Lab-GrownOct 19, 2022
In India’s Lab-Grown Diamond Industry, Change Is the Only ConstantLab-GrownOct 19, 2022
Q&A: Jayen Shah, Founder of Mavuca Capital Advisors
National Jeweler chats with the career banker about the prospects for the lab-grown diamond industry and financing options.
Jayen Shah, CFA and founder of Mavuca, started his professional career in 1995 with Kotak Mahindra Group. He has held various leadership positions at ABN AMRO, Rabobank, The Royal Bank of Scotland PLC (Singapore branch) and Standard Chartered Bank. He joined IDFC bank in 2011. Under his stewardship, IDFC was named Best Bond House–India, 2015 by IFR-Asia.
Mumbai—A tech-enabled investment banking firm, Mavuca specializes in both debt and equity funding.
Over its short history, Mavuca has successfully executed 19 fundraising transactions, grossing more than INR 70 billion (more than $850,000) for marquee clients including L&T Group, KKR’s Virescent Renewable InvIT, JSW Steel, Welspun Enterprises and Shapoorji Group, among others.
National Jeweler recently caught up with the firm’s founder, Jayen Shah, via email to seek his views on the lab-grown diamond industry.
Here’s what he had to say.
National Jeweler: Why is the lab-grown diamond industry considered a sunrise industry?
Jayen Shah: Millennials and Gen Zers constitute probably the biggest growing demographically similar consumer segment.
Their consciousness toward environment, ethics and cost has triggered quickest acceptance and adoption of lab-grown diamonds.
On the other hand, lab-grown diamond technology has been around for more than 60 years. However, it is only recently that advancements in technology have made high quality, affordable lab-grown diamonds a reality.
On the other hand, lab-grown diamond technology has been around for more than 60 years. However, it is only recently that advancements in technology have made high quality, affordable lab-grown diamonds a reality.
On the cost front, experts opine that lab-grown diamonds are [significantly less expensive than] mined diamonds. Early adoption of lab-grown diamonds has been witnessed in the United States and Western Europe.
NJ: What is the market size of lab-grown diamonds globally and in India?
JS: Various estimates suggest that in 2021,lab-grown diamond sales have surpassed $6 billion and out of this, India’s contribution was $1.3 billion.
The market size of lab-grown diamond jewelry in 2019 was a meager 2 percent of [total] diamond jewelry [sales], which is expected to be up 8 percent [year-over-year] in 2022.
Some credible analysts project lab-grown diamonds to be a significant 25 percent of the diamond [market] in five years. Growth percentages are stupendous.
Besides jewelry, 5G networks, computer chips, and satellites use these materials. Thus lab-grown diamonds’ growth is likely to experience significant demand surge due to its multiple uses.
NJ: What are the advantages to Indian manufacturers?
JS: Realizing the immense potential of lab-grown diamonds, the Indian government, after the successful rollout of PLI (production linked incentives) schemes for 14 sectors, is now in discussions for introduction of similar incentives for lab-grown diamond manufacturing along with two more sectors, bicycles and toys.
The extant PLI schemes have a proposed outlay of INR equivalent of $24 billion and aim to create 6 million jobs in the next five years. The launch of the PLI scheme is further likely to boost lab-grown diamond manufacturing in India.
Further, the RBI notification from July 2022 on International Trade Settlement in Indian rupees is [designed] to boost international trade for India. The lab-grown diamond sector may reap the benefits of relatively stable exchange rates for its capital goods imports.
For exporters, export-import trade being settled in INR will even out the uncertainties of forex fluctuations and enhance the operational convenience.
NJ: What financial constraints do Indian manufacturers face in terms of capacity expansion?
JS: The Achilles’ heels for any sunrise industry are some of the usual “teething” problems, such as:
- Time taken for technology stabilization, product adoption and quality framework;
- Volatility in product pricing;
- Limited or non-availability of “seconds” market;
- Fragmentation of market players;
- Higher financial risk-reward; and
- Perception of enhanced credit risk.
