'Rising gold prices driving people to buy diamonds'

February 17, 2009

Venus Jewel, the Mumbai-based diamond manufacturing and exporting firm with a turnover of Rs 1,400-crore, has been in the industry since 1969. A DTC-Sightholder, the company specializes in premium solitaires and is globally recognized for its high standards of cut, polish and symmetry. It was one of the first diamond companies in India to recognize the need for a grading system for a comprehensive indicator of quality and value derivation. Thus, Venus Jewel developed the Venus Grading System (VGS) based on a host of critical grading parameters, besides the standard 4 C's. Mr Anil D Shah, chief operating officer, Venus Jewel, shares his exclusive thoughts and opinions about the industry with gjepc.org:

Despite the recession, in India the online sales of diamonds are doing quite well. What is your opinion about it and have you also experienced the same?

We partially agree with you because the literacy rate as well as acceptance of Information Technology is now gradually spreading. This has simultaneously been witnessed in the sales of diamonds through website as a medium but as far as we are concerned, we feel to have a business model where diamonds/jewellery can be sold through website, the manufacturers and retailers need to follow stringent quality parameters and need to be more organized and systematic in their approach. The companies which have a rational and logical pricing system, consistent and accurate grading with less dependency on a third party certification, will seldom face a slack in their sales. Apart from the above, if companies get more systematic by having the following operations, then we can definitely see some improvements. There should be a perfect "self-finance management" where prompt payment will increase the liquidity in the market and reduce the bad debts. More proportion of the owned funds in the business compared to the borrowed funds. Market driven manufacturing system helps to deliver goods which are more in demand hence we can have a proper manufacturing control and lean inventories of all places.

Diamonds seem to be selling very well down south especially in places like Hyderabad and Kochi. What is your take on this?

We do have customers across Southern India; generally consumers out there are very conscious about quality coupled with having a cautious approach towards their diamond purchases. This market is mainly depended on cash flow from the NRIs and fortunately we have experienced only a marginal fall in demand in South India, compared to others. And, the reason for the same is that currently, we have around 60% of our production in the range of FL to VS1 and D to G colors which are the fastest moving items here and these kind of goods are not only scarce but also difficult to procure. Hence, demand for our product is always there. We are one of the leading large sized diamond manufacturers, continuously making pioneering efforts to deliver superior products and keep retailers' interest intact.

Do you feel since there is an unprecedented hike in gold prices, buyers have suddenly shown this preference for diamonds?

Due to high volatility in gold prices, the consumers across the board are pretty cautious in their approach but a slight stability in the above, the said consumers are eager to buy. As price fluctuations are concerned, there are always temporary phases in each industry which experiences ups and downs. Due to speculation, prices of diamonds had increased dramatically in May-June 2008 and now the market is stabilizing and hence there is again a decrease in prices of diamonds. As a result people might think of buying diamonds viz-a-viz the increasing gold prices. Diamonds are a good proposition as it is always going to be in vogue and will always be a woman's desire because of its enduring nature. The customers for diamonds are elite groups who have their own quest for diamonds. Diamond jewellery is an icon of status for vanity and recognition of wealth. New customers who have made their fortunes during the upturn of economy boom in last few years are also showing interest in buying diamonds rather than hiking up the prices.

Is this preference for diamonds just a passing phase or this craze is going to remain for quite sometime now?

As very popularly said that 'diamonds are forever', and so is its demand. Each new upturn of economy and new generation will not only love to inherit diamonds but will also indulge in making fresh/new purchases adding to their family wealth. As per the feedback received from our customers, we don't see the interest in diamonds going down and it may still hold the privilege of a luxury product. And also a very strong instrument to park funds in the mind and heart of customers. The truth is that with the correction happening globally, demand will be maintained of diamonds that are properly graded, accurately priced as well as well-cut (with ultimate level of fire and brilliance) whereas there will be a downfall in demand as well as price of diamonds that are manufactured with poor skills.

Courtesy: The Gem & Jewellery Export Promotion Council

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