The chances of growing our diamond supply to India are immense
Russian diamond mining giant Alrosa has recently inaugurated its India Representative Office at the Bharat Diamond Bourse in Mumbai and with that, it looks to deepen its trade relations with the diamond and jewellery market. Evgeny Agureev, Director of the United Selling Organization of Alrosa was in Mumbai for the inauguration. A graduate of Lomonosov Moscow State University, Faculty of Economics, specialising in Accounting, Analysis and Audit, holder of a Master’s degree in Financial Management, he has more than 15 years of experience in financial management in commercial banks. Here he talks about Alrosa’s ties with Indian manufacturers, marketing plans, opportunities in India and more.
What is the objective behind the opening of Alrosa’s representative office in India?
The setting up of this representative office in Mumbai is the direct result of the MoU signed between the GJEPC and Alrosa in 2017 and which is backed at the highest level with the further talks between our President and the Prime Minister of India. This is not a trade office but a set-up that allows us to develop an understanding of the Indian market, support the efforts of the industry here to face any challenges that we as the global diamond industry face and have our finger on the pulse of the industry and market here. It is a new chapter in our relations and we are here for the long haul.
How the opening of representative office in India will benefit Alrosa?
India is one of our key partners. In the new contract period (2018-2020), Alrosa has signed 15 long-term contracts with diamond manufacturing companies in India. We currently work with more than 140 Indian companies that buy diamonds from the spot market or auctions. The opening of the office in Mumbai will enable us to better cooperate with industry organisations and our current clients, as well as expand our client base in the country.
What is your assessment of the Indian diamond market at present?
The Indian diamond jewellery market has a huge growth potential including strong opportunities to strengthen the demand for diamond jewellery at the retail end. Due to various policies and economic reform initiatives in the country, the trade narrative has changed for the better. The diamond jewellery market in India is developing and thus, Alrosa is interested in expanding its presence in the Indian market and closer cooperation with industry bodies, both for trade and the entire industry development.
Would Alrosa like to start trading directly in India in the future?
Alrosa is keen on having a trading office in India. However, there is a high excise duty of 40 per cent on buying and selling of diamonds in India which makes it unviable at present. The two governments are in talks with each other and we hope that in the next two to three years, we can make this into a trading office.
At present, what is Alrosa’s output supply to India? Looking at the huge potential lies with the Indian market, where do you see Alrosa’s output supply to India in the next couple of years?
The chances of growing our diamond supply to India are immense. Earlier the supply output was 10 per cent and today, it has reached 16 per cent of our total supply. We see a huge positive demand and this demand is growing day-by-day. We, as a company, would like to support this growth in India.
Last year, because of the Mir underground mine accident our production is influenced. The Mir mine accounted for 9 percent of our annual diamond output, which is approximately three million carats. So there is a high probability that our output will be lower this year and it will impact supplies to all the markets including India.
How the temporary downtime of the Mir underground mine will affect the diamond pricing policies of Alrosa?
For the pricing policy, we are not working out easier ways so that we increase the price if we have less production. We, as a company, do lots and lots of permutation and combination, based on our standing in different positions including the history of our clients and their requirements. If we find that there is stock and if the goods are not moving that is the case to decrease the price and not increase it. So, it is a combination of various factors at play. As far as the less output this year is concerned, we as a company will do all our best to increase production at other diamond fields, including the Internatsionalny and Yubileinaya diamond mines, in order to partly replace the volumes dropped out of production.
Can you explain in brief about the marketing plans of Alrosa in India and elsewhere?
Alrosa has been developing a couple of marketing programmes since the end of the last year and the beginning of this year, which we will implement in the near future. It would be unveiled both, internationally as well as in India. The marketing campaigns will cover several aspects including promotion of fancy cut diamonds and a diamond brand of Alrosa. The brand will be linked to transparency and will also incorporate the history of diamonds. It will also be a brand that will go worldwide but it could be specific to India also.
What do you see next for Alrosa’s services in India?
We look forward to the support of the GJEPC and BDB as we go forward. We would also like to work together with the Indian industry to tackle issues like the threat of undisclosed synthetics. We will soon be introducing our gem testing machine – the Diamond Inspector here. I’m hopeful that our India office will drive the interactions with the industry stakeholders more efficiently. Going forward, the cooperation between Alrosa and the polished diamond manufacturers in India will continue to grow and opening the representative office in India is a logical step in that direction.