Bhumik Gajera’s big plans for Laxmi Diamonds

Among the early industry movers in Surat, Laxmi Diamonds has a global reputation. Bhumik Gajera, part of the promoter family, talks about the upcoming Surat Diamond Bourse, the perspective of lab-grown diamonds and his group focus on earth-mined diamonds.

 Excerpts:

Background of Laxmi Diamonds: https://youtu.be/kFTYN_fkl9k

Laxmi Diamonds was established in 1972. Vasant Gajera was the main force behind it. He had come to Surat at the age of 17 in 1969. By 1972, he had decided to create his own company. Laxmi Diamonds was established with merely four polishing wheels and an aggregate capital of Rs.10,000.

Today in the business we have five first generation family members and 12 second generation family members. Across all offices we now have seven to eight thousand employees. We process roughs worth over half a billion dollars. We have a presence in jewellery market for both local and global sales.

We have for long had a presence beyond merely the trade. The Shantaben Gajera Trust, established in 1993, educates 50,000 students on an annual basis across 17 institutions. We have been adjudged the most socially responsible company in our sector by the GJEPC. Our orphanage manages 1000 children. When we took over the responsibility of Amreli civil hospital it had 300 beds. We put in an investment of Rs.70-80 crore to take it up to 650 beds. We established the medical college over there which caters to around 200-250 students. The set-up today provides basic procedures medication and food free of cost to the patients. It is open to all because after all it is a civil hospital. We handle around 800 OPD cases on daily basis.

Growth visibility: https://youtu.be/VJ6Y5S24DeI

The last decade or so was a turbulent period for the industry. We had to stand scrutiny – on a lot of questions on the practices, and the work policies of the industry. All I can say is that a few examples do not represent what the industry does. The foundation of this trade has been laid in this city and by the work ethic of this city. Over the past decade, we have grown more disciplined in business practices, in operations, in finances, in interactions with regulatory authorities.

Earlier external leverage was much more and, as a natural result, people were less efficient. It’s the simple outcome of putting other people’s money to work. Now the situation is changed. External leverage is now 30% of what it used to be two decades back. People have their own money invested. That naturally means more discipline. It also means decision making becomes quicker, more accurate, and one which takes more aspects in mind. All this is a sea change in the mindset of industry people. That is why we have been able to capture the confidence of stakeholders like bankers and others after a difficult decade.

The relationship with De Beers – https://youtu.be/_B9f99EqznM

De Beers still is among the largest rough suppliers. They can dictate prices and terms of operations, albeit in a disciplined way. When we talk of lab-grown diamonds, it primarily means that, for the processors, there is a lot more material to work on. As of now, no one sees each other as predators.

If you look at the market, only a very small percentage of the population buys natural diamonds. Let’s say that only one in ten people would look at a purchase of a diamond, but now with lab grown diamonds three will look at it. Lab-grown diamonds represent a choice for people in terms of both price points and products available at those price points. That is what will happen and that is how it should be.

Within the industry, most people involved in natural diamonds will have a stake in lab-grown diamonds sooner or later. The challenges are now in marketing – how you perceive, identify a target customer, and educate that person. That is the key.

The Surat Diamond Bourse and what it’s impact would be: https://youtu.be/hE-SZWy92bM

If we look at the Surat Diamond Bourse coming up, it is nothing but a progression. In 1960 when Surat did not have even one million population, the diamond trade came here. The trade has helped develop the city, and in turn it has been rotating around the city. Today 7 of 10 diamonds globally pass through Surat.

Given this context, the Surat Diamond Bourse will add a dimension to the trade as it stands today. The Bourse is a large structure, well-designed and well-organised. How and when would it be feasible for people to reverse migrate from Mumbai to Surat is a matter of time. The scope for this city now has expanded, which anyway has been a rapid growth centre.

The Surat Diamond Bourse impact goes much beyond the diamond industry. It will impact real estate, textiles, ancillary services industry – the area of influence is manifold.

A fresh look at lab-grown diamonds: https://youtu.be/DhN6HWi41hA

If you were to look at lab-grown diamonds from any nation’s perspective, it would make massive sense. However, we should not forget that manufacturing of lab-grown diamonds also necessitates imports of machinery. So there is definitely a forex outgo on the capital account here.

I would want to repeat again – how you talk to customers, that is of paramount importance.

Natural diamonds have a lot of legacy issues like environmental damage, blood diamonds, child labour and so on. They are important and major global players are doing things responsibly in these areas. If we talk of ourselves, have also set environment-based targets for our group. We have a 10-megawatt solar capacity operational in Rajasthan.

In that perspective, most units of lab-grown diamonds are definitely energy intensive, and they secure energy consumption from thermal energy plants. Machinery, as I outlined earlier, is imported.

Lab-grown diamonds in itself is a growing industry. In the growth phase, people are fascinated. This fascination also will grow. But overall the industry will mature with time, as many others have. We appreciate that these diamonds are finite. Mines do not have incremental viability the way they used to. There are increasing environmental concerns. With all this the supply of earth-mined diamonds can only come down from earlier levels. Therefore as a market, this is where we would want to focus on.

Where does the group focus lie: https://youtu.be/kDvpqfk1z1Y

Our group focus has been and always is on earth-mined diamonds. That being said, customers are the most important aspect of our business. If they need or request lab-grown diamonds, we would have to have an independent approach to cater to those requests. Most industry people focusing on earth-mined diamonds also do have an alternative setup in this space. With all this, earth-mined diamonds will always be the centre of our business and our activity.

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Journalist. Educationist. Researcher www.asiaconverge.com focusses primarily on business, economy and policy related issues RN Bhaskar has authored Game India: Seven strategic advantages that could steer India to wealth - http://www.asiaconverge.com/2019/02/game-india-seven-strategic-advantages-can-steer-india-wealth/ Currently consulting editor with FPJ and Founder Editor with Asiaconverge.com. He teaches at educational institutes in India and overseas. He also undertakes specific research projects in select areas. EmailLRNB@asiaconverge.com Many of the policy reports are available as free downloads from https://www.freepressjournal.in/fpj-initiatives/the-free-press-journal-published-books