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This was despite a 12 per cent decline in rough and polished diamond prices, coupled with the ongoing global economic slowdown. The growth in net profit was higher than sales in almost all cases.
For instance, the net profit of Delhi-based jeweller M D Overseas jumped 1,318 per cent, while sales fell 71 per cent in the quarter. Mumbai-based exporter Shrenuj & Co's net profit grew 25.6 per cent against the 18.5 per cent growth in sales.
With shifting consumer preferences from large-size and high-margin diamond jewellery to low-size and volume-driven ornaments, jewellers have changed strategy accordingly. "Individuals' savings have been squeezed because of a continuous rise in inflation. As a consequence, consumers have been opting for rich-look but economical ornaments, a trend noticed in the last few months," said Sandeep Kulhalli, vice-president (retail and marketing), Tanishq. (DAZZLING GAINS)
Against a 23 per cent growth in overall sales of Titan Industries at $556 million, the jewellery segment, including the Tanishq brand, contributed $468.8 mn, a rise of 27 per cent. Titan's net profit rose 24.3 per cent against a 23.2 per cent growth in sales.
"Obviously, consumers do not feel like investing too much in a particular ornament, especially when gold and diamond prices have been continuously rising," he added.
A Citi Research report said Titan's sales share of higher-margin diamond-studded jewellery had reduced to 22 per cent in the third quarter of 2013 as compared to 32 per cent in the second quarter. So did other branded jewellery producers such as Tribhovandas Bhimji Zaveri and PC Jeweller -" the same proportions fell, respectively, from 27 per cent and 32-33 per cent in the second quarter to 24 per cent and 27 per cent, the report said.
This means a consumer shift from high-end, value-driven ornaments to mid-end and low-end items.
"Yes, we are focusing more on low-end jewellery items. Primarily because of consumers demanding low-end ornaments," said Mehul Choksi, managing director, Gitanjali Gems. The company reported its sales from the diamond segment grew 26 per cent to Rs 1,870 crore in the third quarter as compared with Rs 1,487 crore in the corresponding quarter of the previous year.
Similarly, Shrenuj & Co saw a dramatic growth in diamond sales to Rs 1,199 crore for Q3 from Rs 620 crore in the same quarter last year.
Gitanjali has expanded its presence in the diamond sector to raise its profitability. Choksi says overall diamond presence has gone up 35 percentage points in recent months.
There is also growing dependence on other income; a Fitch Ratings report says it is nine to 10 per cent of the profit before tax and such a variable item was a big risk.
Meanwhile, South Africa-headquartered De Beers, which has around 40 per cent of the global rough diamond market share, reported an 11 per cent decline in output at 27.9 million carats in 2012, compared with 31.3 million carats the previous year. Rough diamond prices fell 12 per cent, in line with polished diamond prices during calendar 2012 and it had a 16 per cent fall in overall sales at $6.1 billion, compared with $7.3 billion the previous year. Indian jewellers have not witnessed any repercussions of the global price fall, though it could come after a lag, said Kulhalli.
