How to Derive Right Value for Diamonds

8/8/2019 How to Derive Right Value for Diamonds

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1

Anil D. ShahPartnerVenus Jewel

How to Derive Right Value

for Diamonds



2

Current Scenario

“ You can avoid reality,

but you cannot avoid the

consequences of avoiding

reality” Ayn Rand (1905-1982)



3

Value Addition - “Is the amount of value added to a

product's in final or semi-processed form over and

above the value in its raw form”

Value Addition

Rough Diamond Polished Diamond

Value Addition

Finished Product

Definition of Value Addition



4

Value addition

• By manufacturer from root level• By Getting Right Kind of Rough

• Doing Research Base Production

• Based on Demand and Supply

• Based on Product• By Creating Faith in Grading

• By Research based pricing

• Based on Quality Control

• Based on Marketing• Based on Services

• By Inventory Management

• Based on moral value

Types Of Value Addition



5

First step towards value addition

E.g. procuring right kind of rough, right kind of Research, using right

kind of technology, doing the accurate grading , pricing etc…

Above factors contributes towards the Value addition of yourdiamonds

Value Addition By Manufacturer

From The Root Level



6

“Kimberly Process” is very important

Surety of continuous supply of rightkind of rough from the miners

Integrity has to be maintained right

from acquiring the rough up till the

final product

Extensive research for getting the

optimum output from the rough isnecessary

Value Addition by GettingRight Kind Of Rough



Value Addition Doing ResearchBased Production

7

Research is a continuous and anever ending process

Proper research has to be carried

out in order to be up-to-date withthe demand and the supply trends

within the market

A research department needs to be

highly experience

Right kind of research will alwaysbe helpful to give what the market

wants i.e. what you want



8

Changes in demand-

supply trends are factored

into the manufacturingsystem, swiftly changing

the product mix Leads to a win-win

situation for both,

customers as well as us

One gets exactly what

one is actually looking forwithout having to worry

about overstocking

inventories

Changes

factored into the mfg.system

Product mixautomaticallychanges to

currentdemand

Feedbackand market

trendanalysis

One getsexactly

what one islooking for

Value Addition Based on

Demand and Supply



Value Addition

Based on Products

Best cut, polish & symmetry are the important factors

Also need to balance its value of the stone in relation to cut& shape

E.g. we need to check whether we can derive a better value bymanufacturing round shape, princess shape, square emerald etc…

Provide correct database to artisans for taking on floor decision



10

There are many Problems with in the market such as:-

Lack of accurate, transparent, consistent grading inmarket

Grading done based upon traditional 4C’s and otherstandard parameters

Limitation for the buyers to review the diamonds in depth

before buying

Today's markets require much more than the standard

grading parameters

Value Addition based on CreatingFaith in Grading



“IDEAL Grading System”

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Ideal Grading System should be:- Consistent and detailed

Easy and hassle free for selection of goods

Eliminating requirement for

• Physical examination of goods

• Re-Grading

Such that Price difference with similargrades can be easily justified

Such that all the details of the diamond are

available in one place A Multi Tier Checking system, ensuring

that each diamond is checked by different

graders before it is being finally graded



12



13

Sr. No. Grades Venus Grading System Others

1 Cut 6 6

2 Internal Graining 4 0

2 Polish 5 5

4 Symmetry 5 5

5 Culet 6 8

6 Color (including fancy colors) 54 27

7 Color hue 17 0

8 Fluorescence 10 5

9 Fluorescence Color 5 6

10 Clarity 32 12

11 Luster 11 0

12 Table Inclusions 5 013 Black Inclusions 5 0

14 Inclusion Pattern 5 0

15 Open Inclusions 6 0



14

“Too many people today know

the price of everything and

the value of nothing.” - Ann Landers (1918-2002)



15

Various pricelist are available in market

Pricing should not be

• Market influenced one

• Influenced by the cost factor

Pricing should be influence by theDemand and supply

Pricing difference between 2 similar

grade stones should be easily justified

Value Addition by

Research based pricing



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RO +3.00 Ct: Price effect with color & clarity

Clarity

Price per Carat in INR

Difference in Price of same Clarity & Color

Group Per Ct in Rs.

