EXECUTIVE SUMMERY

After liberalization, the Indian market is open to wide competition. The market
underwent a change and the average customers have become more aware and
demands greater value for money. India being the 2 nd fastest growing economy in
the world next to china. Service sector dominates the India economy today by
contributing more than half our national income. In the 90’s one in every two
Indians earn his livelihood, by providing services, with best jobs, best incomes and
best talent, the service sector is the new showcase of the Indian economy. Moreover
technological advances have made it possible for India to complete on global bias.

The Jewelry industry is a global in nature due to geographic desperation of its value
–chain ,mining of gems and precious metals take place in the Africa ,Canada,
Australia and Russia ; polishing and Jewelry manufacturing in developing
economics like India, China and Turkey; retailing in the developed market of the
US, Europeon Union, Japan and Emerging Nations like India and China. Online
retailing or E-tailing of jewelry does away with geographic boundaries with
availability of jewelry at just a click away. Online jewelry Shopping is Catching Up
past and it is performing better than its brick and mortar counterpart.

Gems and jewelry sector is an integral part of the Indian economy. The sector is of
prime importance as it is one of the emerging sectors of Indian economy. The online
jewelry segment is nascent stage in India with online scales accounting for less than
3% of total jewelry sales in India.
 INTRODUCTION
Tanishq has emerged as India’s fastest growing jewellery brand and is a name
which signifies superior craftsmanship, exclusive designs and superlative
product quality. The term Tanishq was coined by Mr. Xerxes Desai by marrying
the words ‘Tan’ meaning body and ‘Nishk’ meaning a gold ornament.

The journey of Tanishq started with the launch of 18k gold watches studded with
precious stones in 1994. But, it soon grew into a 22K jeweller who presented an
exquisite range of gold and diamond jewellery while striking a perfect balance
between traditional appeal and contemporary charm. The brand perfectly
understands the ethos of the current Indian jewellery market and keeps evolving
along with its changing demands and preferences.

Tanishq has brought to the market a whole new standard of business ethics and
product reliability, in the process bringing about a transformation in which
jewellery is bought or sold in India. Not only does it abide by the stringent
standards but also adheres to strict and uniform guidelines across all 274+ stores
in 160+ cities. With innovations like the Karatmeter to check the purity of gold,
the brand has won over the customer’s hearts.

Following the line of ethical practice further, adequate policies are in place for
their karigars and they are well taken care of with benefits like health care and
financial aid. It is also the only jeweller in India with a state-of-art factory in
Hosur, Tamil Nadu and takes utmost care to ensure that it complies with labour
laws and environmental standards. There are 3 other units in Dehradun,
Pantnagar and Sikkim as well.

With retail sales of over Rs. 10,000 crores in the last financial year, Tanishq
continues to rule the jewellery segment in India.
 INDUSTRY OVER VIEW

Introduction
The Gems and Jewellery sector plays a significant role in the Indian economy,
contributing around 7 per cent of the country’s GDP and 15 per cent to India’s total
merchandise exports. It also employs over 4.64 million workers and is expected to
employ 8.23 million by 2022. One of the fastest growing sectors, it is extremely
export oriented and labour intensive.

Based on its potential for growth and value addition, the Government of India has
declared the Gems and Jewellery sector as a focus area for export promotion. The
Government has recently undertaken various measures to promote investments and
to upgrade technology and skills to promote ‘Brand India’ in the international
market.

India is deemed to be the hub of the global jewellery market because of its low costs
and availability of high-skilled labour. India is the world’s largest cutting and
polishing centre for diamonds, with the cutting and polishing industry being well
supported by government policies. Moreover, India exports 75 per cent of the
world’s polished diamonds, as per statistics from the Gems and Jewellery Export
promotion Council (GJEPC). India's Gems and Jewellery sector has been
contributing in a big way to the country's foreign exchange earnings (FEEs). The
Government of India has viewed the sector as a thrust area for export promotion.
The Indian government presently allows 100 per cent Foreign Direct Investment
(FDI) in the sector through the automatic route.

