Diversification of into

Gems and Jewellery Industry Overview

Size: Large market for Gems & Jewellery with domestic sales of over $15 billion (Rs 65000 Crore) Exports of over $15.5 billion;

18% share of total Indias exports

India accounts for nearly 55% of world net exports of cut & polished diamonds in value terms. Largest consumer of gold jewellery in the world 20% of world consumption around 800 Tonnes India is the largest diamond cutting and polishing centre in the world 60% value share, 85% volume share and 92% share of the world market by number of pieces Third largest consumer of polished diamonds after USA and Japan The gold jewellery market is growing at 15 % per annum and the diamond jewellery market at 27 per cent per annum.

Overview
Structure: The Indian Gems & Jewellery industry is highly fragmented. A large portion of the market 96% is in the unorganised sector . 4% branded. Major players in branded retail are Tanishq, Gili, Carbon, Oyzterbay, Sparkle, De Beers and Cartier.

Titan An Overview
Founded in 1984

Joint Venture between Tata Group and Tamil Nadu Industrial Development Corporation (TIDCO)

World's sixth largest wrist watch manufacturer 7 mn watches/annum with customer base of 65 million Market Cap: 4460 Cr Product Portfolio Watches, Clocks, fashion eyewear, Jewellery

Tanishq - An Overview
Tanishq the Jewelery Division of Titan established in 1995. The name comes from Ta (from Tata) and Nishk (golden coin in sanskrit) It pioneered the concept of branded jewelery and ornaments in India. When Tanishq was launched it sold its products through multi brand stores. In 1998 it decided to come up with its own chain of retail show rooms to create distinctive brand image. Size and Growth:

It is a Rs 927-crore brand. 40% Market Share in branded jewellery Growth of 40% over the past 4 years The profit chart has also seen almost a vertical climb. The contribution to Titan has increased considerably. It is now more than 50% OF Total Titan earnings. It has 87 boutiques in 64 cities across the country. Oligoply Market with players like Oyzterbay, Gili and Carbon having branded jewelery occupying around 4% of the market while the rest being unorganized retail sector.

Market Structure:

Rationales for Diversification

Foreign Exchange Crisis

Huge market for Exports

Fragmented market, mainly retailer driven First Mover Advantage No Branding for such a high value product.

There was demand of 508 tonnes of Gold in India in 1995. There are 5 6 million marriages every year and involve a minimum of 30 50 gm of gold Jewellery.

Unethical Business practices

Our research showed that woman perceived jewellery as their only personal possession.

India being the worlds second largest gold jewellery market after the United States, we were confident we could succeed by being honest and transparent." - Bhasker Bhat, MD.

Modalities of diversification
Type of Diversification: Pure Mechanism: Organic Growth Concentrated on quality

Karatmeter- first non destructive method to check the quality of gold

Brought the diff varieties of jewellery together by bringing in karigars making diff types of jewellery Good working conditions and good remunerations. In 1995 Titan changed name from Titan Watches Ltd. To Titan Industries Ltd to change its image from that of a watch manufacturer to that of fashion accessories manufacturer. Started Tanishq in 1995.

Current Scenario
Sales in 2006-07 Titan 2136 cr. Tanishq 1292 cr.
In 2006-07 Indias jewellery industry grew by 2 per cent and Tanishq by 35 per cent. In 2007-08 the estimated industry growth is 4 to 5 per cent and Tanishq is expected to grow at 45 per cent.

Exports of Gems and Jewellery (US $Million)

Items Cut and Polished Diamonds Gold Jewellery 90-91 2641.01 95-96 4661.9

203.01

569.19

References
www.tanishq.in Official Website Titan Investor Meet (2007) Presentation Data from Gems and Jewellery Export Promotion Council Archives from The Hindu Icfai center of management research

Sales (Rs Cr) over the years

1000

918

900

800

731

927 731
567
567

700

600

412
500

327 235 166

235 166 327

412

400

300

200

100

0 20000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07

Profits (Rs in Crore)

Chart Title
70 60

50
40 30 20 10 0 -10 -20 -30 Series1

1996-97 -10.6

1997-98 -21.96

1998-99 -10.4

1999-00 2.07

2000-01 1.87

2001-02 6

2002-03 7.82

2003-04 14

2004-05 20

2005-06 35

2006-07 60

The Three Year Journey

120 100 84 80 63 60 40 20 0 2004-05 2005-06 2006-07 32 20 35 60 E B IT - Titan P B T - Titan P B T-Tanis hq 109

104 90