Local manufacturers to go downstream

Indian diamond jewellery manufacturers are not content with being suppliers in the US, the largest jewellery market.

Shrenuj & Company yesterday announced that it bought a majority stake in the US-based jewellery distributor, SGS. The announcement comes close on the heels of Gitanjali Gems acquiring American jewellery chain, Samuels. Tanishq, Titan's jewellery business group, has already chalked out plans to enter the market by early next year.

Indian jewellery manufacturers were always present in US as suppliers to big retail chains or their private labels. However the changing trade dynamics has made either ends of the chain (mining or retailing) an important aspect to add value and boost margins.

Vinod Kuriyan, an industry expert said, "The companies cannot achieve profitability by just manufacturing but will have to go downstream in mining or retailing. The presence in retail will get them better prices and control over the distribution network."

According to the Gems and Jewellery Export Promotion Council-KPMG report the value addition at the two-ends of the spectrum are the highest as the intermediary segments offer lower value.

Mehul Choksi, chairman Gitanjali Gems said, "There is an excellent synergy in Indian companies looking at American market as they have the creative expertise . The presence in the retail space offers the companies to be present across the value chain.

"Though the US market growth rate is not as fast as India and China, it is the largest jewellery market."