Overall Price Difference in3.00 Cts for same Clarity &

Color Group in Rs.G+ G G-

VVS1 1497786 1401864 1335135 162651 487953

VVS2 1354207 1288088 1212643 141564 424692

VS1+ 1149991 1105287 1049477121508 364524

VS1 1126749 1083169 1028483

VS2+ 956928 920190 873658

117806 353418VS2 937809 901961 856226

VS2- 916956 884295 839122

SI1+ 685656 668411 640482

87441 262322SI1 657821 641467 614616

SI1- 638983 623332 598215



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Logical & Rational Pricing Extensively detailed grading combined with continual research on market

trends allowing rational and logical price derivation of each diamond

Trillions of possible pricing combinations for every shape and size

Price difference between stones is rationally justifiable and easy to understand

Pricing based on parameters rather than based on rough purchase prices

Pricing are set only based on study and not taking any other price list as a base All the business should be transacted on fixed and final pricing terms

Pricing Factors Polish

Symmetry

Fluorescence

Luster

Opens

Black Inclusion

Location of Inclusion

Inclusion Pattern

Pointer (weight)

No. of Days in Stock

No. of Hits

Internal Graining

Rough Material Type

Color Hue (Shade)



ID Ideal Cut

EX Excellent Cut

VG Very Good Cut

GD Good Cut

FR Fair Cut18

Shape Size Clarity ColorPolish

SymmetryCut

Price Perct in INR

Price Perct in US$

% Differencefrom first

Grade

Round 2.01 VVS1 G EX

ID 765846 16260

EX 762078 16180 -0.49

VG 709326 15060 -7.38

GD 637499 13535 -16.76

FR 558371 11855 -27.09

Cut



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Table Inclusion

Shape Size Clarity ColorCut

Polish

Symmetry

Table

Inclusion

Price Per

ct in INR

Price Per

ct in US $

% Differencefrom first

Grade

Round 2.01 VS1 G EX

T0 604764 12840

T1 598877 12715 -0.97

T2 589928 12525 -2.45

T3 583805 12395 -3.47

T4 580979 12335 -3.93

T0 Clean Inclusion

T1Minor Inclusion

T2 Medium Inclusion

T3 Major Inclusion

T4 Mostly Inclusion



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Shape Size Clarity ColorCut Polish

Symmetry

Black

Inclusion

Price Per

ct in INR

Price Per

ct in US $

% Difference

from first

Grade


N0 762078 16180

N1 750774 15940 -1.48

N2 746771 15855 -2.01

N3 739235 15695 -3.00

N4 723927 15370 -5.01

Black Inclusion

N0 None Inclusion

N1Minor Inclusion

N2 Medium Inclusion

N3 Major Inclusion

N4 Mostly Inclusion



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Symmetry FluorescencePrice Per

