A

Project report

On

Gems and jewelry industry

Submitted to: Submitted by:

Ms. Gagandeep kaur anu gagaan

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Index

particular Page no.

Industry overview 3-7

Types of gems 7-14

Gold and silver 14-16

SWOT 17-18

Government regulations 19-24

Best diamonds brands 24-27

Major players 28-29

Rajesh exports ltd. 30-34

Asian star jewels ltd. 35-36

Financial reports 37-45

Comparative analysis 46-47

Jobs and career in jewelry industry 48-51

Future of jewelry industry 52-53

Exports of gold and diamond 54-56

Market share of gold and diamond 57-58

conclusion 59-60

bibliography 61-62

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INDUSTRY

OVERVIEW

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Gems and jewelry industry

Precious metals and gemstones have been an integral part of the Indian civilization since its recorded

history. Gems and Jewelry (G&J) has been consumed by Indians for ages for both its aesthetic as well as

investment value. India has the distinction of being the first country to introduce diamonds to the world.

The country was also the first to mine, cut & polish and trade in diamonds.

The Indian G&J industry can be classified into various sub segments like diamonds, colored stones, gold

and silver jewelry, pearls, etc. However, the two major segments in India are gold and diamonds. India

dominates the diamond processing trade with 11 out of 12 diamonds being cut and polished in India. India

also dominates the gold and silver consumption globally with consumption of approximately 700 tonnes

(gold) p.a. A major foreign exchange earner, the industry is also notable in providing employment to 1.5

mn people directly and indirectly.

The industry is characterized by a significantly large unorganized sector, labour-intensive operations, high

working capital & raw material intensiveness, gold price volatility and export orientation. The demand for

gold and diamond jewelry is driven by festivals, weddings and gifts, the increasing affluence of the middle

class population and the increase in per capita spent on luxury items.

Though India plays a dominant role in the G&J industry in terms of processing and consumption, mining

of gold and diamond is amongst the lowest in the world. India imports gold and rough diamonds along

with other precious metals. Gold is purchased from countries like Switzerland, South Africa, Australia and

UAE, and rough diamonds are sourced from Belgium, UK, Israel and UAE. There is an impact on the

demand for gold given the record high price of gold in the last couple of years, but consumers have

remained bullish on the precious metal and there is an increased investment-related demand for gold.

The key drivers for growth in the industry are increasing disposable income, conscious marketing efforts,

rising young population with the urge to spend on jewelry since it’s regarded a fashion accessory. Indian

G&J players are recognizing the importance of diversifying their business to emerging markets like China

and the Middle East and not completely relying on the US as was the case before the financial crisis.

However, it will be difficult to replace the US which is still the largest diamond market in the world. We

now expect emerging market countries to be the engines of future growth for the diamond market as the

demand from developed countries will remain subdued for some time to come.

Based on the gradual recovery in the global markets, CARE Research has investigated some of the leading

indicators that signal a growing momentum in the Indian G&J sector. Factors like significantly lower

inventory levels as compared to the period of financial crisis, a huge jump in export numbers, lower

unemployment levels and stable rough diamond prices, all reveal a resurgence in the sector which was so

critically impacted during the financial crisis when demand from developed countries plummeted. The

report elucidates facts on the Indian Gems & Jewelry Industry, supplemented by the latest available data.

Emphasis is laid on the following topics to accomplish the report.

* Evolution and the current state of the industry.

* Product profile of various categories of gems and jewelry like diamond, gold, silver and colored

gemstones.

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* Industry characteristics elaborated with respect to raw material, labour and working capital intensiveness,

unorganized sector, export orientation and branding & certification.

* Demand-supply scenario and detailed discussion on demand drivers, increasing affluence and middle

class population and shift in buying patterns.

* Extensive coverage on export & import trade with the latest three-year data on product-wise and country-

wise exports of gems and jewelry and product-wise imports of gems and jewelry.

* Cost analysis analyzing raw material cost and interest cost.

* A brief note on duty structure and government regulations in the industry.

* SWOT analysis and Porter’s Five Force model.

INDIAN JEWELRY INDUSTRY

The gems and jewelry industry occupies an important position in the Indian

Economy. It is a leading foreign exchange earner, as well as one of the fastest

Growing industries in the country.The two major segments of the sector in India are gold jewelry and

diamonds.Gold jewelry forms around 80 per cent of the Indian jewelry market, with the

Balance comprising fabricated studded jewelry that includes diamond and Gemstone studded jewelry.

Besides, India is world's largest cutting and Polishing Industry for diamonds, well supported by

government policies and the banking sector with around 50 banks providing nearly $3 billion of credit to

the Indian diamond industry.

A predominant portion of the gold jewelry manufactured in India is consumed in the domestic market.

However, a major portion of the rough, uncut diamonds processed in India is exported, either in the form

of polished diamonds or finished diamond jewelry. The largest consumer of gold worldwide, India is also

the leading diamond cutting nation.

Gold and precious gems have played a pivotal role in the Indian social fabric and economy. Precious gems

and jewelry are a part and parcel of Indian traditions and customs. Gold has traditionally been valued in

India as a savings-and investment

vehicle and even today, continues to be the second most popular

instrument after bank deposits.Gems and jewelry is one of the fastest growing sectors in the Indian

economy with an annual growth rate of approximately 15 per cent. The gems and jewelry industry

accounts for nearly 20 per cent of the total Indian exports and employs over 1.3 million people, directly or

indirectly. The Gems and Jewelry (G&J) market essentially comprises of sourcing,

processing, manufacturing and selling of precious metals and gemstones, such as, Gold, Platinum, Silver,

Diamond, Ruby, and Sapphire etc. The G&J market is a significant contributor to the Indian economy,

based on the size of the domestic market and through its contribution to the country’s exports. India is the

largest consumer of gold (around 20 percent of global consumption) and also the largest

Brief History

Before the liberalization of the Indian economy in 1991, only the Minerals and Metals Trading

Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to import gold.

The abolition of the Gold Control Act in 1992, allowed large export houses to import gold freely.

Exporters in export processing zones were allowed to sell 10 percent of their produce in the domestic

market. In 1993, gold and diamond mining were opened up for private investors and foreign investors were

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allowed to own half the equity in mining ventures. In 1997, overseas banks and bullion suppliers were also

allowed to import gold into India. These measures led to the entry of foreign players like DeBeers,Tiffany

and Cartier’s into the Indian market. In the 1990s, the number of retail jewelry outlets in India increased

greatly due to the abolition of the Gold Control

Act.

This led to a highly fragmented and unorganized jewelry market with an estimated 100,000 workshops

supplying over 350,000 retailers, mostly family owned, single shop operations.

In 2001, India had the highest demand for gold in the world; 855 tons were consumed a year, 95% of

which was used for jewelry.

Structure of the Industry:

India’s G&J industry is highly unorganized and fragmented with 96 percent of the total players being

family owned businesses. The gold processing industry has around 15,000 players, with only 80 having

revenues over USD 5 million. India is also home to around 450,000 goldsmiths,100,000 gold jewellers

along with 6,000 diamond processing players and 8,000 diamond jewellers.The value chain of the industry

starts from sourcing and mining of the metals and extends to jewelry retail. While India is not a major

miner of previous metals and stones, the country’s inexpensive and well skilled workforce makes it a

world leader in processing of diamonds. The country’s jewelry retail sector is also expected to evolve with

a shift among consumers towards branded jewelry, driven by greater quality consciousness.

India was one of the first countries to start making fine jewelry from minerals and metals and even today,

most of the jewelry made in India is hand made. The industry is dominated by family jewellers, who

constitute nearly 96 per cent of the market. The country at present has a small but growing organized

sector.Organised players such as Tata with its Tanishq brand, have, however, bee growing steadily to carve

a 4 per cent market share.

India was the first country to introduce diamonds to the world, the first to mine,cut and polish them as well

as trade them. The cutting and polishing of diamonds and other precious stones is one of the oldest

traditions in India and the country has earned a considerable reputation both in the domestic and

international markets for its skills and creativity. In the global diamond market today, Indian diamonds

account for 55 per cent share in value terms, 80 per cent share in caratage (weight) terms and 90 percent

share in volume terms. Today there is a ready availability of an entire range of diamonds in nearly every

size, quality and cut.India offers the twin advantages of skilled labour and low cost in the area of gemstone

processing. India's significance in the global gems and jewelry industry can be largely attributed to its

strength in diamond processing. The export industry mainly comprises of small-to-large units based in

various special economic zones (SEZs), export processing zones (EPZs) and in Electronics Exports

Processing Zone (SEEPZ).

