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Indian gem firm sees profit in jewellery

JAIPUR (India): Indian gemstone exporter Vaibhav Gems Ltd said it expected the company's jewellery sector to propel growth in coming years while gem exports would see only minimal increase in profits.

"We don't expect to see much profit growth in the gemstone export division, but the jewellery division, which is a new sector, will grow rapidly," Vaibhav Gems Managing Director Rajiv Jain told Reuters in a recent interview.

"We see a constant annual (total) profit growth of about 30 percent in the coming five years," he added.

Vaibhav is based in the capital of northwestern Rajasthan state, Jaipur, one of the world's largest centres for gem cutting and polishing. It is the only listed coloured gemstone exporter in India.

In 1998/1999 (March-April) it posted a net profit of 71.71 million Indian rupees ($1.6 million) up from 53.52 million in the previous year. Turnover and other income grew to 736.98 million rupees from 443.28 million.

In the jewellery division alone, turnover saw a year-on-year increase of about 36 percent to 146.83 million rupees.

ALL UNDER ONE ROOF

For hundreds of years, the gem trade has flourished in Jaipur, dubbed the Pink City because of its pink buildings. Millions of dollars worth of raw emeralds, tanzanite, and other precious and semi-precious stones come to the city every year.

Gem cutters and polishers in the city turn the rough stones into glittering gems which are then exported worldwide.

According to the Gem & Jewellery Export Promotion Council, an apex body of Indian exporters, the country exported $6.15 billion worth of gem and jewellery in 1998/99.Gem and jewellery constitutes 15-20 percent of India's total exports.

"We were already exporting stones and Jaipur had an ample skilled labour force for us to start a jewellery division -- it was a logical decision," said Jain, explaining why his firm began making jewellery in 1996/1997.

"We just decided to bring everyone under one roof," he added.

Jaipur's gem trade consists of a myriad of small workshops, many of which are family run.

The current target of Vaibhav's jewellery division is to improve the quality of the jewellery so that they could attract more international customers.

"Our products are already at par with jewellery which is made in Thailand," said Jain. "But we are aiming for the quality which Japanese buyers want -- they take only the best."

The firm is also drawing up plans to enter the domestic retail market with its jewellery, which mostly use coloured gemstones, and not diamonds.

"Indians are one of the largest buyers of gold in the market," Jain said. "When you think in those terms, the domestic market is very hard to ignore."-Reuters