Some of the Indian banking and financial institutional lenders have taken initial steps to analyze and model these risks. These lenders, with suitable mitigating factors and “margin-of-safety” have lent funds toward setting up lab-grown diamond manufacturing facilities.
NJ: What are the highlights of these financing initiatives?
JS: Taking a step back, components of lab-grown diamond manufacturing facilities include: land, building, machinery, technology, back-up power facilities, supporting infrastructure, etc.
Plus, a steady energy supply is an absolute must for any lab-grown diamond manufacturing facility.
Another differentiating factor is the type of technology used to grow diamonds in the laboratory. It could either be the high-pressure, high-temperature (HPHT) process or chemical vapor deposition (CVD).
The cost of machinery to set up a manufacturing unit is significantly higher for HPHT as compared with CVD. Users of both technologies strongly advocate respective project viability, pay-back period, and ROIs.
Several early movers have been the public sector banks, like the State Bank of India (SBI). SBI has already shown interest in financing such brownfield/greenfield projects.
Some of the financing highlights are as follows.
- Financing format: term loan
- Tenure: up to seven years
- Amount of loan: up to 70 percent of the project cost. However, many lenders require cost of land purchase to be funded from promoters’ equity.
- Loan repayment with principal repayment moratorium for 12-18 months and, thereafter, principal repayments customized to projected cash flow generation.
- Financial covenants linked to operating parameters, such as debt/EBIDTA and/or debt service coverage ratio (DSCR)
- Security: first charge of land, plant and machinery
- Ratings: lenders prefer to have investment grade rating from SEBI-registered rating agencies.
Lenders will require a quality technical-economic viability (TEV) study with detailed project report (DPR).
Lenders will weigh on other qualitative factors, including management strength, technical expertise, technology type, equipment manufacturers, etc. Every financing case may have its specific transactional customization.
Editors' Picks
Sponsored by
NJ: What about working capital financing?
JS: Some of the major operating costs of a lab-grown diamond manufacturing facility are electricity, scientists, skilled technicians, machinery maintenance, seeds and general administrative costs.
These accumulate to a relatively smaller proportion, though another major component that adds to the working capital is the credit period provided to buyers.
Several financing options exist, such as receivables discounting, factoring, and bank working capital financing for financial management of the receivables.
Also, the lab-grown diamond industry is a power guzzler. Therefore, the cost of [electricity] is very high. For long-term project viability and sustainability, lab-grown diamond manufacturers may consider long-term power purchase agreements with renewable independent power producers.
This story is one of three included in the special India Diamond Report newsletter. The stories are produced by an independent editor based in India.
This story is one of three included in the special India Diamond Report newsletter. The stories are produced by an independent editor based in India.
More on Lab-Grown
The Latest
CollectionsApr 02, 2025
Bea Bongiasca’s ‘Tarallo’ Collection Expansion Is a ZooThe pieces in “Animali Tarallo” portray animals from stingrays to elephants through portraits and interpretations of their patterns.
MajorsApr 02, 2025
Neiman Marcus’ Dallas Flagship Will Remain Open, For NowParent company Saks Global said the iconic location will be open through the holiday season as it decides what to do with the space.
SourcingApr 02, 2025
Winston’s Collection of Natural Color Diamonds Now on Display in D.C. Ronald Winston, son of Harry Winston, donated the diamonds to the Smithsonian National Museum of Natural History in Washington, D.C.
Brought to you by
The Heart of the Industry: Giving Bench Jewelers the Recognition They DeserveBench jewelers spend years honing their skills, Jewelers of America’s Certification validates their talents.
Policies & IssuesApr 02, 2025
Jewelers of America to Hold Webinar on TariffsThe virtual event will take place April 7 at 3 p.m.
Weekly QuizMar 27, 2025
This Week’s QuizTest your jewelry news knowledge by answering these questions.
Events & AwardsApr 02, 2025
Punchmark to Host Client WorkshopThe educational event will take place in Charlotte, North Carolina, this May.
IndependentsApr 01, 2025
Bergman Jewelers in Omaha Closing After 137 YearsThe independent jeweler first opened its doors in 1888.