GEMS AND JEWELRY INDUSTRY IN WORLD

Gems and jewelry industry has the top ten highest export value that incurred employment and continuous

industries such as mining, designing, making and assembling of body, producing in gem-cutting

machinery, and packaging, etc. Therefore, gems and jewelry industry is an important industry of national

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economic development. In 2003, there are attentive policies and issues related to this industry as follows.

Thailand has participated in the unpolished diamond import-export certification project under the

agreement of Kimberley Process since January 1, 2003 which has confirmed that Thailand would not

polish diamond from the countries that support terrorism.

The Revenue Department has announced the VAT exemption for jewel, white gold, platinum, silver, and

paradium on April 10, 2003, resulting in the increased competitiveness.The Ministry of Industry has been

approved for Bangkok: Fashion City Project by the Cabinet on July 8, 2003 with Baht 1,824 million

budget and 18 months operating period.Board of Investment (BOI) has increased the privileges to the

entrepreneurs who have invested in Gem polis Industrial Estates with exemption of corporate tax for 8

years to the relocating and new factories, and import duty for machinery. The promoting zones have been

classified as exempted 5 years for zone 1, 7 years for zone 2, and 8 years for zone 3. Research and

Development Institute of Gems and Jewelry in cooperation with Asian Science and Technology University

have succeeded in standardization for color comparing of 7 gems, namely emerald, topaz, garnet, topaz,

tanzanite and pink sapphire. Since the colors of gems are important to pricing especially in U.S. and

European markets. Such research is a part of gems and jewelry development project under the second

phase of industrial restructuring plan (fiscal year 2001 – 2004) of the Ministry of Industry.

Industrial Structure

The gems and jewelry industry has comprised with 2 main industries that are polishing and producing. In

2003, 849 factories have registered to the Department of Industrial Works, which over 80% of them is the

small and medium industry with 58,906 employed persons. These labors are expected to be over 1 million

persons from household level nationwide. The gems and jewelry industry has required many labors with

skills and high expertise.

Types of gemsRuby – Sapphire: - Sapphire is a gemstone of rare and expensive, which ranked first in terms of

importance. For the color red and shiny and dark, and subjected to high temperature reduces the color.

Diamonds

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Gems and Jewelry Industry

Gems Polishing Industry Jewelry Production

Diamonds GemsGenuine Jewelry

Artificial Jewelry

Diamond is ranked second after the sapphire in terms of importance. A pure white or yellow... And subject

to high temperatures in order to make.

Emeralds

Is a type of mineral Beryl and is composed of silicate of beryllium and aluminum, is found in the mines

between the rigid rocks and marble unlike most gems. To a deep dark green color, transparent, and ranks

third in importance.

Sapphire

Is a type of metal Alchorondaum bluecolor, consisting of underground heat

and intense pressure is known as sapphire. Have all the colors except Red.. The risk to the fetus and raise

him the deep blue transparent. And ranked fourth in importance.

Star sapphire

A species Ambassador may be transparent or semi-transparent or white lines.

.

Carnelian

Carnelian dark metal and non-pure and amorphous, color, often red, sometimes yellow or green or blue or

gray.. A type of quartz known as jade.

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Onyx

Semi-transparent metal is chemically composed of silica hidden shape containing impurities of iron

compounds... Those fitting the bug appear Garnet different colors red, yellow, and structure..

Amethyst

Popularly known as: Sapphire east. The color is always purple or light or dark purple or between a metal

transparent.. Violet in color because of the effects of manganese in the composition of two types of it. And

the original type of amethyst quartz composed of silicon dioxide.

Turquoise

Turquoise is known since ancient times, the color blue or greenish-gray greenish and sometimes turns into

a green light. It is very rare and its presence in the case of amorphous and composed of aluminium

phosphate, which contains the copper water.

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Topaz

Known as yellow sapphire... a metal transparent golden yellow color mainly but there are types blue or

brown or yellow... Crystals formed within cavities of stones, granite, schist, where there is always cruel.

Lapis lazuli

Known as an old Alaohq... A stone half cream and non-transparent. A dark blue deep. This stone is

extracted from Iran. Chemical composition of the double silicate, sodium aluminum mixed with iron and

sulfur.

OPAL

Is one of the types of gemstone translucent colors. From blue

and white, black, red and green Portuguese and yellow. His meanings. A type of amorphous silica that

contain water in their composition.

cat's eye

Known as Black Opal (cat's eye), where by a single line of white ..

Beryl

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Known as the Emerald Egyptian. Are extracted from old mines. From different types and colors of the

most important of bluish green and blue light, a transparent stone and installed a double silicate of

beryllium and aluminum, hexagonal crystals.

Aquamarine

Gemstone like the Emerald, which is of many colors the most famous Egyptian green, yellow and Cyprus

It is a ray of Luster and not tainted by blackness, and yellowness.

Jade

Is one of the kinds of gemstone like aquamarines, but it is more transparency and clarity of it, and the

finest.

Tourmaline

Tourmaline is characterized by unique colors .. It combines all the colors of the rainbow. So he called the

name of the rainbow.

Rubellite Tourmaline

Is one of the kinds of gemstone beautiful wonderful form of a colored tourmaline. glowing colors and

beauty and magnificence, ranging from red to pink.

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Green Tourmaline

There is a wide range of tourmaline.some of its light and the other dark. Where the color green shine

among the other stones in the dark.. it is yellowish-green colors and green olive. bluish-green and dark

green.The stones are very rare.

Yellow Tourmaline

These different stones for the rest of the tourmaline group is very noticeable .. And Asfrarh caused by the

effects of high magnesium. In order to show the color yellow wonderful to be treated in a very high

temperature.

Blue Tourmaline

The Blue Altermalin of the treasures of precious stones and rare.. In net for the blue color makes him a

legend. It is like emeralds and Sapphire.

Kunzite

Kunzite types of gemstones a solid, which is susceptible, so must be protected from heat and constant

exposure to strong light as it works

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to remove the purple color gradually.

Morganite

Morganite is gemstone that belongs to the group of multi-colored pearl is the best.

Bloodstone

Blood stone, stone colored non-transparent, is called by that name for the popular belief that the benefit to

the imprisonment of blood.

Rose quartz

Rose quartz crystals are more regular and larger than the quartz.

Pearl

Jewel of the most precious gems and is a pearl large masterly form of precious gemstone in terms of value

and different pearls for the rest of the gems the other is the most gem minerals extracted from mines under

the surface of the earth, but pearls made within the shells Maharmen Sand congeal inside the oyster and the

gem mineral solid and usually reflect light, while Pearl Lin and absorbs some kind of light that is reflected

also..

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Red Agate

Transfer from Aristotle to the finest agate is intensified its red color and the weakness of the color yellow

and unanimously most Arab sources, the ancient preference to other species and has been the people until

this day on his Balemni though its origin other and release the sources of modern species of red and orange

name CARNELIAN The red gold and red structure are called SARD.

Yellow agate is one of the types of agate

White Agate

Blue Agate

The product, which is known as BLUE CALSIDONY which is usually injected with faint.

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Green Agate

Overlooked the most ancient sources said may be due to the rarity of known species are classified pale

green in the science of gemstones of modern varieties Alcalsidoni bright green color is due to the effects of

nickel.

GOLD:Gold was first discovered as shining, yellow nuggets. "Gold is where you find it," so the saying

goes, and gold was first discovered in its natural state, in streams all over the world. No doubt it was the

first metal known to early hominids. Gold became a part of every human culture. Its brilliance, natural

beauty, and luster, and its great malleability and resistance to tarnish made it enjoyable to work and play

with. Because gold is dispersed widely throughout the geologic world, its discovery occurred to many

different groups in many different locales. Gold was the first metal widely known to our species. When

thinking about the historical progress of technology, we consider the development of iron and copper-

working as the greatest contributions to our species' economic and cultural progress - but gold came first.

