Analysis and Interpretations

CHAPTER - IV ANALYSIS AND INTERPRETATIONS An Overview of Synthetic Gem Industry An over view of synthetic gem Industry was made with special reference to actual conditions of the manufacturers, labourers and traders prevailing in the industry. This overview emphasizes the financial and marketing conditions of the manufacturers and traders. The socio economic conditions of the workers were also dealt with in detail. Finance Analysis The capacity to invest money in any business affects its performance. The ability or the inability of the person dealing with the business affects it either positively or negatively. The synthetic gem industry business also is not an exception. Here, there are two categories of peoples involved. They are traders who buy the stones from the manufacturers and sell them to various types of buyers. The other ones are manufacturers who produce the stones which are sold to traders in lots, who in turn market them. The role of investment or finance which affects the business of the trader and manufacturer is analyzed here: (1) Traders: The range of investment for traders is anywhere between four to ten lakhs. They always aspire to get maximum profit out of their investment and get back their investment as soon as possible. 133 Main source of funds for these traders are not financial institutions or banks. Most of the traders have their own funds. They don‟t want to depend on any financial institutions for a good reason i.e., they don‟t want to pay interest. Till last two decades, most of the traders had only cash sales and not credit sales. So, they always managed to do the trade with their own funds and never felt the need to borrow money from the lenders. Now, there is a different situation. The relatives (i.e. in- laws) and one time employees or workers with little knowledge have also preferred to come to this business. Increase in the numbers and ever growing competition also plays a vital role in introducing credit sales. Earlier traders used to buy finished stones from manufacturers on a lot basis system, which contained all types, sizes and nature of stones. As there was always sa heavy demand for the stones they were compelled to have a good stock of the stones which meant good or heavy investment. Now as the scene has changed, traders don‟t go for heavy or lot purchase. They try to buy only the required amount of stones and sell them immediately. Thus, the need to invest heavily by the traders has vanished. The burden of investment has shifted to the manufacturers in the form of storage value which has become high for them. Traders also prefer to bear variable costs rather than bearing the fixed costs, which saves their interest on borrowed capital and nil investment for storage gives them more profit. (2) Manufacturers: As the majority manufacturers are poor people they don‟t have their own funds and are totally dependent on friends, 134 relatives and financial institutions. They need to invest on installation of machineries, give advance to get hold of a working place and workers and purchase raw-materials and accessories. Also they need to put aside a portion of their investment as a working capital for day-to-day requirements. Once installation work is established, manufacturers don‟t need much money for investment, because the office and administration expenses are very meager. Much of the investment will go to raw- materials for synthetic stones and payment to labourers. One important factor to be considered here are most of the bankers does not prefer to lend money to synthetic gem industry because of the low-returns to the manufacturers. Manufacturers are forced to bear the brunt of the financial institutions (private) which charge heavy interests. The short term high interest rate loans doesn‟t permit the manufacturers to run the industry peacefully. Remedy suggested is Banks should come forward to lend to the manufacturers of gem industry with long term, low interest rate loans. Many factors like non availability of loan, high interest, credit sales, rejection of stones, low profit make the manufacturers earn very less margin. This is the main reason for the deterioration of this industry. Marketing Analysis Any product manufactured has to find its way to the buyers or customers. The product must fulfill the need and satisfaction of the customers. Synthetic gem industry also is not an exception. Marketing is a continuously evolving and growing process, which has to fit or suit the 135 demands of the time and period of the industry. The product in the synthetic gem industry finds its way to the customers from manufacturers to traders and from traders to the ultimate users of the stones. Manufacturers and traders have different trends and ways of marketing these stones. The size, colour, cut and types of stones also determine the factors of marketing techniques adopted each by the manufacturers and traders. Place of marketing, the distance of marketing place from the manufacturing units and their transportation and cost factors also play a significant role in this area. Difference nature of marketing techniques adopted by the manufacturers and traders are discussed below: (1) Manufacturers: Manufacturers are the ones who procure raw- materials for the stones and then cut, cone, facet and polish then in the units where they are installed. Tiruchirappalli District in Tamilnadu State is the hub of synthetic gem stones industry. In and around Trichy there are many small units of installations where the stones are manufactured. Tiruchirappalli has a very big bazaar known as “Diamond Bazaar” where all types, kinds, shapes, sizes and colours of synthetic gem are traded. Even from Kerala people come to Trichy to market their stones. Synthetic gems are of two types. One is Imitation and another one is American Diamonds. Imitation stones are marketed by manufacturers in Numbers, whereas American Diamonds are done in Carats in weights (one carat is equal to 20 mg. or five carats are equal to one gram.). Hundred 136 imitation stones up to 20 Jallads (allocation by mesh) are priced. Sometimes, if the size is more than 20 jallads it is weighed in carats and priced accordingly. Manufacturers adopt piece rate system for producing imitation stones and trade them in 100s. It is a peculiar system adopted for American diamonds manufacturing. They procure raw-materials (Boules or crackles) in kilograms and give them for cutting in kilos. But for coning, faceting and polishing, they adopt piece rate basis. At last for marketing, they go for carat measurements. While marketing stones, manufacturers use two types of mesh, one each for Imitation Stones and American Diamonds. In both the cases traders are the beneficiaries. Generally, the manufacturers pack their stones in lots according to their specifications and quality. But once in the market they are unable to sell them and earn profit to their satisfaction (aspiration). The aspirations and expectations of both the manufacturers and traders rarely match. Many a time manufacturers sell the products at the whims and fancies of the traders and loose in the bargain. Their earning thus fluctuates and it never becomes a stable one. Every time when manufacturers arrive in the bazaar they have to look for traders, for only a few manufacturers have regular traders to sell their stones. In the end after wandering here and there to find suitable traders to sell their produce they at times under stress forego their profit and sell them at whatever cost they are able to get. There are traders who deal 137 with only high quality stones and give good price to the manufacturers. In these cases efficient manufacturers make a good profit. Some inefficient manufacturers who are unable to differentiate the quality of stones put them in assortment lot and try to cheat the traders. But the shrewd traders never fall for such trap and in the bargain manufacturer‟s end up losing their businesses. Another type of dealing is a rule in the market. Imitation stones are segregated size wise ( for example : below 6 jallad stones, 6 – 10 jallad stones, 11 – 13, 14 – 15 jallad stones). But the American Diamonds stones are segregated by -4J, -6J, -8J, -10J, 11 – 13 J, 14 & 15J, etc. Based only on the said sizes stones are priced between the manufacturers and traders. Red or White colour Imitation Stones of size 6 J as well as 10J are evenly priced. Some scrupulous traders further segregate then as 6, 6 1/4, 6 ½, 6 ¾, 7, 7 ¼, 7 ½, 7 ¾, and 8 Jallads and sell them for different prices to get more profit. During festivals like Deepawali, Pongal, New Year, Tamil Month Aadi etc. traders create artificial excess supply of stones in the market. i.e., the traders show as if there is no demand for stones and try to grab the stones from the manufacturers at cheaper rate. Here, the manufacturers suffer a lot especially during the festivals seasons. All of them were happy either workers or traders except manufacturers. Even after the deal is over between the manufacturer and trader, still the trader can choose to reject some stone or bargain them for lesser price or return them. 138 Manufacturers are always willing to give good wages and remuneration to the workers in their installed units. But the prevailing unfavorable conditions in the market frustrate them and slowly manufacturers are losing interest in the business thus causing a deteriorating industry. (2) Traders: Synthetic gems find their way to the traders from manufacturers. Most of the traders are Saits, Telugu, Tamils and Saurashtra people who market them to the needy because of their well established brand name of their stones and shops.

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