Professional Documents
Culture Documents
A Study of Financial Feasibility of Setting Up A Jewellery Retail Outlet
A Study of Financial Feasibility of Setting Up A Jewellery Retail Outlet
PROJECT REPORT
Department of Business Management Guru Nanak Institute Of Management & Technology (GNIMT) 2011-2013
1
ACKNOWLEDGEMENT
The big task of undertaking such a work could not have been possible without the wholesome inducement, sense of accommodation and purpose guidance provided by various persons in the successful completion of this report. I am extremely grateful to our Director Col. H.S. Singha for providing us better infrastructure and other inputs for study. I am equally thankful to Ms. Sandhya Mehta (Deputy Director) whose excellent guidance has served as a constant source of inspiration and helped me a lot in carrying out the research of the project. I express my deep feeling of gratitude and profound respect to Mr. Pankaj Goel under whose valuable guidance the work has been planned and completed. I owe more than a debt of gratitude to all the persons who have helped me directly and indirectly in my project.
Sahil Dhir
STUDENTS DECLARATION
I hereby certify that the work which is being presented in the report, entitled A FEASIBILITY STUDY OF SETTING UP A Jewellery Retail Outlet in Ludhiana in the partial fulfilment of the requirements for the award of the degree of Masters of business administration and submitted in Guru Nanak institute of Management and Technology, Ludhiana as an authentic record of my own work carried out during a period from november, 2012 to feb18, 2013 under the supervision of Prof. Pankaj Goel.
The matter embodied in this thesis has not been submitted by me for the award of any other degree of this or any other University/institute.
SAHIL DHIR
This is to certify that the above statement made by the candidate is correct to the best of our knowledge.
The Viva voice examination of SAHIL DHIR has been held on ___________.
Sign of Supervisor
Contents
Introduction ..................................................................................................................................... 5 Brief History ................................................................................................................................... 7 Structure Of The Industry: .............................................................................................................. 7 Indian Jewellery Industry:............................................................................................................... 8 India Jewellery Industry - Highlights ..................................................................................... 8 Branded Jewellery:.................................................................................................................. 9 Key To The Success Of Jewellery Store.............................................................................. 10 Ludhiana Associations .................................................................................................................. 11 Important Jewellery Showrooms In Ludhiana .............................................................................. 11 Factors Driving Growth Of The Jewellery Market ....................................................................... 12 Hall Marking- Certification Of Gold ............................................................................................ 13 Assaying & Hallmarking Centres ............................................................................................. 14 Objective Of Study ....................................................................................................................... 15 Research Methodology ................................................................................................................. 16 Supply Of The Products ............................................................................................................... 19 Detailed Project Report ................................................................................................................. 20 Particulars Of Project .................................................................................................................... 21 Detailed Particulars Of Stock........................................................................................................ 26 Detailed Particulars Of People Hired ............................................................................................ 27 Projected Cash Utilisation A/C .................................................................................................... 31 Learning ........................................................................................................................................ 33 Project Loan Application Form .................................................................................................... 34 Conclusion .................................................................................................................................... 35 Bibliography ................................................................................................................................. 36
more relevant to the objectives. The survey was conducted through personal interviews over a period of 20 days. From the above survey it is found that, working women contribute a greater impact on branded jewelry. It is found that 42.5 per cent of working women has very good shopping habits, thus has a greater impact on branded jewelry. The rest of the target group, though non-working, came from a similar background with similar purchasing power. Survey was conducted on age group 18-65 yr.
Brief History
Before the liberalization of the Indian economy in 1991, only the Minerals and Metals Trading Corporation of India (MMTC) and the State Bank of India (SBI) were allowed to import gold. The abolition of the Gold Control Act in 1992, allowed large export houses to import gold freely. Exporters in export processing zones were allowed to sell 10 percent of their produce in the domestic market. In 1993, gold and diamond mining were opened up for private investors and foreign investors were allowed to own half the equity in mining ventures. In 1997, overseas banks and bullion suppliers were also allowed to import gold into India. These measures led to the entry of foreign players like DeBeers, Tiffany and Cartiers into the Indian market. In the 1990s, the number of retail jewellery outlets in India increased greatly due to the abolition of the Gold Control Act. This led to a highly fragmented and unorganized jewellery market with an estimated 100,000 workshops supplying over 350,000 retailers, mostly familyowned, single shop operations. In 2001, India had the highest demand for gold in the world; 855 tons were consumed a year, 95% of which was used for jewellery.
around 15,000 players, with only 80 having revenues over USD 5 million. India is also home to around 450,000 goldsmiths, 100,000 gold jewellers along with 6,000 diamond processing players and 8,000 diamond jewellers. The value chain of the industry starts from sourcing and mining of the metals and extends to jewellery retail. While India is not a major miner of previous metals and stones, the countrys inexpensive and well skilled workforce makes it a world leader in processing of diamonds. The countrys jewellery retail sector is also expected to evolve with a shift among consumers towards branded jewellery, driven by greater quality consciousness.