Gold is the easiest of the metals to work. It occurs in a virtually pure and workable state, whereas most

other metals tend to be found in ore-bodies that pose some difficulty in smelting. Gold's early uses were no

doubt ornamental, and its brilliance and permanence (it neither corrodes nor tarnishes) linked it to deities

and royalty in early civilizations.

Silver

Silver is known by the mankind since Pre-History, and its discovery is estimated happened to shortly after

that of copper and gold. The oldest reference to the element appears in the book of Genesis. The Egyptians

considered gold to be a perfect metal, and gave it the symbol of a circle. Since silver was the closest to

gold in perfection, it was given the symbol of a semi-circle.. The Romans called silver argentum, keeping

this as the international name of the element, from where its chemical symbol derives. Its malleability and

ductility make it ideal for ornamental purposes. It was also used for paying debts, in personal and religious

places decoration and in utensils of the wealthiest houses.

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SWOT

ANALYSIS

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SWOT analysis of gems and jewelry industry

Strengths:

One million craftsman associated with it. their skills can be harnessed for designing and making modern

jewelry.

-Abundance ofcheap and skilled labor in India.

- Excellent marketing network spread across the world.

- Supportive government industrial/ exim policy.

Weaknesses:

High domestic interest rates compared to elsewhere

- Small firms lacking technological/ export information expertise.

- Low productivity compared to labor in china, Thailand and srilanka. As the major raw material

requirements need to be imported, companies normally stock huge quantities of inventory resulting high

inventory carrying costs.

Opportunities:

-new market in Europe and Latin America

- Growing demand in south Asian & far east countries.

- Removal gold control act.

Threats:

- China, Sri Lanka and Thailand's entry in small diamond segment

- Infrastructural bottlenecks, frequent changes in exim policies, irregular supply of gold.

- Over dependence on single-channel supply chain. Decisions of De Beers and Argyle's terms for renewing

their supply contract

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GOVERNMENT

INITIATIVES

OR

REGULATIONS

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Regulation and policy regarding gems and jewelry industry

Gems & Jewelry Export Promotion Council (GJEPC): Established in 1966, the GJEPC is the apex

body of the Indian gems and jewelry industry, and has around 6,500 members across India. The primary

goal of the Council is to introduce the Indian gems and jewelry to the international market and to promote

their exports. The Council provides market information to its members regarding foreign trade inquiries,

trade and tariff regulations, rates of import duties, and information about jewelry fairs and exhibitions. The

roles played by the GJPEC are broadly highlighted below:

Trade Facilitator

The Council promotes the Indian gems and jewelry industry in the international market. It organizes

international jewelry shows, hosts trade delegations, and undertakes image-building exercises through

advertisements, publications and audio-visual means.

Advisory Role

The Council also aids better interaction and understanding between traders and government. The Council

takes up relevant issues with the government and agencies connected with exports. It also submits

documents for consideration and inclusion in the EXIM Policy.

Nodal Agency for Kimberley Process Certification Scheme

GJEPC works closely with the Indian government and the traders to implement and oversee the Kimberley

Process Certification Scheme; in fact, the Council has been appointed as the nodal agency in India under

the Kimberley Process Certification Scheme.

Training and Research

The GJEPC runs many institutes that provide training in all aspects of manufacturing and design in

Mumbai, Delhi, Surat and Jaipur.

Varied Interests

The Council publishes many brochures, statistical booklets, trade directories and a bi-monthly magazine -

Solitaire International, which is distributed internationally as well as to its members.

Gem & Jewelry Trade Council of India (GJTCI): The GJTCI was founded in 2000, and is tasked with

resolving any issue arising from trade in gems and jewelry. It plays an important role in showcasing the

Indian gems and jewelry to the international as well as the domestic market. Like the GJEPC, GJTCI also

provides information to its members through a monthly newsletter, various educative and trade-

motivational events such as seminars, workshops, exhibitions, festivals etc.

The Bureau of Indian Standards: The Bureau of Indian Standards (BIS), the National Standards Body of

India, is a statutory body set up under the Bureau of Indian Standards Act, 1986 and is responsible for

hallmarking gold jewelry in India.

Deregulation of Gold in India

In the pre-liberalisation period (prior to 1991), severe restrictions on the export and import of gold from

and into India were imposed. During that time only the State Bank of India (SBI) and the Metals Trading

Corporation of India (MMTC) were allowed to import gold.

The reasons for imposing these restrictions were:

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To reduce demand for, as well as availability of gold

To alter the savings preferences of the population in favour of investments other than gold/silver

To stop smuggling of gold

To conserve foreign exchange resources

To prevent generation of or to unearth black money. It was thought that since gold was one of the most

obvious choices for keeping undeclared/ill-gotten income and wealth, a policy to restrict supply of gold

would be effective in curbing black money.

Several schemes that restricted the export and import of gold were launched in various forms between

1947 and 1963, but the control regime finally took shape with the implementation of the Gold Control Act

1968. This Act did not allow goldsmiths to receive more than 100 grams of standard gold for

manufacturing jewelry. Further, a certified goldsmith was not allowed to possess a stock of more than 300

grams of primary gold at any time. The quantity of primary gold possessed by a licensed dealer was

limited between 400 grams and 2 kg, depending on the number of artisans employed. There was a legal

ban on gold transaction between dealers.

The government abolished the Gold Control Act when the balance of payment crisis occurred in 1990,

after which the large export houses could import gold freely. Exporters in the export processing zones were

allowed to sell 10% of their produce in the domestic market. In 1993, gold and diamond mining were

opened up for private investors and foreign investors were allowed to own half of the equity in mining

ventures. In 1997, overseas banks and bullion suppliers were also allowed to import gold into India. These

measures led to the entry of foreign players such as De Beers, Tiffany and Cartier into the Indian market.

Foreign Direct Investment Policy

At present, the Indian government allows 100% foreign direct investment (FDI) in gems and jewelry

through the automatic route.

For exploration and mining of diamonds and precious stones FDI is allowed up to 74% under the

automatic route.

For exploration and mining of gold and silver and minerals other than diamonds and precious stones,

metallurgy and processing, FDI is allowed up to 100% under the automatic route.

Kimberley Process (KP)

The Kimberley Process came into force when the South African diamond producing nations met at

Kimberley in South Africa in May 2000. The Kimberly Process was set up to discuss ways to stop the

trade in ‘conflict diamonds’ and to ensure that diamond purchases did not fund violence. As of November

2008, the KP had 49 members, representing 75 countries. The Kimberley Process Certification Scheme

(KPCS) was implemented in India on January 1, 2003 to verify the legitimacy of the import / export of

rough diamonds as per the UN resolution and to curb the entry of conflict diamonds into the global trade

flow. The system of verification and issuance of KPC is administered from the Mumbai and Surat offices

of GJEPC. In India’s Foreign Trade Policy 2009-14, the following measures related to the Kimberley

Process Certification Scheme (KPCS) have been adopted:

No import or export of rough diamonds shall be permitted unless accompanied by the KP certificate as

specified by the GJEPC.

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The export and import of rough diamonds to and from Venezuela has been prohibited by the Indian

government owing to the voluntary separation of Venezuela from the KPCS.

Government Initiatives to Boost the Sector

Measures taken by the government in the Union Budget 2009-10:

Customs Duty on Gold and Silver

Customs duty on serially numbered gold bars (other than tola bars) and gold coins to be increased from Rs

100 per 10 gram to Rs 200 per 10 gram. Customs duty on other forms of gold to be increased from Rs 250

per 10 gram to Rs 500 per 10 gram.

Customs duty on silver to be increased from Rs 500 per kg to Rs 1,000 per kg. These increases will also be

applicable when gold and silver (including ornaments) are imported as personal baggage

Central Excise Duty

Excise duty on branded articles of jewelry to be reduced from 2% to nil.

All categories within HS code 71 except the ‘diamonds whether or not worked but not mounted or set’ (HS

code 7102) and certain sub-categories within HS code 7104 and 7106 currently have an excise duty rate of

16%.

The category ‘diamonds whether or not worked but not mounted or set’ (HS code 7102) currently does not

attract any excise duty.

Sub-category ‘Piezo-electric quartz’ (HS code 71041000), silver (including silver plated with gold or

platinum) in powdered form (HS code 71061000), unwrought (HS code 71069100) and other (HS code

71069290) do not attract any excise duty.