Market size
Gold demand in India rose to 760.40 tonnes between January to December 2018.
India's gems and jewellery exports stood at US$ 4.99 billion between Apr 2019 –
May 2019*. During the same period, exports of cut and polished diamonds stood at
US$ 3.52 billion, thereby contributing about 76.96 per cent of the total gems and
jewellery exports in value terms.
Exports of gold coins and medallions stood at US$ 686.51 million and silver
jewellery exports stood at US$ 765.98 million between April 2018 - March 2019 *.

The gems and jewelry market in India is home to more than 300,000 players, with
the majority being small players. Its market size is about US$ 75 billion as of 2017
and is expected to reach US$ 100 billion by 2025. It contributes 29 per cent to the
global jewelry consumption.
India is one of the largest exporters of gems and jewelry and the industry is
considered to play a vital role in the Indian economy as it contributes a major chunk
to the total foreign reserves of the country. The Goods and Services Tax (GST) and
monsoon will steer India’s gold demand going forward.

Investments/Developments
The Gems and Jewellery sector is witnessing changes in consumer preferences due
to adoption of western lifestyle. Consumers are demanding new designs and
varieties in jewellery, and branded jewellers are able to fulfil their changing
demands better than the local unorganised players. Moreover, increase in per capita
income has led to an increase in sales of jewellery, as jewellery is a status symbol in
India.

The cumulative Foreign Direct Investment (FDI) inflows in diamond and gold
ornaments in the period April 2000 – March 2019 were US$ 1.16 billion, according
to Department for Promotion of Industry and Internal Trade (DPIIT).
Some of the key investments in this industry are listed below.

 Deals worth Rs 8,000 crore (US$ 1.19 billion) were made at the Indian
International Jewellery Show held in August 2018.

 Companies such as PC Jewellers, PNG Jewellers, Popley and Sons, are

planning to introduce a virtual-reality (VR) experience for their customers. The
customer will have to wear a VR headset, through which they can select any
jewellery, see the jewellery from different angles and zoom on it to view
intricate designs.
 : GLOBAL SCENERIO:
Industry Insights
The global jewelry market size was valued at USD 278.5 billion in 2018 and is
anticipated to witness significant growth over the forecast period. Increasing
disposable income and innovative jewelry designs offered by manufacturers are
anticipated to drive the demand for jewelry over the forecast period.
A vast client base of the jewelry industry makes it possible for manufacturers to
cater to a large market and earn profits. Introduction of new designs and emerging
fashion trends are attracting customers. Manufacturers are leveraging this daily
change in fashion to innovate more products and designs to attract customers.
Moreover, changing lifestyle and perception of jewelry as a status symbol is
expected to boost the growth of this market. Additionally, growing acceptance of
jewelry among men is another factor propelling market growth. Products such as
cufflinks, plain gold chains, cufflinks, tie bar, cartography necklaces, and signet
rings are few of the products common among men.
Emerging trend of bridal jewelry is gaining momentum in the market. In countries
like India, a wedding is considered a huge affair having a lot of rituals and functions.
Growing expenditure on wedding functions is expected to positively impact the
market growth. Women are focusing on the latest trends of necklaces, hairpins, and
bangles. Availability of customization of such products is an important factor likely
to fuel market growth.
Usage of gold chains and necklaces is no longer limited to weddings and functions.
Men and women both wear rings, plain gold chains, and anklets as a fashion
statement. Earrings and bracelets are also gifted on various occasions or events like
birthdays and anniversaries. This consumption behavior is expected to positively
impact the market growth.
Manufacturers are also focusing on product innovation by leveraging the demand for
cross-cultural jewelry designs. Designs inspired by Brazil tribal women and Greek
or Roman culture are steadily penetrating the market based on their popularity.
Additionally, awareness about authenticity of the metals and gems used in the
jewelry pieces is also another factor fueling market growth.
Manufacturers are not only following the authenticity standards but also educating
consumers via their advertising campaigns. Moreover, market is expected to witness
significant growth via the online channel as major key players are focusing on using
their websites to announce product launches, sales, and other relevant information.
Material Type Insights
Gold is the most popular metal used for making jewelry across the world. It held the
largest market share and was valued at USD 117.1 billion in 2018 due to increase in
exports and imports of gold. Increasing GDP of developing countries like India and
China is one of the major reasons for the growth of gold jewelry.
China was the largest consumer of gold in 2018, followed by India and U.S.
Moreover, gold is considered to be a hard currency that can be converted into cash
during emergencies. Additionally, youth in China prefer low-purity gold jewelry for
day-to-day use. This is expected to drive the gold imports in China on a large scale,
fueling market demand.
However, diamonds are becoming increasingly popular due to increase in disposable
income. Diamonds are considered to be one of the earth’s most impressive natural
materials due to their stunning attributes. People consider having diamond jewelry to
be a personal indication that they are tough like the gem itself. It is also perceived as
a symbol of financial success to possess a diamond because their shortage makes
them a classy commodity.
Moreover, engagement and wedding diamond rings are quite popular in most of the
developed countries. In addition, availability of synthetic or laboratory-grown
diamonds is propelling the growth of the diamond jewelry segment. Synthetic
diamonds are as real as natural diamonds as they have the same internal structure.
However, these diamonds are 20%-40% less expensive as compared to natural
diamonds.
Platinum is a popular material used in jewelry making. However, platinum is heavy
in weight and is more expensive as compared to gold and diamond. Additionally,
platinum can easily get scratches and dents as compared to gold but it can hold
diamond and other precious stones very securely. This is expected to keep the
market demand for platinum jewelry constant. Other types of materials include
silver, steel, and copper. These metals are often used in fashion and imitation
jewelry.