ct in INR

Price Per

ct in US $

% Difference

from firstGrade


FL0 762078 16180

FL1 739235 15695 -3.00

FL2 645741 13710 -15.27

FL3 585689 12435 -23.15

FL4 570617 12115 -25.12

Fluorescence

FL0 No Fluorescence

FL1 Faint Fluorescence

FL2 Medium Fluorescence

FL3 Strong Fluorescence

FL4 Very Strong Fluorescence



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Symmetry

Inclusion

Pattern

Price Per

ct in INR

Price Per

ct in US $

% Difference

from first

Grade

Round 2.01 SI1 G EX

S1 462287 9815

S2 459932 9765 -0.51

C1 457577 9715 -1.02C2 453102 9620 -1.99

Inclusion Pattern

S1 Scattered inclusion

S2 Semi Scattered Inclusion

C1 Light Concentrated Inclusion

C2 Semi Concentrated Inclusion



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Symmetry

Internal

Graining

Price Per

ct in INR

Price Per

ct in US $

% Difference

from first

Grade

Round 2.01 SI1 G EX

G0 457577 9715

G1 455222 9665 -0.51

G2 453102 9620 -0.98

G3 448392 9520 -2.01

Internal Graining

G0 No Internal Graining

G1 Light Internal Graining

G2 Medium Internal Graining

G3 Heavy Internal Graining

d d



1 ct Round IF D Price Trend

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684450

667440

765855

852975

964395959535

926280902835

858465 849465

744120 729180

676170

636435

620460

605025

645300

632475

657720

691245

677475

704925

701280697590

766710778185

770445

797715

834300

INR 100,000

INR 200,000

INR 300,000

INR 400,000

INR 500,000

INR 600,000

INR 700,000

INR 800,000

INR 900,000

INR 1,000,000

INR 1,100,000

J a n - 0 8

F e b - 0 8

M a r - 0 8

A p r - 0 8

M a y - 0 8

J u n - 0 8

J u l - 0 8

A u g - 0 8

S e p - 0 8

O c t - 0 8

N o v - 0 8

D e c - 0 8

J a n - 0 9

F e b - 0 9

M a r - 0 9

A p r - 0 9

M a y - 0 9

J u n - 0 9

J u l - 0 9

A u g - 0 9

S e p - 0 9

O c t - 0 9

N o v - 0 9

D e c - 0 9

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a

- 1 0

1 R d VVS2 F P i T d



1 ct Round VVS2 F Price Trend

25

360765

368010

410175 418275

463635

454365

425565425520

406665

384435

333180

308925

286470 282150

296505

290610

317790

314640

325800

332325

324090

332280

338895

340560

374355370620

361440

368730

379935

INR 100,000

INR 150,000

INR 200,000

INR 250,000

INR 300,000

INR 350,000

INR 400,000

INR 450,000

INR 500,000

J a n - 0 8

F e b - 0 8

M a r - 0 8

A p r - 0 8

M a y - 0 8

J u n - 0 8

J u l - 0 8

A u g - 0 8

S e p - 0 8

O c t - 0 8

N o v - 0 8

D e c - 0 8

J a n - 0 9

F e b - 0 9

M a r - 0 9

A p r - 0 9

M a y - 0 9

J u n - 0 9

J u l - 0 9

A u g - 0 9

S e p - 0 9

O c t - 0 9

N o v - 0 9

D e c - 0 9

J a n - 1 0

F e b - 1 0

M a r - 1 0

A p r - 1 0

M a y - 1 0

ff f d ff d



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Effects of different Grading Parameterson Price in same Shape, size, Color & Clarity Group

Shape Size Color Clarity Ct / Po/ sym

Top/ Cop

/Pop CI. Natts IP.

%

Difference

RO 2.01 F VS2+ EX NN T0 N0 NN

RO 2.00 F VS2- EX MD T4 N3 C2 -33.1

Shape Carats Color Clarity Cut Po / Sym NTTop/ Cop

/Pop

CI. IP. Flou%

Difference

RO 3.01 G+ SI1+ ID EX N0 NN T0 NN FL0

RO 3.00 G- SI1- ID EX N4 SM T3 C2 FL0 -36.2

Shape Carats Color Clarity Cut PO / Sym Top/ Cop/Pop

CI. Natts Flou %Difference

RO 1.01 G VVS2 ID EX NN T0 N0 FL0

RO 1.00 G VVS2 VG EX VS T4 N4 FL0 -25.2

Price Comparison of Fancy shapes



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ShapesPrice per cts.