Fiscal Stimulus Measures (December 2008)

The Reserve Bank of India announced certain fiscal stimulus measures in December 2008 to revive the

Indian economy during the onset of the global financial crisis. The following measures were announced for

the Indian gems and jewelry sector:

Increasing the post-shipment Rupee export credit period from 90 days to 180 days from November 28,

2008

Increasing the pre-shipment rupee export credit period from 180 days to 270 days from November 15,

2008 Providing an interest subvention of 2% up to March 31, 2009, subject to minimum rate of interest of

7% per annum, to make pre and post-shipment export credit for gems and jewelry more attractive

Allowing exporters to avail refund of service tax on foreign agent commissions of up to 10% of FOB value

of exports. They will also be allowed refund of service tax on output services while availing of benefits

under Duty Drawback Scheme Banks will charge interest rate not exceeding Benchmark Prime Lending

Rate (BPLR) minus 4.5% on pre-shipment credit up to 270 days and post-shipment credit up to 180 days

on the outstanding amount for the period December 1, 2008 to September 30, 2009.

Export Facilitation Measures by the Ministry of Commerce and Industry

Further, in February 2009, the gems and jewelry sector got a special boost from the Ministry of Commerce

with the following announcements: Gems and jewelry, diamonds and precious metals were given a special

boost by the Ministry of Commerce and Industry, the Export Promotion Council for Gems and Jewelry and

Star Trading Houses (in the gems and jewelry sector). Besides, the Diamond India Ltd, MSTC Ltd and

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STCL Ltd were added under the list of nominated agencies notified under Para 4 A.4 of foreign trade

policy for the import of precious metals.Surat, Gujarat has been given the recognition of a town of export

excellence, because it is home to thousands of diamond units that employ many diamond workers. The

authorized persons of gems and jewelry units in export-oriented units will be allowed to carry personal

carriage of gold in primary form up to 10 kg in a financial year subject to the RBI and customs guidelines.

Import restrictions on worked corals have been removed to address the grievance of gem and jewelry

exporters.

Foreign Trade Policy 2009-2014

Foreign Trade Policy has identified the gems and jewelry sector as a thrust area with prospects for export

expansion and employment generation. The highlights of the policy are:

Import of gold of 8 carat and above allowed under replenishment scheme subject to import being

accompanied by an Assay Certificate specifying purity, weight and alloy content.

Duty Free Import Entitlement (based on FOB value of exports during the previous financial year) of

consumables and tools, for:

Jewelry made out of:

Precious metals (other than gold and platinum) – 2%

Gold and platinum – 1%

Rhodium finished silver – 3%

Cut and polished diamonds – 1%

Duty free import entitlement of consumables for metals other than gold, platinum will be 2% of FOB value

of exports during the previous financial year.

Duty-free import entitlement of commercial samples shall be Rs 300,000.

Duty free re-import entitlement for rejected jewelry shall be 2% of FOB value of exports.

Import of diamonds on consignment basis for certification/ grading and re-export by the authorised

offices/agencies of Gemological Institute of America (GIA) in India or other approved agencies will be

permitted.

To promote export of gems and jewelry products, the value limits of personal carriage of gems and jewelry

products in case of holding/participating in overseas exhibitions increased to US$ 5 mn and to US$ 1 mn

in case of export promotion tours. Further, the limit in case of personal carriage, as samples, for export

promotion tours, has been increased from US$ 0.1 mn to US$ 1 mn.

Extension in number of days for re-import of unsold items in case of participation in an exhibition in the

US increased to 90 days.

In an Endeavour to make India a diamond international trading hub, diamond bourses will be planned.

Gems and jewelry units may sell up to 10% of FOB value of exports of the preceding year in Domestic

Tariff Area (DTA), subject to fulfilment of positive Net Foreign Exchange (NFE). In respect of sale of

plain jewelry, recipient shall pay concessional rate of duty as applicable to sale from nominated agencies.

In order to boost the gems and jewelry sector, the value addition norms were reduced in the FTP 2009-14.

Earlier, owing to abrupt fluctuation in gold prices, exporters were unable to comply with the previous high

value addition norms.

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Special Economic Zones (SEZ)

In order to boost foreign trade and investment, the Indian government introduced the SEZ policy in April

2000 under the Export-Import (EXIM) policy. Under the policy, the government allowed companies to set

up units in SEZ to manufacture goods or provide services that facilitated a hassle-free environment for

exports. However, it was the SEZ Act 2005 – passed in February 2006 – that laid down regulatory

frameworks and rules for setting up and for the operation of SEZs. With extended tax holidays up to 15

years – from previous tax holiday of 10 years, the SEZ Act managed to generate considerable level of

interest; as a result, the number of SEZs witnessed a sharp rise in a matter of few years. The Act envisages

promoting exports of goods and services, promoting FDI, creating employment, generating economic

activity and most importantly, developing infrastructure.

To promote the exports of gems and jewelry, the government has set up various SEZs with specific

incentives. Some important government policies relating to SEZs in the gems and jewelry sector are

highlighted below:

No import or export of rough diamonds will be permitted unless the shipment parcel is accompanied by the

Kimberley Process Certificate issued by the Development Commissioner.

Cut and polished diamonds and precious and semi-precious stones (except rough diamonds, precious or

semiprecious stones having zero duty) shall not be allowed to be taken outside the SEZ for sub-

contracting.

A gem and jewelry unit may receive plain gold or silver or platinum jewelry from the Domestic Tariff

Area or from an EOU or from a unit in the same or another SEZ in exchange of equivalent content of gold

or silver or platinum contained in the said jewelry after adjusting permissible wastage or manufacturing

loss allowed under the provisions of the Foreign Trade Policy read with the handbook of procedures.

The DTA Unit undertaking sub-contracting or supplying jewelry against exchange of gold or silver or

platinum shall not be entitled to export entitlements.

24

BEST DIAMONDS

BRANDS

OF INDIA

Best Diamonds of India

A diamond is forever. Indian society has unanimously agreed with this statement generations ago.

The shine of diamond sales are soaring high in the recent days.

Nakshatra Diamonds

The world-renowned Nakshatra diamonds were launched in 2000, with an equally dazzling Aishwarya Rai

as its brand ambassador. In the present scenario Nakshatra diamonds occupy a leading position in the

fashion diamond jewelry segment..

Nakshatra diamonds claim to shine your glamor and love life. They have aptly put their slogan as

"brightest circles of light." Elegant and graceful Nakshatra diamonds are the epitome of passion, attitude

25

and independence.

Adora Diamonds

Adora Diamonds were launched in India in July 2003 by Mumbai based Concept Jewelry (India) Ltd. On

the present day the still expanding retail network centers of Adora expands to 117 outlets in 47 cities of

India. Adora means glory in Spanish and claims that its diamond collection is themed on love. Adora

diamonds are for adornment of every moment, occasion, and phase of life through its up and downs.

The Swaranjali signature collection of living legend Lata Mangeshkar is a unique feature of Adora

diamonds. Each piece of Swaranjali collection is conceptualized and approved by Lata Mangeshkar and

bears her laser printed signature.

Tanishq Diamonds

Tanishq diamonds are India's largest, most desirable and fastest growing Jewelry brand in India. Tanishq,

launched in 1995, is the Jewelry business group of Titan Industries Ltd. On the present day Tanishq has 84

outlets in 61 cities of India. Tanishq diamonds embark the aspiration of emerging Indian women who uses

tradition rather than being used by it.

Tanishq diamonds bring together the work of Karigars, who specialize in different ways of making the

Jewelry. Tanishq diamonds comprises fashion and style in tradition bound category through its innovation.

Kiah Diamonds

World's largest volume manufacturer of diamonds-Sheetal manufacturing Company (SMC) launched its

exquisite Kiah diamond collection in October, 2004. Kiah diamonds are claims to be for celebrating

womanhood. The brand name 'Kiah' means beautiful place. On the latest Kiah diamonds have won the Best

Showroom in the DTC Diamond Season for 2005-2006.

