Rishabh Tongya of Diacolor
As third generation manufacturers of diamonds and coloured stones, Diacolor is
well established in the wholesale industry, both in India and across the globe.
Foraying into retail, the Diacolor name became synonymous to luxury in the B2C
space when the young turk, Rishabh Tongya paid heed to the inner artist in him. Fine
jewellery is his personal passion and transforming passion into vocation, Rishabh has
surely surpassed large expectations.
Current State
Our diamond manufacturing and export
industry has played an important role in
the country’s economic growth over the
years. Although the last few months of
2014 have reported a dip in the export
of polished diamonds due to liquidity
crisis and sluggish demand from the diamond
consuming nations like U.S., there
are however numerous opportunities for
growth with exploring newer markets like
Russia, Middle East, etc. There has also
been an increase in the domestic demand
for diamonds over the past couple
of years with the increasing share of the
luxury market in the country. The overall
outlook hence, for the years to come
seems positive for the Indian diamond
industry.
The hurdles faced by the diamond industry in India currently include a slow demand in the major export markets like the U.S. and the dwindling profit margins on polished diamonds.
Another reason hitting the industry is the beneficiation programme in Africa under which most African countries are setting up their own cutting and polishing units and outsourcing of rough diamonds to India and China are being discontinued Bankruptcy Reports in HK, A Worry Of course, this is certainly very sad news as banks would be scrutinising the consignee companies very strictly and would be hesitant to give export credit. Ebola Outbreak Impact Ever since the breakout of Ebola virus in the west African countries many diamantaires have stopped sourcing rough diamonds and halted their visit to these countries for the past couple of months.
This has somewhat affected the diamond industry as these African countries account for a substantial amount of the diamond production and would thereon create a shortage of rough diamonds. But, we haven’t returned any parcel coming in from Africa.
The Modi Effect
We really expect PM Modi to bring in a
flat turnover tax for smoother day-today
operations. Also, we expect him to
lessen the restrictions and encourage the
industry.
High Diamond Prices
Diamond manufacturers have high costs
and of course they would also want to
maximize on the prices. Unless the producers
reduce the charges, they would
pretty much remain high.
Strategies to Overcome
Hurdles
To overcome the hurdles that the industry
is experiencing, we try to not indulge
in overtrading. Other than that it is important
to deal in businesses with margins
and explore new markets and better
avenues.
Toughest Period
A switch from B2B business to retail is
somewhat challenging to begin with. An
important part of retail is to educate your
consumer in a much simpler language as
compared to a B2B set-up where certain
jargons, terms and products are relatable
to a majority of consumers. Another
difference being that while purchases in
a B2B transaction are more driven by rationale,
retail consumers tend to be more
emotionally driven.
Love For Profession
In the time that I have spent in the luxury
retail section, I have had the opportunity
to meet and interact with some very nice
people, it is my understanding that consumers
looking at super luxury products
value the product they buy and the experience
of luxury is in the ownership of the
product. It has hence made it possible
for me to manufacture and offer some of
the best jewels to our discerning clients.
Rapid Fire Round:
Favourite business book: ‘Getting to
Yes’ by Roger Fisher and William Ury
Business mantra: ‘Cash is King’.
Role model/Mentor in business: My
father.
If not a businessman then…: I would
have been a philanthropist.
Idea of unwinding: Travelling
Current State
The current state of the Indian diamond
industry is unexplainable as some companies
are moving goods at low prices
and booking loss, while some are holding
their goods waiting for the scenario
to change. The main issue at the current
stage is the low demand from the retailers
across the globe. Also, the price that
our customers’ want is lower than our
selling cost. But, it’s a phase and this too
shall pass.
Bankruptcy Reports in
HK, A Worry
The position, which the market is currently
holding is full of rumours flying
around. The reports that have come to
us have not affected HVK at all. Talking
about the industry, if the reports are verified
as they claim to be, then the finance
will decrease in the industry, which in
turn is going to be bad for the industry.
Ebola Outbreak Impact
We haven’t faced the Ebola crisis in any
form. None of our suppliers have reported
anything serious. Hence, the question
of returning the parcels from African regions
doesn’t arise at all.
The Modi Effect
One man cannot solve every problem instantly
but PM Modi, being a Gujarati; we
believe that he has business in his genes.
All the decisions made by him will be favorable
to the economy of the country,
individually and also as a whole.
IIJS 2014 Dampening
Whatever you have heard about the IIJS
2014 being slow this season is wrong.
We at HVK had a busy exhibition compared
to last year, but it was very simple,
some companies were very busy while
some were absolutely free. The scenario
will remain similar till Diwali, but we expect
the whole market to revive after that.