Product Insights
Ring was the most popular product, accounting for a share of 28.9% in 2018. The
major reason for the popularity of this jewelry is growing interest of the consumers
in the intricate designs and details of the rings. Additionally, rings are perceived as
stylish and elegant. Hence, increase in consumption of men’s signet rings is also
expected to drive the segment.
Rings are available in various sizes and shapes. They are not only used for
engagements or anniversaries, but are also used on a daily basis. For instance, silver
is known to have healing properties and it helps with internal heat and circulation.
Hence, many people wear silver rings. Awareness about such spiritual benefits of
various metals and availability of custom-made rings are expected to drive the ring
product segment in the projected period.
Diamond-studded rings are gaining traction owing to increase in demand for
diamond jewelry. Additionally, platinum love rings are becoming popular and are
worn by many couples as a symbol of love. Moreover, many Brazilian designs
involve rings with various colorful gems mounted on them. Rising customer
inclination towards studded jewelry is a key factor boosting the segment growth.
Bracelet is another popular product. They are known to look elegant and gentle on
the hands without burdening the wrists unlike bangles. Availability of a variety of
thin and thick bracelets in gold, diamond, and silver is expected to boost the demand
for bracelets. Moreover, manufacturers are focusing on couple bracelets like
platinum or diamond love bands to boost sales. Increasing use of bracelets in daily
life is also expected to boost product demand.
Necklaces and earrings are the products mostly used during weddings. Heavy
expenditure is made on diamond and studded necklace sets during festivities.
Additionally, earrings and pendants are used for gifting purposes due to increase in
purchasing power of consumers. Moreover, increasing consumption of studded
earrings among men is expected to fuel the growth of the earrings segment. Other
products like cufflinks, tie pins, hairpins, and anklets are gaining popularity as the
young generation are becoming fashion-smart and trendy about their look and
appearance.
Regional Insights
In terms of revenue and consumption, Asia Pacific occupied the largest jewelry
market share of 60.1% in 2018. This is attributed to high demand from countries like
China and India, where gold is consumed on a large scale. China was the leading
country in the market due to its rapidly developing economy and increasing
spending power of the population. Gold jewelry is very popular in India due to its
high demand in weddings and festivals. Additionally, presence of Chow Tai Fook,
one of the major players, in China, Hong Kong, and Macau is expected to boost
jewelry demand in this region.
Middle East and Africa is expected to witness significant growth, expanding at a
CAGR of 8.0% from 2019 to 2025. Jewelry designs in UAE and Saudi Arabia are
very unique and world-famous, which, in turn, is expected to boost the market
growth in this region. Additionally, this region is expected to contribute significantly
to the market growth in the forecast period due to presence of gold mines and
emergence of UAE as the largest diamond trading hub.
North America and Europe are expected to witness slow growth due to major
imports of gold and diamond being diverted to Asia Pacific countries. However,
diamond jewelry is increasingly becoming popular due to rise in disposable income
of the population.
Jewelry Market Share Insights
The global market is highly competitive and fragmented due to the presence of many
key manufacturers like Tiffany & Co., Swarovski, Signet Jewels, and Chow Tai
Fook. However, major manufacturers are facing stiff competition from local
manufacturers in various parts of the world. Product innovation and sales via online
channel are the key trends in the market. Manufacturers are focusing on online
services to learn the consumer demand and update their manufacturing technologies
with the latest processes. Additionally, websites are customized as per the
consumer’s purchase and search history to create demand. This is expected to
positively impact the market growth in the forecast period.
 : INDIAN SCENERIO:
India's gems and jewellery sector are one of the largest in the world contributing 29
per cent to the global jewellery consumption. The market size of the sector is about
Rs 5,24,175 crore (US$ 75 billion) as of 2018 and is estimated to reach Rs 6,98,900
crore (US$ 100 billion) by 2025. The sector is home to more than 300,000 gems and
jewellery players, contributes about 7 per cent to India’s Gross Domestic Product
(GDP) and employs over 4.64 million employees.

