For IGI in the last 3-4 years, the biggest growth has come from Lab Grown Diamond. Going forward also that is the biggest growth driver. Now the biggest risk to this is the falling prices of LGDs. In the Natural Diamonds, the way De Beers controls the prices, by restricting the supply, there is no single entity which can control prices of LGDs.
Now if excessive capacities for growing LGDs come up and due to which there is a massive fall in the prices, then that can spell doom for the industry. If the prices become too low, then the exclusivity factor in Diamond is gone and there may not be any need for certification as well.
Now for LGDs, how do the industry ensure that prices do not crash.
Going forward it in the steady state it may follow and undergo cycles of high demand and low demand, with cycles of under capacity and overcapacity. With prices rising during under capacity and rising during over capacity. This will happen when the demand globally is kind of stabilized and there is may be a steady single digit growth in demand.
But now when people are still discovering LGDs and their value, and market is growing thick and fast, and simultaneously capacities are also coming up to match the present and the future demand, the prices will remain very volatile. This phase of high growth may stay for another 3-5 years, before it kind of stabilizes. During this phase as Diamonds are coming from all kinds of sources and technologies, there will be great need for certification from independent credible body, so that one is able to assess the quality and value the diamond accordingly.
So feel that IGI should have good growth for the next 3-5 years at least.
The risk which we spoke earlier is if after this phase if the LGDs prices stabilizes at much lower levels and diamond loose their precious stone status then the need for certifications may vanish, which will detrimental for IGI.
Thanks.