s journey over the years, as well as its plans for the future…

Some excerpts:

Star Rays recently announced that it intends to be India’s first carbon-neutral diamond company in the country. Tell us more about this initiative…

The diamond industry is not often credited for its efforts to protect the natural world and support its people and communities, even though many in the sector are proactive in building a sustainable future for our planet and its inhabitants.

Star Rays is leading the charge among diamond cutting and polishing firms. Social responsibility and environmental protection are top priorities for Star Rays. Star Rays is convinced that sustainable growth can be achieved through the development and well-being of its employees and their families, business partners, the local community and the environment.

Carbon neutrality is just one of several initiatives that Star Rays has adopted. This has helped to cement its reputation as an environmentally and socially conscious company. Underlining its commitment to sustainable business practices, Star Rays has been carrying out carbon emission assessments for the past two years and is determined to become India’s first carbon-neutral diamond manufacturer. Star Rays is collaborating with Carbon Expert, a carbon consultancy firm that has developed processes and best practices to help companies become carbon neutral under the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard. Star Rays is also participating in the World Jewellery Confederation’s Greenhouse Gas Measuring and Offsetting Initiative to ensure that its carbon emissions and removals are measured by international standards.

Can you run us through Star Rays history, giving details about the growth graph, products, etc., for the benefit of our readers?

Star Rays is one of the leading manufacturers of solitaire diamonds since 1980. We were accorded De Beers Sightholder status in the year 2014. Our offering includes CanadaMark and Forevermark diamonds as well. As a member of the Responsible Jewellery Council, we are committed to ethical best practices in all areas of our business.

Our manufacturing facility in Surat produces close to 60,000+ solitaires annually from 0.30 – 5ct+. We offer a seamless buying experience with a wide selection of close to 12,000+ solitaires through our website and mobile app.

We export to more than 28 countries and have a global presence with sales offices in New York, Dubai, Hong Kong and Mumbai.

In the recent past, Star Rays established a fully owned subsidiary, Star Rays Diamonds Botswana (Pty) Ltd which manufactures diamonds in a fully equipped, state-of-the-art factory in Gaborone, Botswana. We currently employ close to 45 people in the facility with most of them being locals.

Our vision is to build a beneficiation manufacturing operation of the highest standard (when benchmarked against global best practices) allowing for long-term sustainability. Star Rays is also committed to skills transfer, employee well-being and believes in giving back to the communities in which it operates. Star Rays Botswana is a De Beers Sightholder as well. 

Star Rays Factory                                                                                                                               Image credit: Star Rays

As a solitaire manufacturer, does Star Rays use multiple sources to buy rough? Currently, which mining companies are the Star Rays’ main rough diamond suppliers?

We directly source high-quality rough diamonds from the world’s leading mining companies like De Beers, ALROSA and Dominion. Besides these majors, we do procure rough diamonds from other mining companies as well.

If mining companies reduced their supplies, will the Indian industry return to is robust past? What effect will over-stocking of rough diamonds have on the price? What changes do you foresee this year?

Considering the current situation where half of the world is under lockdown due to the spread of Coronavirus the industry is mulling to stop imports of rough diamonds for next month or so. This could be a very sensible move to bring back some sort of a balance between reduced demand and current supply. It will be practically impossible to continue at the same levels of production as demand will take a hit shortly.

When and how things will return to normalcy is unpredictable. With such uncertain times, the industry should continue to sell from its existing inventory without adding any more polished goods for at least the next few months.

Mining companies have been supportive in understanding the situation and have offered options to defer the purchase to a later date. This has somewhat helped ease the pressure on the midstream.

Midstream will surely see further consolidation going forward. It will need to evolve and become more agile. We need a more demand-driven manufacturing approach. The cyclic over optimist approach of the industry hasn’t been very helpful.

As exporters, what is the demand situation in the global market for solitaires? What quality, size, shape, etc., of solitaires move well in overseas markets in comparison to the Indian domestic market? What’s the volume of business in the domestic market right now?