Nirvana Diamonds

Nirvana Diamonds from Fine Jewelry (I) Ltd. was launched in 1987 in India. Nirvana diamonds are

targeting at fashion conscious, modern and independent thinking women. Internationally acclaimed

Nirvana diamonds are manufactured by using state-of-the-art technology. As a proof of their quality

Nirvana was among one of the brands to offer lifetime warranty to its consumers.

D'damas Diamonds

D'damas Diamonds are part of Gitanjali Digico Group and one of the earliest diamond houses established

in India in 1966. On the present day D'damas Diamonds offer highly modernized diamond cutting and

polishing facilities at five locations in India.d’damas is the best diamonds.

 

26

27

MAJOR

PLAYERS

IN JEWELRY

INDUSTRY

Rajesh exports ltd.: Rajesh exports ltd is the world’s largest gold manufacturing company. It was

incorporated in 1985 having its head office in Bangalore. they are world low cost jewelry producers,

having manufacturing facilities from refining to retailing.

Asian star jewels pvt. Ltd.: A' Star Jewelry is the domestic jewelry manufacturing division of Asian Star

Company Limited- a Diamond Trading Company Sight holder™. Asian Star is one of the world's leading

diamantine, with interest in diamond manufacturing, jewelry manufacturing and retailing.

28

Gitanjli jewels: it is founded as a single company, cutting and polishing diamond to the jewelry trade at

surat, Gujarat in 1966. The gitanjli group became, many times over, a pioneer among major diamond &

jewelry products. It has won 50 national and council awards from the ministry of India.

Asmi group: Asmi jewelry India Private Limited operates as a subsidiary of Gitanjali Gems Limited and it

is one of the top manufactures and retailers of wide range of gold and diamond jewelry for women. It has

500+ retail outlets in India which includes stand alone stores, leading franchisees and established anchor

shop-in-shop and leading retailers.

Suashish Jewelry Ltd: Suashish   Diamonds   Limited   is   a   public   limited  company   incorporated  

on October   05,   1988   under   the  Companies Act, 1956   Promoted by Ramesh Kumar S Goenka,

Suashish Diamonds (SDL) was incorporated in Oct.'88 which imports rough diamonds, cuts and polishes

them, and then exports them. Its clientele is spread across the US, Japan, Europe, east Asia and Israel. It is

a privileged sight holder of the Diamond Trading Company (DTC), London, whereby it enjoys an

uninterrupted supply of raw materials at competitive rates. SDL has been granted Star Trading House

status under the export-import policy of the Government of India. It has established a 100% subsidiary 

Suashish Diamonds  in Hong Kong.

29

RAJESH

EXPORTS LTD.

Rajesh exports India ltd.

Rajesh Exports Limited (REL) headquartered in Bangalore, India manufactures gold & diamond jewelry.

REL exports its products world wide and distributes them within India to the wholesale jewelry market.

REL also retails its products through its own network of retail jewelry showrooms Shubh Jewelers spread

across India.

30

World's largest Jewelry manufacturing facility

World's largest manufacturer of gold Jewelry

World's lowest cost Jewelry producer

Fully integrated from Refining to Retailing

Leading retail Brands across India

Government recognized Premier Trading House

India's largest exporter of gold jewelry

No 1 Investor Friendly Company in India

India's Second Fastest Growing Company

Overview

"Rajesh Export Ltd's (REL) objective is to establish itself firmly as a leader in the global jewelry market by

manufacturing and marketing the finest quality jewelry to consumers across the world. To achieve this

objective REL will put in all required efforts and consequently emerge as a global leader in the field of

jewelry"

Global Strengths through Indian Innovations

REL is headquartered in Bangalore, India

Incorporated in 1990 REL began operations as a gold jewelry manufacturing and export company

Since inception REL has emphasized on Research and Development.

REL has introduced several new designs and concepts of jewelry to the international market.

REL has evolved as a powerhouse in design, development and distribution of gold jewelry.

REL has one of the world’s largest jewelry design database of 29000 designs.

REL is currently the largest manufacturer of gold jewelry in the world.

REL is the lowest cost gold jewelry producer in the world

REL has developed several innovative technologies and processes in the manufacture of jewelry

REL has its presence in the entire jewelry cycle beginning from refining of Gold to retailing jewelry.

REL is a professionally managed company committed to the highest standards of corporate governance.

REL securities are widely held, with some of the world’s top institutions being the share holders

The securities of REL are listed and traded in India on the NSE and BSE

 History

31

Promoters in retail jewelry business since 1970

1985 - Brothers Rajesh Mehta and Prashant Mehta joined family retail jewelry business.

1989 - Rajesh Exports was established as a partnership firm to manufacture and export jewelry

1990 - Rajesh Exports established the first organized gold jewelry manufacturing facility in India.

1991 - Rajesh Exports established India’s first R&D facility in the jewelry sector.

1994 - Rajesh Exports emerged as the largest exporter of jewelry from India.

1995 - Initial Public Offer (IPO) of securities to fund expansion of manufacturing facility

1995 - IPO overwhelmingly subscribed and REL securities listed and traded on the BSE & NSE

1996 - REL successfully implemented the expansion plan.

1999 - REL plans to set up world’s largest manufacturing facility

2002 - REL completes the construction of the World’s Largest manufacturing facility.

2003 - REL begins commercial production in the new manufacturing facility

2006 - REL achieves sales of USD 1.5 billion.

2007 - REL establishes branded retail chain stores under the name of “Laabh Jewelers”

Management

REL is managed by a Board of Directors comprising of experienced people in the jewelry trade and also

professionals from other relevant areas. The Board of Directors are responsible for all major decisions. The

Board of Directors are assisted by a well defined hierarchy comprising of some of the most experienced

Professionals in the jewelry field. The Directors have ultimate responsibility for the management and

administration of the affairs of the company.

The Articles of Association of the Company provide that, the number of Directors shall not be less than

three and not more than twelve. The company may, subject to the provisions of the Articles of Association

and the Companies act, alter the minimum or maximum number of Directors by approval of its

Shareholders.

Not less than two thirds of the total number of Directors shall be, elected Directors who retire by rotation.

At each annual general meeting of the Company, one-third or such of the directors for the time being who

are liable to retire by rotation, shall retire from office. A retiring Director is eligible for re-election.

  Infrastructure

Over the period of years, REL has built the finest infrastructure for manufacturing, marketing and

distribution of world class jewelry.

Manufacturing

  Marketing

REL has established reliable international marketing network which has a reach in North America, Europe,

Asia & Australia. REL also has set-up a domestic marketing network across most of the Indian states.

Facilities

Refining & Alloying

Manufacturing

The manufacturing facility is specifically designed to control the wastage of Gold. Advanced and practical

Gold recovery procedures are employed to achieve the lowest Gold wastage in jewelry production in the

world.

32

 Research & Development

Research and Development (R&D) is the core focus of the company. REL has an advanced R&D

department comprising of senior designers, metallurgists, chemists and specialized artisans.

Distribution

REL manufactures seventy tones of Gold jewelry and other gold products per annum. These products are

distributed globally and in the domestic market in India. Over the years REL has set-up a reliable

distribution network across the world and in India.

New York, Chicago, Dallas, Toronto, London, Paris, Zurich, Dubai, Sharjah, Muscat, Kuwait,

Singapore, Kuala Lumpur and Sydney..

..Products

REL manufactures a wide range of jewelry. The R&D division tracks the changes in the jewelry markets,

the changes are analyzed and based on the analysis designers create designs.

The designs on the drawing board are prototyped by senior artisans. The products so created are displayed

to the selection committee which decides on the inclusion of the products in the design portfolio. The

existing design portfolio is also constantly monitored to eliminate out of trend designs. REL currently has a

design portfolio of 29,000 active designs.

The design portfolio is divided in to three basic types of products:-

Asian Jewelry Designs

REL specializes in ASIAN JEWELRY and manufactures almost all types of Asian Jewelry in 22cts, 21cts

and 18ct.

.

EARRINGS

PENDENTS

CHAINS

NECKLACES

NECKLACE SETS

BANGLES

BRACELETS

Western Jewelry Designs

REL’s mainline of activity has been manufacture of Asian jewelry. Over the last six years REL has

conducted extensive research in Western jewelry and REL has developed several unique designs to suit the

western taste.:

EAR RINGS

RINGS

PENDENTS

CHAINS

NECKLACES

BRACELETS

Diamond Jewelry Designs

33

REL has conducted extensive research to develop a range of diamond jewelry. Some of the finest designers

both in India and abroad have contributed to the range of exclusive diamond designs.