Yet Prices High
As I have mentioned before the manufacturers
cannot sell below the cost of production
and hence the business transaction
cannot be done. Some transactions
that do happen are based on compromise
on some level or the other.
Strategies to Overcome
Hurdles
The timing would be the important thing.
What we buy and at what price, are going
to play an important role. Faster cycles and low inventory is going to be the key
in this market.
Toughest Period
It has been almost eight years since I
have entered the business but till now I
haven’t seen the time where I would feel
that ‘this is a tough phase’. But, generally
speaking last six months were really
tough in terms of customers’ demands
and miners’ prices.
Love For Profession
It’s a family business hence a strong
support system has been in place, helping
me to keep the aggression going.
Apart from that I am into the diamond industry,
which is a lot of bling bling, that’s
always attractive.
Rapid Fire Round:
Favorite business book: Still not inspired
by one
Business mantra: You receive what
you put in
Role model/Mentor in business: My
father
If not a businessman then: Would be
an investment banker or a stock trader
Idea of unwinding: Spending time with
friends and travelling
Current State
The diamond industry is currently facing the
uncertainties about the economic situation.
The consumer confidence will continue
to be a key issue and a challenge to the
diamond industry. As everybody knows the
year 2014 has been an exceptionally challenging
year. It has been a roller coaster
ride with patches of busy months of high
demand which suddenly dropped towards
the second half of the year. The slowing
down of demands from Hong Kong, Mainland
China as well as the U.S. and a liquidity
crunch, which is felt across the industry, are
two of the major hurdles we are currently
facing.
Bankruptcy Reports in
HK, A Worry
As we are aware, 30 per cent (by value)
of the total exports of polished diamonds
from India every year goes to Hong Kong
and china. The recent bankruptcies definitely
have a huge impact on the Indian
diamond industry. Indian diamantaires, who
supply polished diamonds are in a state of
panic and will be more cautious towards
future business. Due to the weak financial
condition of some big jewellery companies
in Hong Kong there are chances that the
Indian diamond companies may face huge
losses.
Ebola Outbreak Impact
The epidemic is causing Indian diamantaires
to cancel their trips to the African
countries. Sierra Leone, which is just one
example exports about $220 million worth
of diamonds every year and Angola which
produces over a billion $ worth a year. As
this source is currently inaccessible and
workers in the region unavailable, to a certain
extent do affect the Indian diamond
industry as the input of rough is curtailed.
The Modi Effect
We have a lot of hope from the new Government.
We believe that the new Government
will give a new direction to the jewellery
business. It might also reduce the
import duty which will lead to increase in
exports and thus there will be an increase
in foreign exchange. Hence, we have
high hopes from the strong new
Government.
IIJS 2014 Dampening
The two major reasons according
to me is the consumer
confidence, which is a key
issue and as well as the money
crunch. We should see an increase in
sales as we are near the festival season, Diwali
in October and hopefully should carry
on as we approach Christmas.
Yet High Prices
Because the industry is so bound by tradition,
any disruption in the pipeline tends to
spark concerns. Several such disruptions
occurred in 2014, but we do not expect
these events to have significant long-term
impact. These small bumps in the road do
nothing to dim the diamond industry’s longterm
growth prospects. Retailers in India,
China and U.S. are still pressing ahead with
ambitious expansion plans, and the countries
should remain a very attractive market
for diamonds in the long term.
The manufacturers have adjusted the
prices to a small extent where deemed
necessary as demands for certain products
has weakened.
Strategies to Overcome
Hurdles
In tough times, to be successful means
knowing how to use your talent and resources
to the best advantage. To withstand these hurdles we are steering our
business through the turbulent environment
by remaining liquid and not being leveraged
or over exposed. Along with that we are
also tapping on new evolving markets.
Toughest Period
The toughest phase I experienced over the
past 15 years of being in the business
is the crisis in 2008 where
business came to a standstill
with financial crisis all around
and a total loss in consumer
confidences as people lost
money in all sectors. A luxurious
product like diamonds
was the least of interest for consumers.
Love For Profession
What I like most about our business is the
fact that we are dealing in one of the most
luxurious products in the world, which is a
result of a long process from mine to retail.
The process of creating a niche piece of
jewellery is always exciting, as every rough
diamond mined is different and it’s a constant
process of creating something unique
from a stone to a glitter on the finger. The
international travel, exposure and association
with people from all around the world in
the process are also very exhilarating.
Rapid Fire Round:
Favorite business book: The Business of
Belief by Tom Asacker
Business mantra: Beyond the ordinary
Role model/Mentor in business: Sudhir
Mehta
If not a businessman then…: I would
have been a Banker
Idea of unwinding: A week at a spa resort
in the Maldives
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