Brought to you by
Natural Diamonds Should Mean MoreNatural diamonds mean more than lab-grown, but when every cut is ideal, they all look the same. Customers want more—Facets of Fire delivers.
MajorsApr 01, 2025
QVC Group to Cut 900 Jobs in the U.S.The layoffs come amid the TV shopping channel’s efforts to restructure and focus on live shopping through social media.
Events & AwardsApr 01, 2025
U.S. Antique Shows Adds Fall Show in FloridaThe debut event will take place in Miami’s Coconut Grove neighborhood this fall.
Events & AwardsApr 01, 2025
TJS to Host Discussion on Jewelry Industry’s Labor ShortageThe roundtable will take place May 17 ahead of the trade show’s welcome dinner.
CollectionsApr 01, 2025
Monica Rich Kosann Says ‘Good Grief’ in Peanuts Jewelry CollectionThe “Peanuts x Monica Rich Kosann” collection features the comic strip’s classic vocabulary across 10 bracelet designs.
Recorded WebinarsMar 31, 2025
Watch: What Do We Mean When We Say ‘Recycled’ Gold?Three industry experts dive into the complexities of the material often marketed as an “ethical” alternative for metal in jewelry.
TrendsMar 31, 2025
Amanda’s Style File: Dripping in DiamondsDiamonds are not only one of the most prominent gemstones, but the birthstone for those born in April.
MajorsMar 31, 2025
Lashbrook Expands Into Luxury Golf Gifts With AcquisitionThe Utah-based company known for making wedding bands has acquired Doubloon Golf.
WatchesMar 31, 2025
Bulgari CEO Jean-Christophe Babin Will Also Head LVMH WatchesThe longtime luxury executive led one of LVMH’s watch brands, TAG Heuer, for 12 years before taking over Bulgari in 2013.
CrimeMar 28, 2025
2 Suspects Arrested in $1.7M Smash-and-Grab Robbery of NY Jewelry StoreAuthorities said the robbers fled with jewelry and 70 Rolex watches, later taking pictures of themselves posing with big stacks of cash.
SourcingMar 28, 2025
19th-Century Jade Book Now Available in EnglishLotus Gemology founder Richard W. Hughes has translated Heinrich Fischer’s 1880 book “Nephrit und Jadeit” from its original German.
CollectionsMar 28, 2025
Piece of the Week: Löf’s ‘The Valentine’ RingThe ring's design features contrasting lines influenced by work from architecture-inspired photographer Nikola Olic.
SurveysMar 27, 2025
Consumer Confidence Falls in March Amid ‘Gloomy’ OutlookThe Conference Board’s index fell as consumers continued to worry about the impact of tariffs, the labor market, and the price of eggs.
AuctionsMar 27, 2025
300-Year-Old Ring Linked to Witch Trial Judge Goes Unsold at Auction However, two medieval jewels surpassed estimates at Noonans Mayfair’s recent jewelry auction in London.
WatchesMar 27, 2025
Austin Butler Joins Breitling as Brand AmbassadorThe Oscar-nominated actor debuted in the campaign for the new “Top Time B31” collection, which introduced Breitling’s Caliber B31.
SourcingMar 27, 2025
Susan Jacques, Gaetano Cavalieri to Headline 2025 ICA Congress The Congress is scheduled to take place May 19-22 in Brasilia, Brazil.
IndependentsMar 26, 2025
Bailey’s Fine Jewelry Acquires Fellow NC Independent JewelerThe family-owned retailer is the new owner of Morrison Smith Jewelers in Charlotte, North Carolina.
WatchesMar 26, 2025
Bulova Celebrates 150th Anniversary With Art Deco WatchesThe “150 Art Deco” collection features a Miss America timepiece and a pocket watch from the brand’s Archive Series.
MajorsMar 26, 2025
QVC Group Appoints New PresidentAlex Wellen, formerly CEO and president of MotorTrend Group, has taken on the role.
Events & AwardsMar 26, 2025
Jewelers of America Announces New Funding Initiative The Impact Initiative is part of the nonprofit association’s new three-year strategic plan.