EARRINGS

RINGS

PENDENTS

BRACELETS

.

34

ASIAN STAR

JEWELS LTD.

ASIAN star jewels ltd.

Asian Star Jewels Pvt. Ltd. is a subsidiary of Asian Star Company Limited- a Diamond Trading Company

Sight holder™. Asian Star Company Limited, is one of the leading world diamantaires with interest in

35

diamond manufacturing, jewelry manufacturing and retailing. Asian Star Jewel’s exclusively caters to the

international market and crafts carefully chosen stones into the most exquisitely designed jewelry of high

standards.

The organization is a professionally managed firm with a goal to deliver the best products on time, every

time. The company is strongly focused about market expansion, having a track record of developing

contemporary designs that cater to a client's specific requirements across all product categories. Asian Star

Jewels Pvt. Ltd. is a subsidiary of Asian Star Company Limited- a Diamond Trading Company, every

time. The company is strongly focused about market expansion, having a track record of developing

contemporary designs that cater to a client's specific requirements across all product categories.

Infrastructure

Asian Star Jewells’s manufacturing operation at SEEPZ in Mumbai has a production capacity of 300,000

pieces per annum.

Our sophisticated infrastructure is harnessed with state-of-the-art equipment and technology, specially

imported from Germany and Japan to produce a range of machine-made and hand-made jewelry. An

efficient in-house product development team uses the best technological support services such as

CAD/CAM, to deliver strikingly beautiful jewelry which captures the essence of contemporary and

traditional designs.

Services

Asian Star Jewells’s strong brand image and reputation is evident from its prominent clientele in major

countries across the globe such as USA, Canada, Spain, Italy, Germany, France, South America, Australia

and Gulf, whose unwavering faith shows through the repeat business.

We believe in adding value to our business proposition by providing our customers with the best services

available in the industry. We have a customized Quality Control System and a Grading System in place to

meet specific requirements of our clients.

36

FINANCIALREPORTS

Balance sheet of Rajesh Exports ltd.

 

ParticularsMar 2011

Mar 2010 Mar 2009 Mar 2008

SOURCES OF FUNDS            

Share Capital 295.26   265.82   257.01   250.61  

Share warrants & Outstanding 0.00   0.00   0.00   0.00  

37

Total Reserve 15672.49   11176.25   8881.34   7638.60  

Shareholder's Funds 15967.75   11442.07   9138.35   7889.22  

Secured Loans 24153.91   17582.63   15413.46   5898.91  

Unsecured Loans 1150.05   3280.30   3919.72   3809.30  

Total Debts 25303.96   20862.93   19333.18   9708.22  

Total Liabilities 41271.71   32305.00   28471.53   17597.43  

APPLICATION OF FUNDS :            

Gross Block 863.36   836.63   756.09   657.12  

Less: Accumulated

Depreciation149.58   130.03   112.23   95.01  

Less: Impairment of Assets 0   0   0   0  

Net Block 713.78   706.61   643.86   562.11  

Lease Adjustment A/c 0   0   0   0  

Capital Work in Progress 0   0   4.97   4.41  

Pre-operative Expenses

pending0   0   0   0  

Assets in transit 0   0   0   0  

Investments 34.18   44.18   3849.12   1363.03  

Current Assets, Loans &

Advances           

Inventories 3773.41   4135.05   1742.93   2458.25  

Sundry Debtors 15805.46   6120.64   5472.70   5042.73  

Cash and Bank 78152.48   66537.63   55374.29   50023.69  

Other Current Assets 82.20   0   0   0.00  

Loans and Advances 6868.70   8695.69   7652.61   2380.37  

Total Current Assets 104682.26   85489.02   70242.53   59905.04  

Less : Current Liabilities and

Provisions           

Current Liabilities 63954.22   53626.01   46091.65   44142.65  

Provisions 212.51   317.04   185.58   102.81  

Total Current Liabilities 64166.73   53943.05   46277.23   44245.46  

Net Current Assets 40515.52   31545.97   23965.30   15659.58  

Miscellaneous Expenses not

written off0   0.03   0.06   0.08  

Deferred Tax Assets / Liabilities8.22   8.22   8.22   8.22  

Total Assets 41271.71   32305.00   28471.53   17597.43  

Contingent Liabilities 1393.92   466.78   0.83   1150.30  

38

Balance sheet of Asian star ltd.

Particulars

Mar 2010

Mar 2009 Mar 2008

SOURCES OF FUNDS         

Share Capital 106.71   358.71   358.71  

Share warrants & Outstanding 0.00   0.00   0.00  

Total Reserve 3343.68   3092.72   2937.30  

Shareholder's Funds 3450.40   3451.43   3296.01  

Secured Loans 5225.38   5076.00   5338.97  

Unsecured Loans 398.90   195.00   87.50  

Total Debts 5624.28   5271.00   5426.47  

Total Liabilities 9074.67   8722.43   8722.49  

APPLICATION OF FUNDS :         

Gross Block 1664.77   1626.36   1145.63  

Less: Accumulated Depreciation 245.47   172.02   106.69  

Less: Impairment of Assets 0   0   0  

Net Block 1419.30   1454.34   1038.94  

Lease Adjustment A/c 0   0   0  

Capital Work in Progress 31.42   12.85   201.67  

Pre-operative Expenses pending 0   0   0  

Assets in transit 0   0   0  

Investments 39.53   130.61   289.00  

Current Assets, Loans & Advances         

Inventories 3096.17   2688.45   2826.17  

Sundry Debtors 4079.42   3890.33   4142.46  

Cash and Bank 833.92   750.41   882.18  

Other Current Assets 0   0   0  

Loans and Advances 1151.56   503.88   790.24  

Total Current Assets 9161.08   7833.07   8641.05  

Less : Current Liabilities and

Provisions        

Current Liabilities 1083.73   178.90   777.94  

Provisions 243.07   296.50   571.82  

Total Current Liabilities 1326.81   475.40   1349.76  

Net Current Assets 7834.27   7357.66   7291.29  

Miscellaneous Expenses not written

off0   0   0  

Deferred Tax Assets / Liabilities -249.85   -233.05   -98.41  

Total Assets 9074.67   8722.43   8722.49  

Contingent Liabilities 0   0   10.05  

39

GRAPH

total assets

32305

28472.53

17597.43

9074.67 8722.43 8722.49

0

5000

10000

15000

20000

25000

30000

35000

2010 2009 2008

rajesh exports ltd.

a star jeweletrs ltd.

share capital

265.82 257.01 250.61

106.71

358.71 358.71

0

50

100

150

200

250

300

350

400

2010 2009 2008

year

amo

un

t

rajesh exports ltd.

a star jeweletrs ltd.

40

cash & bank balance

66537.63

55374.2950023.69

833.92 750.41 882.180

10000

20000

30000

40000

50000

60000

70000

2010 2009 2008

year

amo

un

t

rajesh exports ltd.

a star jeweletrs ltd.

Financial ratios of Rajesh exports ltd.

