Designed for gold

Coimbatore never fails to surprise in its role as a nursery for entrepreneurs who break new ground. How else can you describe the story of a wage-earner on a princely monthly salary of Rs 150 a quarter century back, going on to head a business with an annual turnover of Rs 2,500 crore, and looking to double the same to Rs 5,000 crore in the coming months?

Mind-boggling, particularly as that wage earner happens to be a first generation entrepreneur. Surprisingly, not many in the city seem to be aware of the story of this manufacturer of gold ornaments, among the largest in the SAARC region!

It was way back in 1984, after completing his graduation, that Mr K. Srinivasan, Managing Director, Emerald Jewel Industry India Ltd, Coimbatore, sensed a huge opportunity in the then un-organised jewellery trade. Taking up a job in a jewellery showroom here, he learnt the tricks of the trade over a 10-month period and then plunged into the production of hand-made jewellery, mainly jummukis , press chains and half sets.

What worked to his advantage was his ability to spot the shortcomings of the industry at that point — he says there were not many good designs and the finish was poor. Having addressed these issues in his business, he took orders from dealers of gold ornaments in North India and got goldsmiths in the city to produce them. There has been no looking back ever since!

Mechanisation, no bar

He took the mechanisation route to increase productivity and ensure consistency in quality. Today, 2,500 people are directly employed by his company in four units and around 500 goldsmiths work on contract basis.

Since fashion is fickle, Mr Srinivasan says Emerald has been churning out designs, and has so far created more than one lakh designs. In fact, 10-15 new designs are made everyday, he says.

Currently, the company produces 12 tonnes of gold ornaments annually, which would soon be doubled to 24 tonnes. At current value, his annual production is worth around Rs 2,400 crore. This is expected to touch nearly Rs 5,000 crore when production is doubled within a year. He hopes to meet this target by enhancing capacity in the existing locations and by starting new production facilities.

Mr Srinivasan says it has been his policy to have all the manufacturing done at Coimbatore. He expects to employ around 1,000 people when the enhanced manufacturing capacity goes on stream. Emerald now has 30-40 dealers across the country. It also has a subsidiary in Dubai and clients across the world. He plans to start subsidiaries in London, Singapore and New York to sell his products.

Exports account for about 10 per cent of the total sales of Emerald. Once the planned overseas subsidiaries are commissioned, exports would go up to 20 per cent. He is targeting people of Indian origin for his overseas forays.

A brand on the anvil

While he currently sells his gold ornaments to retailers, he is planning to sell them under the brand ‘Jewel One' through by a chain of stores, comprising both owned and franchised stores. A beginning would be made during the 2011-12 FY with the opening of 10 stores in Tamil Nadu on ownership basis, as boutiques of 800-1,000 sq ft. If the initiative proves successful, it would be extended across the country on franchise basis.

Mr Srinivasan says at present Emerald produces plain gold ornaments, and gold ornaments studded with synthetic stones and diamond jewellery too. The value of the pieces range from Rs 2,500 to a maximum value of Rs 2.50 lakh-Rs 3 lakh each.

On the quality of gold ornaments, he said the market was changing and ‘things are not like before'. Purchase of hallmarked jewellery would ensure quality and sellers would not stand to lose any value. Hallmarking was gaining acceptance and he felt the Government was also considering making hallmarking mandatory, which he welcomed as a ‘quality conscious person'.

Referring to the mood among buyers given the spiralling price of the yellow metal, particularly in the past two or three years, the Emerald MD says people have gained confidence that investments in gold offer better returns than any comparable investment option. Because of the price increase, the sale of gold ornaments had come down slightly in terms of quantity.

Mr Srinivasan, however, felt a correction in prices was ‘overdue', though he did not know when that would occur. There was a gap in the sale of gold, which was being filled up by mutual funds. But ‘everybody wants to exit' and when that happens, panic selling would set in, impacting the price. To sustain the current price levels, around $100 billion would be required to be pumped into the industry every year, which was not possible ‘forever'.

His company was also into the production of diamond jewellery and current volume stood at 1,000 carats of diamond jewellery a month valued at about Rs 3.5 crore. Soon, he expected volumes to go up to 2,000 carats/month. He said the taste of the younger generation of buyers was different from their parents. Ornament producers would have to adjust to their preference for light weight, international-style jewellery.

Light weight, handmade pieces

Explaining how Coimbatore has become a major hub for the manufacture of gold ornaments, he said the city has been known for light weight, handmade jewellery. The new generation of jewellers had gone in for mechanisation and the city had about 50 gold ornament manufacturing units, each specialising in certain types of jewellery.

Mumbai, Kolkata, Rajkot, Amritsar, Delhi, Nellore and Belgaum were also centres for gold ornament manufacture, and mechanisation was gaining ground in each of them. Coimbatore was popular for the manufacture of rings, pendants and ear studs, though bangles and necklaces were also made in small quantity.

He said earlier proposals for forming jewellery clusters in Coimbatore did not take off due to opposition from some quarters. However, he did not think there was a case for forming a Special Economic Zone (SEZ) in Coimbatore for jewellery manufacturers since they did not have the required export volumes.

He said the pieces being made currently would not have much demand in the international markets since they were targeted at the Indian diaspora living overseas. If it was aimed at catering to international tastes, it would become viable. But for the export quantity registered from Coimbatore, line balancing would be difficult and the time for an exclusive jewellery SEZ at Coimbatore was yet to come.

Asked about his plans for an IPO, Mr.Srinivasan said ‘‘definitely we will go for an IPO, (but) not now” and it would take a “minimum of two years” as he wanted to strengthen the administration of the business.

Mr Srinivasan has won several awards, including the ‘Best Gold Jewellery Manufacturer Award' in 2011 — a special award for outstanding contribution to the Gem and Jewellery Industry by the All-India Gems & Jewellery Trade Federation (GJF) during IIJS Signature Show.

COMMENT NOW