India's gems and jewellery sector contributes about 15 per cent to India’s total
merchandise exports. The overall net exports of gems and jewellery stood at Rs
67,793.3 crore (US$ 9.70 billion) in FY20P (April-July’19) registering a compound
annual growth rate (CAGR) of 4.99 per cent over FY05; whereas gems and
jewellery overall imports is about 3 per cent, in terms of value Rs 2,29,239.2 crore
(US$ 32.8 billion) in FY19 and increased at a CAGR of 7.97 per cent from Rs
81,282.07 crore (US$ 11.63 billion) in FY05 to Rs 2,20,293.28 crore (US$ 31.52
billion) in FY18.

India is the world’s largest centre for cut and polished diamonds in the world and
exports 75 per cent of the world’s polished diamonds. Today, 14 out of 15 diamonds
sold in the world are either polished or cut in India. India exported Rs 24,601.28
crore (US$ 3.52 billion) worth of cut and polished diamonds in FY20P (as of May
19). It contributed 73.42 per cent of the total gems and jewellery exports.

India is the largest consumer of gold in the world. Rising middle class population
and increasing income levels are the key drivers for the demand of gold and other
jewellery in India. India’s demand for gold jewellery hit a four-year high in
Q1CY19 at 125.4 tonnes. India’s gold jewellery exports stood at US$ 4.06 billion
and imports stood at US$ 98.17 billion in FY20P (April-July’19). Gold demand in
India rose 11 per cent year-on-year to 760.40 tonnes during January-December
2018. Also, the Government of India has permitted 100 per cent Foreign Direct
Investment (FDI) in the sector under the automatic route.

The Rs 250,000 crore (US$ 35.77 billion) household jewellery industry is probably
going to get a major lift through the government’s decision for foreign direct
investment (FDI) in retail. As of January 2018, the Reserve Bank of India (RBI) has
increased the scope of the gold-monetisation scheme by allowing charitable
institutions and government entities to deposit gold, which is expected to boost
deposits over the coming months. The Bureau of Indian Standards (BIS) has revised
the standard on gold hallmarking in India from January 2018, to include a BIS mark,
purity in carat and fitness as well as the unit’s identification and the jeweller’s
identification mark on gold jewellery. The move is aimed at ensuring a quality check
on gold jewellery.As per Union Budget 2019-20, the GST rate has been reduced
from 18 per cent to 5 per cent (*5 per cent without Input Tax Credit (ITC)) for
services by way of job work in relation to gems and jewellery, leather goods, textiles
etc.- Provisional

Government Initiatives

 The Bureau of Indian Standards (BIS) has revised the standard on gold
hallmarking in India from January 2018. The gold jewellery hallmark will now
carry a BIS mark, purity in carat and fitness as well as the unit’s identification
and the jeweller’s identification mark. The move is aimed at ensuring a quality
check on gold jewellery.