Particulars Mar 2011 Mar 2010 Mar 2009 Mar 2008

Operational & Financial Ratios            

   Earnings Per Share (Rs) 8.40   7.28   3.40   8.24  

   CEPS(Rs) 8.47   7.34   3.47   8.31  

   DPS(Rs) 0.60   1.00   0.60   0.35  

   Book NAV/Share(Rs) 54.08   43.05   35.56   31.48  

   Tax Rate(%) 7.74   6.68   11.35   11.01  

Margin Ratios            

   Core EBITDA Margin(%) 0.53   1.02   -0.11   -1.19  

   EBIT Margin(%) 2.13   1.65   2.01   4.64  

   Pre Tax Margin(%) 1.31   1.13   0.82   2.84  

   PAT Margin (%) 1.21   1.05   0.73   2.52  

   Cash Profit Margin (%) 1.22   1.06   0.75   2.54  

Performance Ratios            

   ROA(%) 6.74   6.36   3.79   7.66  

41

   ROE(%) 18.10   18.79   10.26   37.63  

   ROCE(%) 11.87   10.00   10.43   14.10  

   Asset Turnover(x) 5.58   6.06   5.19   3.04  

   Sales/Fixed Asset(x) 241.57   231.19   169.11   130.65  

   Working Capital/Sales(x) 5.07   5.84   4.99   5.23  

Efficiency Ratios            

   Fixed Capital/Sales(x) 0.00   0.00   0.01   0.01  

   Receivable days 19.49   11.49   16.06   31.23  

   Inventory Days 7.03   5.83   6.42   7.61  

   Payable days 105.20   97.96   138.86   171.25  

Valuation Parameters            

   PER(x) 12.95   16.36   7.41   9.42  

   PCE(x) 12.85   16.21   7.27   9.35  

   Price/Book(x) 2.01   2.76   0.71   2.47  

   Yield(%) 0.55   0.84   2.38   0.45  

   EV/Net Sales(x) -0.10   -0.08   -0.25   -0.25  

   EV/Core EBITDA(x) -4.73   -4.59   -12.22   -5.46  

   EV/EBIT(x) -4.75   -4.62   -12.31   -5.49  

   EV/CE(x) -0.50   -0.43   -1.04   -1.19  

   M Cap / Sales 0.16   0.17   0.05   0.24  

Growth Ratio            

   Net Sales Growth(%) 11.53   54.07   45.95   24.08  

   Core EBITDA Growth(%) 43.49   26.36   -36.64   78.17  

   EBIT Growth(%) 43.69   26.54   -36.83   78.62  

   PAT Growth(%) 28.23   121.35   -57.70   103.94  

   EPS Growth(%) 15.44   114.01   -58.75   -69.93  

Financial Stability Ratios            

   Total Debt/Equity(x) 1.58   1.82   1.71   1.23  

   Current Ratio(x) 1.63   1.58   1.52   1.36  

   Quick Ratio(x) 1.57   1.52   1.49   1.30  

   Interest Cover(x) 2.60   3.14   1.70   2.57  

   Total Debt/Mcap(x) 0.79   0.66   2.99   0.50  

Financial ratios of Asian star jewelers

Particulars

42

Mar 2010 Mar 2009 Mar 2008

Operational & Financial Ratios         

   Earnings Per Share (Rs) 26.34   17.10   37.09  

   CEPS(Rs) 33.92   24.01   40.77  

   DPS(Rs) 2.00   2.00   2.00  

   Book NAV/Share(Rs) 323.34   299.82   285.26  

   Tax Rate (%) 22.81   41.70   26.29  

Margin Ratios         

   Core EBITDA Margin (%) 4.59   5.24   5.37  

   EBIT Margin(%) 4.60   4.78   6.50  

   Pre Tax Margin(%) 2.76   2.60   4.19  

   PAT Margin (%) 2.13   1.51   3.09  

   Cash Profit Margin (%) 2.70   2.04   3.33  

Performance Ratios         

   ROA(%) 3.21   2.18   4.70  

   ROE(%) 8.59   6.09   14.17  

   ROCE(%) 6.94   6.88   9.88  

   Asset Turnover(x) 1.51   1.44   1.52  

   Sales/Fixed Asset(x) 8.16   9.05   15.25  

   Working Capital/Sales(x) 1.71   1.71   1.79  

Efficiency Ratios         

   Fixed Capital/Sales(x) 0.12   0.11   0.07  

   Receivable days 108.37   116.81   126.67  

   Inventory Days 78.66   80.19   74.69  

   Payable days 19.02   13.47   16.02  

Valuation Parameters         

   PER(x) 43.67   63.92   31.81  

   PCE(x) 33.90   45.53   28.94  

   Price/Book(x) 3.56   3.65   4.14  

   Yield(%) 0.17   0.18   0.17  

   EV/Net Sales(x) 1.27   1.31   1.33  

   EV/Core EBITDA(x) 24.60   24.66   19.76  

   EV/EBIT(x) 27.64   27.38   20.50  

   EV/CE(x) 1.88   1.88   1.99  

   M Cap / Sales 0.91   0.93   0.96  

Growth Ratio         

   Net Sales Growth(%) 6.94   -3.84   12.16  

   Core EBITDA Growth(%) 4.06   -24.25   12.07  

   EBIT Growth(%) 2.81   -29.22   11.51  

   PAT Growth(%) 50.30   -52.88   46.42  

   EPS Growth(%) 54.00   -53.89   47.73  

Financial Stability Ratios         

   Total Debt/Equity(x) 1.63   1.53   1.65  

43

   Current Ratio(x) 8.45   43.78   11.11  

   Quick Ratio(x) 5.60   28.88   7.75  

   Interest Cover(x) 2.50   2.19  

   Total Debt/Mcap(x) 0.46   0.45   0.43  

Graph

Earning per share

earning per share

7.283.4

8.24

26.34

17.1

37.09

0

5

10

15

20

25

30

35

40

2010 2009 2008

year

amo

un

t

rajesh exports ltd.Sheet

a star jewelers ltd.

44

45

yield

0.84

2.38

0.45

0.17 0.18 0.17

0

0.5

1

1.5

2

2.5

2010 2009 2008

year

amo

un

t

rajesh exports ltd.

a star jeweletrs ltd.

COMPARATIVE

ANALYSIS

Comparison between Rajesh exports ltd. And Asian star jewelers ltd.

Basis of comparison Rajesh exports ltd. Asian star jewelers ltd.

incorporation Rajesh Mehta and pershant

Mehta incorporated this

company in 1970.

It is a subsidiary of Asian star

company ltd, a diamond

trading company.

Aim/focus To establish itself as a leader

in the global jewelry market.

This company aims at the

market expansion.

production It produces 70 tones of gold

jewelry and other gold

Its manufactures nearly

300000 pieces per annum.

46

products in a year.

products It deals with three types of

products: Asian, western and

diamond.

It mostly deals with diamond.

Export The company exports its

products in 14 countries of the

world including new York,

Toronto, Italy, and Paris.

The company exports in the 10

countries of the world

including Spain, Germany etc.

technology The company uses new

technology for the

improvement of its products

and to meet its client’s

requirement.

Machinery and technology is

imported from Germany and

Japan.

Research and development.

Corporate governance.

R& D is the core focus of the

company.

The company has highest

standards of corporate

governance.

The company aims at

providing the best services or

products to its customers

having quality control system.

47

JOBS AND CAREER

IN JEWELRY

INDUSTRY

Which are the major job profiles in the diamond industry?

The Indian diamond and jewelry industry is increasingly being corporative. A number of factors including

the need for better governance, the need to form companies that can access finance on the equity markets

and generally positioning Indian diamond companies for growth drives this. Hence there is a strong need

for professional management and as a result the gems and jewelry industry requires qualified business,

operations, IT and finance managers, accountants, marketing specialists and HR specialists. In short, this

sector is competing with any other industry for qualified professionals. Alongside these roles, there is need

for equally professional artisans who will be trained as gemologists, diamond sorters, planners, diamond

polishers and jewelry craftsmen.

48

Career Opportunity in Gem & Jewelry Industry

Since India stands number one in the list of world’s biggest gold consumer, Gem and jewellery industry is

one of the fastest growing industries of the Indian economy. This industry hence provides numerous career

opportunities in various fields to those who want to be a part of this industry. The following are the career

options:

Designing:

Those with an eye for perfection and detailing, patience, having ability to concentrate and good sense for

design can opt for this field. Jewelry designers have the choice of working with the export units or jewelry

showrooms. Designing jewelry for men and celebrities is also a good option for those who are talented,

highly skilled and vibrant. Also designers can work on freelance basis by selling their designs to various

firms.

Gemology:

All those who are interested in Gemology can begin their career with gem identification, gem cutting,

sorting, grading and evaluation.

Since 9 out of every 10n diamonds sold worldwide are cut and polished in India, diamond industry too

provides a great opportunity

Marketing:

With the entry of big corporate like TATA and Reliance in the jewelry sector, more and more consumers

are growing brand conscious. Retaining old customers and attracting new customers by the way of

providing personalized products and services is where industry growing conscious about. Marketing may

also include the packaging segment.

Research:

After acquiring some experience in this field the research scholar’s option can be taken up as a career.

Various jewelry houses, export units and the institutions offering jewelry designing /making and gemology

courses do invest in research in this field.

