The annual IIJS Signature show just wrapped up in Mumbai and in the forefront were gold jewelry sales and the ability of the diamond industry to adjust to the turbulent diamond landscape.
The small trade fair is a valuable venue for Indian diamond and jewelry manufacturers to do business with local retailers and among themselves. Some 7,000 people visited 580 exhibitors at the three-day event looking mostly for gold jewelry, an item always in demand in the sub-continent.
Gold Leads at IIJS
Gold jewelry sales at the show were good according to exhibitors, especially during the first day. Gold plays an important role in India as a store of value and practically any money a family saves, especially if low-income or middle-class, is converted into gold. The downside is that design and brand are of less importance – gold is bought as jewelry just as a convenience. On the upside, in recent years young adults in their 20s and 30s are interested in brand as well as design and jewelry makers are addressing this with a growing emphasis on both.
Diamond jewelry sales were not as brisk as gold. On the first day of the show some business was reported in the afternoon hours and on the second day, diamond and diamond jewelry sales were “surprisingly good” according to most exhibitors. Most of the business for diamond jewelry was by companies that put a strong emphasis on design and quality, proving that high-end is doing well in the country.
For loose diamonds, the issues are more complicated. Most loose diamond purchases were to meet specific orders and not for inventory as traders are doing everything they can to reduce expenses.
Diamond Companies Adjust to Current Market and Improve Cash Flow
Indian diamond and diamond jewelry companies are managing their cash flow carefully these days. Diamond manufacturers adjusted their operations to the current low and declining loose diamond prices and high rough diamond prices. In the backdrop are fixed overhead costs and costly financing, according to traders.
The adopted solution is reducing the outlay on rough diamonds by preferring lower cost goods, which allowed them at the same time to keep their workforce busy. In some places, the workday was shortened, although this is not the norm. The reduced production allowed not only managing expenses but also decreasing inventory levels.
The efforts are paying off and now manufacturers are reporting that their cash flow improved, even though sales are still subdued. This week De Beers and Rio Tinto are holding a rough diamond sales week, and a large amount of rough diamonds, estimated at over $600 million, will shortly enter the market. What the manufacturers decide to buy, and then which goods they manufacture, will demonstrate how much funds are allocated to buying, and what goods they believe are commercial in the current market.