 The Gems and Jewellery Export Promotion Council (GJEPC) signed a

Memorandum of Understanding (MoU) with Maharashtra Industrial
Development Corporation (MIDC) to build India’s largest jewellery park in at
Ghansoli in Navi-Mumbai on a 25 acres land with about more than 5000
jewellery units of various sizes ranging from 500-10,000 square feet. The
overall investment of Rs 13,500 crore (US$ 2.09 billion).

 Gold Monetisation Scheme enables individuals, trusts and mutual funds to

deposit gold with banks and earn interest on the same in return.

Road Ahead
In the coming years, growth in Gems and Jewellery sector would be largely
contributed by the development of large retailers/brands. Established brands are
guiding the organised market and are opening opportunities to grow. Increasing
penetration of organised players provides variety in terms of products and designs.
Online sales are expected to account for 1-2 per cent of the fine jewellery segment
by 2021-22. Also, the relaxation of restrictions of gold import is likely to provide a
fillip to the industry. The improvement in availability along with the reintroduction
of low cost gold metal loans and likely stabilisation of gold prices at lower levels is
expected to drive volume growth for jewellers over short to medium term. The
demand for jewellery is expected to be significantly supported by the recent positive
developments in the industry.
 OTHER MARKET SHARE
These jewellery chains—including Titan, PC Jewellers, Kalyan, Joyalukkas,
Malabar Gold and Diamonds, GRT, P N Gadgil and Sons and Thangamayil—have a
current share of 29 per cent and are growing at a CAGR of 11 per cent, although, the
Rs 2.7-lakh crore jewellery market in India has recorded a flat growth between
FY14 and FY18. This implies that there is a clear shift of business towards the
organised trade as the jewellery chains have aggressively expanded their footprint by
an estimated 2 million square feet in those years.

“We expect this Superpack jewellers to corner 42 per cent of the domestic market by
FY23, underpinned by their aggressive expansion drive, design and increasingly
competitive pricing vis-à-vis family jewellers,” said Jay Gandhi, AVP, consumer
discretionary, HDFC Securities.

Earlier, precious metal agency GFMS too had found that the shift towards organised
trade was accelerated after demonetisation and introduction of GST, which made it
difficult for the unorganised trade to operate as earlier. Industry dynamics have
oscillated in favour of the organised jewellers since FY15 due to the spate of
regulatory events. The revocation 80:20 import rule and ban of gold on lease as well
as the revision of the cap on gold deposit schemes ?upward to 35 per cent of
networth?have helped the organised players. Mandatory hallmarking too will aid the
unorganised to organised shift in the future.

According to HDFC Securities, the battle for market share battle will be fought
largely in the north and west markets where the presence of these top players is
limited. These jewellers have a 4 per cent share among the BIS-listed jewellery
stores in North and West, while their revenue share is 40 per cent in the south. Scope
for penetration, coupled with higher profitability from impulse purchases and
studded jewellery off-take, make North and West key markets for these players to
conquer.

The up-selling opportunity presented by gold exchange scheme can help these
jewellers clock higher same store sales growth. Almost 50-70 per cent of their
customer base are repeat customers who are ideal candidates for exchange schemes.
Titan and PCJ account for 5 per cent and 2 per cent of the total gold exchange
market. Across zones, big-box jewellers have revised their exchange programme to
capture the up-selling opportunity.
While Titan remains a distant leader in terms of national presence, able contenders
are visible across all zones. South jewellers, which used to have homogenous
jewellery designs, are proactively increasing their non-south ‘Karigar’ pool. Hence,
the design arbitrage of Titan will dwindle in the medium-term. Jewellers like
Joyalukkas, Kalyan Jewellers and PCJ may catch up with Titan in terms of design.