Indian diamond market as compared to the world market

The Indian diamond market, which along with China, provide the major drivers of growth in global

diamond jewelry consumption over the next decade. India has a long tradition of gold consumption and is

starting to move towards diamonds as emerging middle class aspirations collide with improvements in

disposable income. In India there are also strong regional differences in quality preferences that will

provide opportunities for a wide range of diamonds.

49

Gem and jewelry trade federation and the art of jewelry magazines decided to conduct an exhibition

for its consumers.

The All India Gem and Jewelry Trade Federation (GJF) and The Art of Jewelry (AOJ) Magazine signed a

Memorandum of Understanding (MOU) to conduct a series of business-to-consumer exhibitions (B2C)

across India. The aim of the B2C exhibitions is to reach out to the large market of jewelry consumers in

India.

The MOU was signed by GJF chairman C.Vinod Hayagriv and AOJ managing director Sumesh Wadhera.

“This initiative will touch consumers across India and I feel immensely pleasured to have this tie-up. This

event will be named ‘Best of India,’ wherein the consumers will get to see the best of jewelry from all the

corners of the country under one roof,” Wadhera said.

Hayagriv said, “This initiative will propel demand and help better the quality in the industry, and will also

help spread education amongst the consumers.”

The MOU was signed during the sidelines of South India Jewelry Show (SIJS) 2010. SIJS is a premier

B2B jewelry trade show which was held March 20-22, at Sree Kanteerava Indoor Stadium in Bangalore.

The Art of Jewelry Magazine

The Art of Jewelry Magazine is India’s No. 1 jewelry trade magazine, providing cutting-edge information

for the gem and jewelry sector. The magazine has been recognized by readers, advertisers and the trades as

a premier media vehicle adhering to the highest standards for editorial, production, design, and most

importantly, ethics and impartiality.

The All India Gems & Jewelry Trade Federation

The All India Gems & Jewelry Trade Federation (GJF) is a national trade federation for the promotion and

growth of trade in gems and jewelry across India. GJF members come together to manage various aspects

of fair trade practices and efficient organization of business the gems and jewelry industry. The numerous

local associations already in existence do not focus on issues of the trade at a national level. Founded in

2005, the Federation unites manufacturers, wholesalers, retailers and exporters all across India. GJF

members include 155 founding members, 232 lifetime members, 125 annual members, 23 board of

directors and 72 governing board of directors, representing leading retailers, manufacturers, wholesalers

and trade bodies of India.

50

51

FUTURE OF GEMS

AND JEWELRY

SECTOR

Indian Gems & Jewelry Industry to Cross US$ 26 Billion By 2012

With the availability of skilled labor and low production cost, gems and jewelry market in India is

expected to grow at a CAGR of 12% during 2009-2012, says RNCOS.

52

Pre log (Press Release) - Sep 09, 2009 - A new research on the Indian gems and jewelry sector, “Indian

Gems and Jewelry Market - Future Prospects to 2011”, by RNCOS, anticipates the Indian gems and

jewelry sector to cross US$ 26 Billion by 2012, driven by availability of huge base of skilled labor and

improving lifestyle.

We have found that India has a large pool of skilled and low cost man power for its gems and jewelry

industry. The country has world’s one of the best skilled manpower to design and make high volumes of

exquisite jewelry at relatively low labor cost. The cost per carat for cutting and polishing diamond was

US$ 10 in India as compared to US$ 17 in China and US$ 150 in Belgium. It also has the largest resource

hub in diamond cutting and processing. Low cost of labor involved in production of finished diamonds has

lured global attention, thereby resulting into the growth of the industry.

Changing lifestyle and urbanization are also fuelling the growth in the gems and jewelry industry, mainly

in branded jewelry, which is expected to grow over 40% in the coming years. Urban consumers in India

have become more exposed to western lifestyles, primarily through overseas traveling. This has led to

increased preference for products and designs that are popular abroad. For instance, there is a shift towards

machine-made jewelry over the traditional handcrafted jewelry.

“Indian Gems and Jewelry Market - Future Prospects to 2011” provides comprehensive information on

gems and jewelry market in India while focusing on past and future market scenario. The report studies the

past and present market trends to highlight the potential growth areas in future. It also gives an overview

of the organized and unorganized market for gems and jewelry in the country. The report also takes into

account the weaknesses and strengths of existing players in the market to facilitate new players to devise

their strategies accordingly to gain competitive advantage.

The research also includes forecast on various segments of the industry like gems & jewelry market, gold

jewelry sales, share in world gold consumption, diamond jewelry sales, branded jewelry market and share

of branded jewelry in the overall jewelry market.

.

53

EXPORTS OF

GEMS AND

JEWELRY IN INDIA

Exports

54

During the Fiscal Year 2010-11, the total exports for gems and jewellery stood at US$ 43.1 billion as

compared to US$ 29.4 billion during the fiscal year 2009-10. During the same period, the sector registered

a growth of 46.5 per cent over the previous year.

total exports

43.1

29.4

05

101520253035404550

2010-11 2009-10

year

us$

bil

lio

n

Composition of Exports

Cut and polished diamonds: The export of cut and polished diamonds grew manifold in 2010-11 as

compared to 2009-10. In 2010-11, the export of cut and polished diamonds was US$ 28.2 billion as

compared US$ 15.6 billion, recording a growth of 81.5 per cent.

cut & polished diamond

28.2

15.6

0

5

10

15

20

25

30

2010-11 2009-10

year

us$b

illio

n

Colored Gemstones: Export of colored gemstones was registered at US$ 0.314 billion in 2010-11 as

compared to US$ 0.304 billion in 2009-10, showing a growth of 3.5 per cent.

55

colored gem stones

0.314

0.304

0.2980.3

0.3020.3040.306

0.3080.31

0.3120.3140.316

2010-11 2009-10

year

us$b

illi

on

Gold Jewellery: Export of Gold jewellery alsoSource: Gem and Jewellery Export Promotion Council

(GJEPC) grew tremendously in 2010-11, registering US$ 12.9 billion as compared to US$ 6.1 billion in

2009-10. A growth of 110.3 per cent was recorded.

gold jewelry

12.9

6.1

0

2

4

6

8

10

12

14

2010-11 2009-10

year

us$

bil

lio

n

56

MARKET SHARE

OF GOLD AND

DIAMOND

57

Gold is the principal raw material for making jewelry in India. In 2007 gold had a market share of US$

12.24 billion (Rs 550 crores), while diamond had a market share of US$ 2.56 billion (Rs 115 crores).

Eighty per cent of the gems and jewelry industry in India is dominated by gold and the rest is controlled by

diamond and gemstone industry. This trade in India is mainly fragmented as 96 percent of total business

comes from unorganized sector.

Graph

market share

550

115

0

100

200

300

400

500

600

2007

year

rs(i

n c

rore

)

gold

diamond

58

CONCLUSION

59

Conclusion:

The Indian gems and jewelry industry is highly fragmented with a large number of private sector

companies.

India is one of the largest exporters of gems and jewelry.

India is the polishing capital of the world.

India's Position in Gems and Jewelry Sector

Gems and Jewelry is one of India’s leading foreign exchange earning sectors. Gem & Jewelry sector

accounted for 16.7 per cent of India’s total Merchandise Exports.

Volume of exports pegged at US$ 43.1 billion as of March 2011.

At present, India exports 95 per cent of the world's diamonds

India is the most technologically advanced diamond-cutting centre in the world.

There is an impact on the demand for gold given the record high prices of gold in last couple of years, but

consumers have remained bullish on the precious metals and there is an increased investment related for

gold.

US is the largest diamond market in the world.

In India there are so many companies in this sector who exports or imports the gold, diamond and precious

metals like gitanjli group, Rajesh exports, and asmi group. And different popular brands for diamond like

nakshatra, tanishq, kiah etc.

After studying the balance sheet and financial ratios of the two different companies, it is concluded that the

Rajesh exports ltd. has a higher capital then the Asian star. The total assets, cash, and bank balance of

Rajesh exports ltd. Is more than the Asian star jewels ltd.

60

BIBLIOGRAPHY

61

Websites:

www.money.livemint.com

www.money.rediff.com

www.rajeshindia.com

www.astarjewels.com

www.itsmyascent.com

www.ibef.org

www.blog.aspira.com

62