Jewellery market size - US$ 13 billion Diamond jewellery - US$ 1.2 billion Gold jewellery market growth year on year - 15% Diamond jewellery market growth - 27%
Branded Jewellery:
India is the world's largest consumer of gold and third largest consumer of diamond jewellery after Japan and USA. The jewellery market in India is estimated to be around US$ 15 billion, second only to the US (US$ 40 billion) and is followed by China (US$ 11 billion). The jewellery market in India is second to the fast moving consumer goods market. Globally, branded jewellery accounts for only 8% of the total market of US$ 70 billion, while in India of the total jewellery market, the branded segment accounts for a minuscule 2%. Further, it is very fragmented and dominated by the unorganized sector. Branded jewellery has been a relatively recent phenomenon in India. Tanishq and Gili were among the earliest jewellery brands in India. There has also been a shift in consumer preference towards diamond jewellery due to the extensive positioning of diamond jewellery as both affordable and contemporary. Another key development in branded jewellery has been the introduction of value added services such as the certification of gold and diamonds, and life time return and buy-back schemes. These trade practices have resulted in the perception of superior quality associated with branded jewelry The trend so far ... Branded jewellery has been a relatively recent phenomenon in India and in other developing countries. In India most jewellery is retailed in the unorganized sector. In India there are more than 2.5 million jewellers. But if we talk about jewellery brands in India, these brands can be counted on one's fingers. As mentioned earlier, branded jewellery is known as organized jewelry. As per survey done by some big companies branded jewellery accounts for merely 2% to 3% of the total jewellery retail market in India, which underlines the fact that there is very good scope for branded jewelry. The jewellery sector in India has grown at a CAGR of 9% in the past two years as against that organized jewellery sector has showcased over 30% CAGR during the same period. This is mainly on account of jewellery retailing in India undergoing a slow transformation from a largely unorganized sector to a more organised one. The majority of traditional jewellers cater to the local population and most purchases are made on trust and on the basis of the reputation of the local jewellers. However, with the growth in retail sector and introduction
of new formats such as boutiques and supermarkets etc, Indian customers are displaying growing preference for quality, designs and branding.
Hubs:
Delhi and its neighbouring states are famous for manufacturing silver jewellery and articles.
Jaipur is a key centre for polishing precious and semi-precious gemstones. Kolkata is famous for its lightweight plain gold jewelry. This category of jewellery finds a large market in Tamil Nadu.
Hyderabad is the centre for precious and semi-precious studded jewelry. Nellore is a source for handmade jewellery that has been supplying the Chennai market for quite a few decades. Belgaum in Karnataka and Nellore together, specialize in studded jewellery using synthetic or imitation stones.
Coimbatore in Tamil Nadu specializes in casting jewelry. Trichur in Kerala is another source for lightweight gold jewellery and diamond cutting.
Mumbai is the centre for machine made jewelry. The city is also India's largest wholesale market in terms of volume.
Huge footfalls in modern formats due department stores being destination stores. Comfortable & attractive shopping experience. Reliability & quality from the perspective of the customer. Brand exclusivity & wide range of designs. Malls are the preferred choice.
10
LUDHIANA ASSOCIATIONS:
Name Ludhiana Jewellers Assoiciation Swarankar Sangh Prem Bhandari Gopal Bhandari Head of association Anand Sikri Secretary Manoj Dhanda
Total number of members that are covered under both of these associations are 111.
PC Jewellers
B Xix 128, Fawara Chowk, Rani Jhansi Road, Civil Lines, LUDHIANA - 141001 | Call: +(91)-161-4567017
Gitanjali Jewels
455, Near Bharat Nagar Chowk,Adjoining Bank Of India, The Mall Road, 3 No Divison, LUDHIANA - 141010 | Call: +(91)-161-4615150
11
Ganpati Jewellers
Neemwala Chowk, Shivala Rd, Bagh Khazanchian, Ludhiana - 141008 Call: +(91)-161-2728442
Storehouse value to fashion accessory: The growth of the jewellery market in India is spurred by factors such as occasions of wear and purchase. The entire way that people buy jewellery is changing, and younger women who are buying for fashion, rather than investment - are driving the change. In India till three to four years back, jewellery purchases were made on few traditional occasions such as Diwali, Aksahy Tritiya etc. However, with the increase in the number of working women and changing lifestyle, jewellery is gaining importance as a fashion accessory.
