A legend in his own right, Govindbhai Laljibhai Dholakia, Chairman, Shree Ramkrishna Exports P. Ltd, is a self-made man. Having built the company fr om scratch to one of the leading players in the Indian diamond industry, Govindbhai is a businessman par excellence. And as a philanthropist, his contribution to social welfare with special focus on education is note-worthy, especially when he himself is a school dropout.
Speaking at length with Rough & Polished, he comes across as an astute businessman, airing his views on all things business, with smatterings of philosophy. But his explanation of his experience at IIM & ISRO are the most endearing...
Shree Ramkrishna Exports P. Ltd is known as one of the oldest diamond manufacturing and exporting companies in India. Can you take us through its growth to its present status… and as a jewellery manufacturer as well?
Yes, our company, Shree Ramkrishna Exports P. Ltd (SRK) is one of the oldest diamond manufacturing companies with consolidated annual revenue of $850 million. SRK’s inception was in 1964, and it has been a long journey of 50 years till date. I started at the age of 13 on a very small scale… that is with one wheel “Ghanti”. Slowly I understood the ‘market’; initially I was doing ‘contract base manufacturing’ for other, and then I started operating independently in the local market. In 1976, I started trading in Mumbai, and later with progress and increased production capacity I ventured into the international market. We started manufacturing with 2 employees and today SRK is a big family of 7000 plus employees. SRK’s annual production is about 28,000 carat per month. In the year 2003, we diversified to jewellery manufacturing and established “The Jewelry Co.” to cater to the International market and “Jewel Goldi (India)”, to cater to the domestic market. We started as it as part of compliance with DTC norms, but our expertise, technological integration, dedication and most importantly transparency paid off best results. Today, even our Jewellery division has completed ten years in business, having India’s leading retail Brands in its huge and esteemed fleets of clients.
The One word that we incorporated in our Business is “Integrity”, which means a lot to us.
And One philosophy that every 7000 plus SRK family member has incorporated in every aspect of his/her life is that “I Am Nothing, But I can do Anything”… and we have made this our company Mantra.
What is that ‘extra’ that SRK offers, as against other companies, to the polished diamond buyers? And, can you please explain SRK’s ‘online’ sales program?
We believe in one philosophy “show only that much, which you have”. We believe in transparency and full disclosure. We want customer to feel the same faith and trust which he experiences while physically examining the diamonds, when buying online fr om srkexport.com; and accordingly we have developed our web portal. One can see all details including photos, HD Movie, Heart & Arrow, GIA Certificate of each stone in our inventory comprising of over 18000 diamonds. We provide exclusive set of features and facilities to our customer with which they can easily, smartly and conveniently manage their account on our website.
Our focus is on the fair Trade and we are committed to our every client. We also vouch that all the diamonds customers purchase fr om SRK are not tainted by any immoral activity, right from the mine till it has reached their hands. In all aspects, we exercise integrity whether it is rough procurement, manufacturing & distributing or even in business association with others, be it business practices, sales, marketing, pricing, and human resource. Our diamonds are “Diamonds of Moral Values”.
We have digitized our business to such an extent that within a short time a customer can order their requirement, with full verification. We have i-SRK Mobile application for i-Pad, i-Phone, Android & Blackberry to access diamond details while in transit.
If I want to sum-up, then I could say that our Business Processes are our USP as they are formulated on one approach…“Customer Centric”.
Diamond rough shortage has been a major problem for the Indian diamond industry since the beginning of the industry. How do you see the future shaping up for the cutting centres with respect to ‘rough’ availability?
Mining disruptions in South Africa have led to a huge scarcity of low-end rough diamonds in India. The polished market, remained active with demand from overseas as well as the domestic jewellery sector showing sudden increase, so much so that shortage of goods were reported for almost all colour/size of stones.
It is the nature of this industry that for raw material we have to depend on other countries. Diamond is a naturally scarce product and unfortunately India is not blessed the large quantity of deposits. So therefore in such case, two options are available…either Indian polishing and cutting centres should not rely on one source but should have multiple suppliers from different countries to have uninterrupted supply OR start mining what little deposits are available in India, atleast to cater to the local rough demands. But, unfortunately mining in India does not seems to be a feasible option due to non-conducive environment…multiple reasons.
