India’s Diamond Growth to Slow Due to Lack of Rough

Photo credit: De Beers Group

Exports of gems and jewelry from India are expected to rise 5 to 7 percent in 2012/13, a slower pace than the prior year than the estimated 9 percent growth in 2011/12 that ends in March, as sourcing of rough diamonds and color stones is the "biggest constraint," Rajiv Jain, chairman of Gems and Jewellery Export Promotion Council, reportedly said.

Jain expects gems and jewelry exports from India to rise to $47 billion in the 2012 fiscal year, Reuters reports.

India, the largest diamond manufacturing center in the world, does not mine diamonds of its own. It depends on raw materials from Botswana, Zambia and South Africa among others for supply.

"Every mining country wants to process diamonds and color stones in their home country and increase employment there," Jain reportedly said.

Gems and jewelry amounts to 17 percent of India's total exports, and employs 1.5 million workers.

Jain reportedly said the council was focusing on Latin American countries and Commonwealth of Independent States, along with China, to promote jewelry from India, but will take time for substantial increase in the market share, Reuters reports.

Read More

India’s February Gems and Jewelry Exports Down 39%

Fewer orders from western markets have resulted in a 39.3 percent decline in February gems and jewelry exports to $2.7 billion, according to India’s Gem and Jewellery Export Promotion Council.

The biggest losses among India's gemstone and jewelry manufactures were led by a 53.7% drop in polished diamond orders, followed by a 30.3 percent drop in gold jewelry exports. Exports of rough diamonds fell by 15.6 percent for the period and colored gemstones fell by a more modest 3.7 percent.

Gains for the month were led by silver jewelry (39.5 percent) and gold medallions and coins (15.7 percent).

GJEPC, the organization the leads the India gems and jewelry industry, reportedly blames the decline on fewer orders from the U.S. and Europe, whose economies are still struggling. Other major export markets for the gem and jewelry manufacturers are the UAE and Hong Kong.

The organization also reported that gems and jewelry exports increased by 4 percent from April 2011 till February.

Read More

Import Tax Caused an 80% Drop in India’s Diamond Imports

Indian workers polishing diamonds. Photo credit: Solitaire International

February diamond imports fell 80 percent, year-over-year, to $476 million in February due to a 2 percent import increase for the precious gem, according to the India Gems and Jewellery Export Promotion Council as reported by the Times of India.

The tax has led to drastic drop in the “circular” or “round tripping” among the country's diamond dealers and manufacturers. These are deals in which the same goods are traded over and over to raise capital. The practice has reportedly come under fire, inside and outside the Indian diamond industry, according to reports because it allegedly involves defrauding banks, padding a company’s volumes or laundering money.

The import tax has also led to a decline in diamond exports, GJEPC reportedly said.

Read More

The Dramatic Fall of India’s Largest Jewelry Company

Mehul Choksi, managing director of Gitanjali Group, is under investigation for stock market manipulations.

One of the world’s largest diamond and jewelry companies has quickly fallen on hard times. The Gitanjali Group, which bills itself as the “world’s largest integrated conglomerate of diamonds, jewelry and lifestyle brands,” has seen its share price fall 79 percent in a month, largely due to the Reserve Bank of India's recent restrictions on gold imports that has damaged much of the jewelry trade in the country. However, the latest setback on Thursday appears to have been self afflicted.

Gitanjali’s managing director, Mehul Choksi, has been suspended of trading activities by the Securities and Exchange Board of India (SEBI), as part of a probe into suspected market manipulations, according to reports by the Economic Times of India and other publications in the country.

Choksi is one of 26 individuals and firms that were suspended Thursday, according to reports. They are all suspected of being linked with a securities and stock brokerage services company called Prime Broking Company (India) Ltd., which also operates under the name Prime Securities. The company is described by The Economic Times as a “significant shareholder” of Gitanjali. Choksi is the leading shareholder of Gitanjali with a 51 percent stake. They are being investigated for allegedly making trades while concealing their identities, according to the report. 

According to a second story in The Economic Times, Gitanjali shares appear to be in the center of this investigation. Several investors reportedly purchased Gitanjali shares through Prime Broking, “which allegedly pledged these without their consent to take exposure on the derivatives segment of NSE.” Two of the suspended parties have filed police reports against Prime Broking.

The company that began in 1966 as a cutting and polishing diamond operation for the jewelry trade has undergone dramatic and expansive growth. Gitanjali now operates on five continents and in just about every sector of the jewelry industry. It is one of India’s largest diamond manufacturers, jewelry manufacturers and retailers. It manufactures rough diamonds, designs and builds jewelry, creates jewelry brands and distributes diamonds and jewelry for wholesale and retail—including its own stores in India, the US and other parts of the world. It claims to be:

* The world’s largest number of established jewelry brands under one roof;

* A distributor and retailer with 4,000 points of sales throughout the world; and

* The largest precious jewelry manufacturer in the world, with the ability to produce 235,000 jewelry pieces per month across nine manufacturing facilities.

In India—in addition to its vast manufacturing, design, distribution and retail operations—it owns approximately 20 jewelry brands, each one fronted by a Bollywood star.

Among its holdings in the US is Samuels Jewelers, the country’s fifth largest retail jewelry chain with 111 stores. In Italy, it owns five jewelry brands under the name “Leading Italian Jewelers,” with the most prominent being luxury jewelry brand Stefan Hafner. It also has large operations in Belgium, UK, Japan, China, Southeast Asia and the Middle East.

If that’s not enough, the company owns 17 watch brands (including Italian brands Morellato and Pirelli) and several brands that deal in household products, particularly tableware and silverware, that include the Italian companies Greggio Argento and Donatella.

Gitanjali’s influence on the worldwide jewelry trade cannot be underestimated. Its suffering may have a domino effect—particularly in India..

The company trades on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India (NSE). Since June 24, the company went from a high of 550 rupees ($9.21) to a low of 115 ($1.93) on the BSE. It last traded at 115.60 rupees.

The impact of this setback will soon be known as markets will open in a few hours.

Please join me on the Jewelry News Network Facebook Page, on Twitter @JewelryNewsNet and on the Forbes Website.

Read More