Niru Diamonds is an Israel-based diamond manufacturer focused on supplying to the high-end jewelry and watch sectors. The company was recently honored by Israel’s president as an outstanding exporter for 2013 with exports of $112 million for that year. Ranjeet Barmecha, Niru’s CEO, recently spoke with Rapaport News about the company’s operations and the markets in which it operates:

RN What is the background of Niru Diamonds?

RB: I came to Israel in 1977 and started the company in 1979. At that time it was our business to buy rough in Israel and export to India. When I saw the potential for cleaving and preparing the rough in Israel, we developed the ability to saw and manufacture in Netanya. In 1991 we transferred all of our manufacturing activity to Sri Lanka.

We have a small laser factory in Ramat Gan where we prepare big stones, but our office in Israel is essentially for rough planning, marketing and distribution.

RN How did you come to specialize in your niche areas?

RB: We are focused on baguettes, princess cuts and small-size round diamonds for the high-end jewelry and watch markets. We have other goods which we market through our offices in Hong Kong and New York but our focus is on those three areas.

When I first started in the industry, I learned cleaving and that became my specialty. In India we used to make rounds from cleaving, but when I came to Israel I saw that you could take out baguettes from cleaving. Princess cuts are very similar to baguettes so it was a natural progression, and then we went into rounds.

RN How is the fancy shape market currently?

RB: Demand for nice, high-end princess cuts was weak in 2012 and 2013, but it wasn’t bad in 2014.

All fancy shapes have their ups and downs as jewelers buy according to the designs that they make. Production of these items isn’t huge, so when jewelers start to use a certain article, the price tends to rise, and the opposite is true if the jewelers aren’t using those goods.

In the past two years, the baguette market was very good as we saw more designers using baguettes. Also, the price of princess cuts had already dropped which stimulated demand in 2014. We expect that it will be better in 2015.

Our main exports are to Geneva, Switzerland, the U.S. and Hong Kong. The second half of 2014 was softer in the Far East, but it’s been okay in the U.S. and Switzerland.

RN The president’s honor was for 2013, but did you have continued growth in 2014?

RB: I think that they looked at our performance over the last four to five years before giving us the award. Our growth has been very steady. In 2014, we had exports from Israel of about $158 million.

But last year was a tough year. Profitability was brought down by high rough prices. This affected us but it affected manufacturers of rounds more. Our profit margin depends on rough prices, which went up in 2014 while polished prices didn’t.

I don’t know if there will be a rough price correction in 2015 but there should be, otherwise people won’t be able to buy goods.

RN What do you consider to be the biggest challenge facing manufacturers today?

RB: Our biggest challenge is to get the rough we need. We have a consistent supply but the procurement of rough at the right price is very difficult.

Accessibility is also a problem because high-end jewelers and the watch industry need G and better color diamonds, which is relatively scarce in rough. Also, we can’t buy only G+ rough diamonds so we have to buy a broader range which we have to manage. We try not to deal in rough and prefer to maximize our manufacturing.

RN What advice would you give to someone starting out in the industry?

RB: We all need to be transparent in our accounting and banking. This was something that was missing in the diamond industry until now. By 2016, our company will be IFRS compliant. We took a step forward and I believe it’s very important that others do the same.

RN How do you envision your business 10 years from now?

RB: Our next goal is to achieve group sales of $500 million with reasonable profitability and more transparency. We are not planning to diversify and will achieve that by focusing on our three niche products.

We recently changed our mission to “Spreading Happiness” from “Perfect Synergy” and that will be reflected in our corporate branding. When someone buys a diamond they become happy. So we want to make more sales in order to spread the happiness. The more diamonds we sell, the more happiness we are able to spread across the globe.