Diamond mining in India has never taken off though many projects were initiated like Panna, Rio Tinto and even some private companies. Your comments.
There are several reasons behind the failure of diamond mining, in spite of several initiatives. I would say, in its very nature, diamond mining is an industry which requires large amount of risk capital. Secondly, highly bureaucratic governmental set-up is not conducive for significant progress. Besides this, issues related to involvement of Foreign Players in Indian Mining Sector are an integral influencing factor. Technology, which is required for such mining was also a drawback as Indian Players were not capable of developing or even acquiring such highly complex technical-knowhow. Other issue is that mines are confined to certain state territories and State government PSUs are carrying out mining from these mines. So even if Central Government invites foreign players to carry out mining, there would be the direct opposition from state government. Royalty to Government is also one contributing reason for under- developed diamond mining in India.
Coming back to SRK, besides getting your ‘rough’ as a DTC Sightholder, from wh ere else do you source your rough diamonds?
Yes, we do buy rough diamonds from other sources. While doing so, we regard to contractual commitments under the De Beers BPPs and any other commitments that we have made to industry bodies in respect to the trade in non-conflict diamonds and full adherence to the Kimberley Process and any other regulatory provisions. We source our goods from only official rough suppliers; and only manufacturers and trade.
De Beers controls not only the amount of goods each client is offered in its box; it also decides on the types and sizes of goods each box contains, based on its own opinion of each individual sightholder’s needs. But the market is never the same every time and so the needs vary. Also, there is the shortage of rough sometime. So, to move on with the working cycle, we need multiple suppliers like ALROSA, etc.
What is your company’s equation with ALROSA in terms of rough procurement? Do you see ALROSA as a major rough supplier for India in the coming years?
The amount of ALROSA rough diamonds sales to Indian companies has been steadily growing for the last 5 years, and resulted into $700 million of sales in 2013. Right now, many customers from India are working successfully with ALROSA on competitive bidding and long-term contracts basis. This amount is expected to grow to $ 3-4 billion in near future.
Securing direct imports of rough diamonds from Russia and streamlining overall trade procedures will benefit ALROSA, as well as the Indian cutting centres. Indirect routing of rough diamonds into India simply adds to cost and increases the complexity of sourcing raw material for the Indian industry.
Both India and Russia will benefit if a concrete trade procedure is put in place. India’s exports of polished diamonds to Russia will increase as well.
What changes have you seen in diamond demand globally over the years? And what about China... is it a threat or a potential market for Indian exporters?
These days India is facing more and more competition from China and Thailand The new competition from China is undoubtedly a huge threat to India’s diamond industry.
But China is not into exports of diamonds currently. The growing demand for finished diamonds within is a huge market to be catered to. This increasing consumer base in China has given India a good opportunity and has exported nearly US$ 7 billion worth of diamonds to China. Even though China’s growing cutting and polishing industry represents a threat, the growing consumer base is a boon, albeit for now, to India. With India having its own domestic market as well as overseas demand to cater to, it is taking steps to ensure its supply of rough diamonds, even as China is increasing its investment in this area.
So clearly, there are opportunities and obstacles ahead for both India and China; and success will go to the player who will adapt and evolve.
How do you think India is faring now as a jewellery manufacturer and supplier... both exports as well as for the domestic market? Which area of manufacturing, design or any other aspects should Indian manufacturers focus?
The outlook for the gem and jewellery sector is positive. The positive trend is expected to continue, as major economies are showing signs of recovery, which is resulting in fresh orders for the sector.
Further, the gems and jewellery sector is also expected to grow in the domestic market, going forward. As the per capita consumption of jewellery is low in India, an analytic study shows that in 2015, China is forecast to have a 13% share of the worldwide market for jewellery consumption, second after the U.S. with a 26% share and followed by India with a 12% share. So there exists an attractive opportunity to tap the domestic market as well as export market.