In INR

% Difference

From Round

ROUND 823981

HEART 489379 -40.6

PEAR 488378 -40.7

MARQUISE 485122 -41.1

OVAL 466588 -43.4

PRINCESS 437536 -46.9

CUSHION BRILLIANT 424262 -48.5

RADIANT 411489 -50.1

CUSHION 396212 -51.9

EMERALD 382437 -53.6SQUARE RADIANT 377929 -54.1

SQUARE EMERALD 368162 -55.3

TRILLIANT 342616 -58.4

TRIANGLE STEP 279001 -66.1

BAGUETTE 277499 -66.3

Carats Clarity Color Ct/Po/Sy Shade Luster Black inclusion Fluorescence

2.010 VVS1 F Excellent White Very Good N0 FL0

Price Comparison of Fancy shapeswith Round Brilliants (in INR)

Diff b h P i i



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Logical & Rational Price Lists. Market Price Lists

Availability Available for customers in terms of actual stones Publically available to theirsubscribers

DepthAround 16 grading attributes and price differs on each

grade, example 1.00 & 1.01 also has different priceLimited to 4 C

Changes/

Updation Frequently on daily basis as per market / sales Less frequently

Dynamism

Around trillions of combination of prices based on

grading combinations Main 16 grades creates numbers

of combination

Limited combination.

Precision

Very less difference in each price points are varying on

the grades for example in Round shape +1.00 there is

difference in SI1 purity as under SI1+ TO SI1 DIFF IS5.50% AND SI1 TO SI1- DIFF IS 4.50% in D+ F- color.

High price point and gaps

as the prices are based on

basic clarity/color grades

Key Factors

dominating

price

Actual Sales / demand / supply Prediction / transactions/

generalized feedback

Difference between the Pricing

Value Addition Based



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Value Addition Based on Quality Control

Quality Control process affects the overallquality of the product

Quality control via Inspection at every stageof production essential

Skilled• Artisans

• Graders

• Sales people

Organization culture, confidence, motivating

workforce, team spirit, relationship alsomatters

We add Value by effective Quality Control inour organization

Value Addition Based



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Value Addition Based on Marketing

Marketing has always been an effective tool when it comesto promoting and branding the products

Manufacturer provide marketing support to the retailers

with the help of additional support apart from selling theproduct

E.g. Effective distribution supply chain

Which retailers provide marketing support to theircustomers

E.g. Advertising, promotion etc….

A Eff ti S l Ch i



You show him theavailable Products

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An Effective Supply Chain

A customer comesto your store

You log on tocompany website

But the customerwant customizethe Ring

The customerselects a Ring

The customerselects the good asper his specification

In mean time

Goods aredelivered to you

You prepare the ring

and deliver it to thecustomer on time

You start preparingthe mount

Thus the customeris happy

Value Addition based



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Value Addition based on Services

Services are the most important and a prominent part of

any business

Service has to be provided at the right place, at right

time, to right people, and at right cost

That could be any regular service or the Add-on-Service

that the company is providing

E.g. Diamond DNA, Unique Grading & Pricing System,

real time inventory, easy payment options, ready to

deliver goods, faster delivery of goods, etc….

Diamond DNA



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Diamond DNA

Value addition by



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Value addition by

Inventory Management

Predict requirements and accordingstock your goods

No need to keep huge inventory

Order at your convenience

Concentrate on the type and qualityrather than the cost of overstocking thegoods

Get Just-In-Time delivery of good forproduction

Choose your supplier appropriately

Reduce the cost of inventory and in turnreduce the overall cost of your finalproduct and maximize profits

Value Addition based on



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Value Addition based on

moral value

India is now operating on aninternational platform

Providing Faith to customers throughQuality, Transparency, Trust,

Satisfaction the 4 main Pillar of anyorganization is essential

Importance for moral value, bestbusiness practices, fair competition,equal opportunity has been

increasing

With all these practices we add valueto the product



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“It Is Not What WeReceive Enriches Our Lives,but It Is What We Give”

- George Albert Smith (1870-1951 )



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Documents

How to Derive Right Value for Diamonds