With most of the major countries been affected by the pandemic, it’s very difficult to say how long will it take before the consumer demand returns to normal. We can hope that in another 4 to 5 months things may start to settle. Far-East (China and HK) have started to show signs of recovery on the business front.

India manufactures and exports close to 90% of the world diamonds by volume so practically India is exporting all kinds of diamonds world over.

Solitaire demand has been steady in the overseas markets. Every country has a market for all sorts of solitaires so it’s practically not possible to associate a particular quality of solitaire with a country. China contributes close to 15% of global diamond consumption and most of these diamonds are below 1ct size (0.30, 0.40, 0.50, 0.70, 0.90 pointers, in F to I, VS-SI range). The USA continues to contribute close to 45% of the world diamond consumption and it’s a very mature and diversified market. The US has a market for all kinds of solitaires ranging from the best to the commercial qualities.

India contributes close to 6-8% of the global diamond market which in terms of value should be around USD 8 Billion. Since the year 2000 India has seen a steady growth on the diamond consumption front. It’s just that the last couple of years the growth has been stagnant for various reasons. India has a very strong affinity to diamonds which will surely lead to higher consumptions in the future.

With organisers either cancelling or postponing Global Trade Shows recently due to COVID-19, how has it affected Star Rays in particular? Will this negatively affect the Indian G&J industry on the whole? Your views.

Cancellation or rescheduling of events will surely have an impact soon. These events provided a great platform for PR, networking and displaying of products. As the reoccurrence of such a pandemic can’t be ruled out in future, the industry will have to use more digital and online technologies to compensate for the cancellation of these trade shows. I feel that the industry can mitigate this negative impact to a great extent by using digital marketing and networking tools.

Buying of solitaires has already become an online phenomenon. Our global clients were able to access our inventory through our website and app even during this lockdown.

Looks like Lab Grown Diamonds are here to stay, with many companies jumping onto the bandwagon. What do you predict will be the future of the Natural diamond industry? Do you think natural diamond and LGD sector can co-exist without any major issues? Your opinion.

In my opinion, both are two different categories, and both will have room to co-exist. It will be wrong to say that one will take over the other. Looking at the better profit margins a lot of companies have jumped into it but in the long term, these margins will reduce drastically. Already in the last one year, the prices of LGD’s have reduced 40- 60% and it’s believed that LGD prices will stabilize at somewhere 10% of its natural counterpart.

Both these categories will cater to different need states of the consumers. Consumers will probably start looking at LGD’s as fashion category. Natural Diamonds will continue to retain its premium positioning due to its rarity and value holding capacity.

Today, the Indian gem and jewellery industry is badly hit due to liquidity problems, high rough cost, polished prices going down, gold prices going up, bank financing cut drastically; production reduced at cutting centres, workers rendered jobless… and so on. Where do you think the industry is heading to, as of now?

We are experiencing a phase of consolidation. There have been too many players in the midstream. I would say that the industry has seen some unrealistic and unsustainable growth in the last decade or so. Lack of financial discipline in the industry led to the banks shying away from it.

High rough cost again can be contributed to the availability of easy financing. If any industry starts to produce more than the demand then naturally prices will go down. In the race to secure top positions in terms of exports, the industry lost its track and went after unviable production volumes.

Going forward in future companies need to have the financial discipline and make rational business decisions. We will have to change from being manufacturing centric to a marketing-oriented industry. We need to treat diamonds as a luxury product and not a commodity. The language of the trade needs to change across the board.

Finally, how is Star Rays faring in these tumultuous times? What strategies is the company using to overcome this period? Any diversifying plans, maybe into LGDs, in the future?

Ethics and values have been at the core of our business. We have always believed in a lean organizational structure which is agile and driven by rational business decisions.

We will be looking at spending more wisely on technology and digital marketing as these will be driving the businesses in future. Sustainability and traceability are the two key areas where we remain focused on.

The recent slowdown due to the pandemic has impacted everyone and we aren’t an exception to the same. This year may not be the best year for the industry due to the pandemic but we remain positive in the long term.

We remain focused on our natural diamond business and don’t have any plans of diversifying into LGD’s anytime soon.

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