We believe that Indian Manufacturers should pay attention to all aspect whether manufacturing, designing, Policy driven practices. Quality is the key to all Doors. TQM (Total Quality Management) is required to face global competition.
What’s your opinion on the Government’s duty imposition on polished imports as well as on rough imports? In which way can the Indian government help the Indian diamond industry to become as well as grow as a ‘trading hub’?
The government has announced several measures for the promotion of the gems and jewellery sector in the New Foreign Trade Policy. The Policy framed has liberalised the way of doing business and have empowered diamond manufacturers on various aspect on international trade like:-
- Import of diamonds on consignment basis for certification/grading and re-export by the authorized offices/agencies of Gemological Institute of America (GIA) in India or other approved agencies to be permitted.
- To promote exports of gems and jewellery products, the value lim it of personal carriage has been increased from USD 2 million to USD 5 million in case of participation in overseas exhibitions. The lim it in case of personal carriage as samples for export promotion tours has also been increased from USD 0.1 million to USD 1 million.
- The number of days for re-import of unsold items in the case of participation in an exhibition in the US has been increased to 90 days.
- The government plans to establish diamond bourses in an endeavour to make India an international diamond trading hub.
- 100% FDI is permitted in the gems and jewellery sector through the automatic route.
- Gems and jewellery SEZs have been set up to promote investments in the sector.
Our Government has changed its view towards the gems and jewellery industry but still there is a lot to be done at the institutional level, like procedural level (import/export), and banking level. Though it is good that RBI has liberalized advance remittance norms, which is a boost for exporters. There is also a need for simplified tax structure for the diamond industry in particular, looking at the complexity it involves. Over the years, how do you think the Indian domestic market’s demand for polished diamond has changed and grown, in terms of quality/size of diamonds, etc.?
India produces around 95% of the world’s cut and polished diamond pieces. By carat weight, India is estimated to process 80% of world rough production by volume and 58% by value. India is predominantly involved in cutting and polishing of small-sized diamonds, which weigh less than one carat. India's cut and polished diamond exports have a high global share in terms of number of pieces; however, in terms of value the share is much lower.
Today, by moving up the value chain and processing larger stones India has further increase its value share in total exports. The trend has been changing since last 3-4 years. Indian exporters who have dominance in processing of small stones, have already started moving into cutting of large and medium size stones. Therefore, a considerable increase in market share, in terms of revenue share has been observed.
It is said that India and China are set to replace the USA as the biggest diamond jewellery consumers in the coming years. What’s your take? And how does this augur for the Indian cutting and polishing as well as the jewellery manufacturing sector?
Both India and China have huge domestic consumer base. Besides there is an increasing trend for diamond jewellery demand among Chinese middle class. However, per-capita consumption of Jewellery in India is very low, in spite of growing per-capita-income among urban public. So there is clear indication of scope of market as still majority of market in these two countries is untapped.
I have also mentioned earlier that as per a study in 2015, China is forecast to have a 13% share of the worldwide market for jewellery consumption, second after the U.S. with a 26% share and followed by India with a 12% share. This shows the increasing market trend in India as well as China.
So in coming years the USA will definitely remain the highest consumer of diamond jewellery but surely will have India and China on par or may be China will be leading the board in the long run.
Heard you were invited as a guest lecturer by the Indian Institute of Management (IIM), Ahmedabad (the topmost Business school of India), as well as by ISRO (Indian Space Research Organization). For the benefit of the readers, please let us know more about it and your experience in both the institutions.
The country as well as the society provides us opportunity to acquire knowledge and education from the institutes like ISRO and IIM. One way of giving back to society is to develop young minds for future managerial and leadership roles. I love to be part any Institute or Program which enables young blood for self-sustaining learning and growth; and creating future leaders in various area of work.
I was invited by IIM and ISRO to share my experience, particularly my background, my struggle and the work I am doing now… that is, the Social activity that SRK carries out. Honestly, I felt honoured. It was a rare honour for me as I am neither a politician nor an academic. I think IIM and ISRO saw something in me and my work, to invite me and listen to my story.
Aruna Gaitonde, Rough&Polished, India