Government initiatives: The Government of India has taken initiatives to stimulate the growth of the gems and jewellery industry given the industry's critical importance in Indian exports. SEZs and Gems and jewellery Parks have been set up to promote investments in the sector. Also, 100% FDI is permitted in the sector through the automatic route and increased investment by industry bodies (DTC, PGI, and WGC) is spurring rapid growth of the branded jewellery market in India. The Foreign Trade Policy (2004-2009) has exempted service tax on services (related to exports), which are rendered abroad. Cutting and polishing of gems and jewellery is treated as manufacturing for the purposes of exemption under Section 10A of the Income Tax Act. It has also made the import of polished diamonds completely duty free. All this has fuelled growth within the sector.
Value added services: The introduction of value added services such as the certification of gold and diamonds, and lifetime return and buy-back scheme has further fuelled the growth of the organized 12
jewellery segment. Such trade practices have resulted in the perception of superior quality associated with branded jewelry.
Emerging trends: On account of media proliferation, overseas travel, customers being more exposed to western lifestyle, changing attitude, increasing disposal incomes, there has been a shift in demand from mere traditional handcrafted jewellery to branded machine made jewelry. Earlier jewellery was considered as an investment, however, now it is looked upon as a fashion accessory or an everyday wear product. The occasions of purchases have also witnessed a change. For instance, previously purchases were made during marriage or festival seasons, while nowadays wear ability and gifting dimensions have led to demand throughout the year. Traditional designs have been replaced by fashionable and lightweight jewelry. Further, growing interest in white gold and newer precious metals and the like is also generating significant interest
Government of India took the cognizance and understood the necessity of protecting the public in its purchases of gold jewellery specially with regard to standards of fineness and the prevention of adulteration, be it deliberate or accidental. The principle objectives of the Hallmarking Scheme are to protect the public against the fraud of adulteration and to oblige manufacturers to maintain legal standards of fineness. Hallmarking is the accurate determination and official recording of the proportionate content of precious metal in gold. Hallmarks are thus official marks used in many countries as a guarantee of purity or fineness of gold jewellery.
13
Taking cognizance of these aspects the RBI Standing Committee on Gold and Precious Metals opined that introduction of a Hallmarking System would not only protect the public from fraud, but also assist exports of jewellery. While agreeing on this the Committee reckoned that compulsory certification of gold would not be implementable on account of the massive structure of trade. Recommending the pursuance of a voluntary scheme, it emphasized the deviations in purity of fine metal should invoke penalties under legislation and BIS was named as the sole agency in the country for Hallmarking of gold jewellery under the provisions of the BIS Act, 1986.
The BIS logo A three digit number (out of a set of six pre-defined values) indicating the purity of the gold in part-per-thousand-format viz; 958, 916, 875, 750, 585, 375. Thus a BIS 916 hallmark would certify to a purity of 916 per 1000, that is 91.6%, translating to a 22 carat purity of gold.[4][5]
Logo of the assaying centre A code denoting the date of hallmarking Logo/code of the jeweler Assaying & Hallmarking Centres The testing of the jewellery as well as the marking is done in approved Assaying & Hallmarking Centres across the nation. These are private undertakings approved as well as monitored by the BIS Legal status The mandatory status of hallmarking gold jewellery sold in India, although declared, is yet to be implemented.[6] But it has a wide acceptance among consumers. This often leads to fake hallmarking of jewellery which is under the regular scrutiny of the bureau.[ 14
Indias government raised taxes on gold imports on Monday in the latest step in a campaign by the worlds largest bullion importer to peg back demand for the precious metal. Taxes on imported gold will rise from 4 per cent to 6 per cent . Indias gold imports have grown sharply, up nearly 50 per cent in 2011-2012 to an estimated $57.5bn Precious metals like gold and bullion would be taxed at one per cent.
Objective of study
To verify the possibility of opening jewellery retail outlet. To study the financial feasibility of project undertaken.
15
RESEARCH METHODOLOGY
Scope of the study:
The scope of the study is to get the detailed knowledge about the jewellery units operating in Ludhiana. Data collection:
Secondary data is collected for some other purpose and which is useful in the present research. Research Design: Exploratory study. Technique of investigation: Telephonic interview. Sampling unit: Jewellery retail units in Ludhiana. Research tool: Cost sheet, Ratio analysis, Projected balance sheet. Software Assistance: Ms excel, Ms word, Ms power point.
16
Alternatives
Setting up own manufacturing unit of gold jewellery with labour and capital employed in it.
As per the business of gold jewellery is concerned, an individual have two alternatives:
The first alternatives is that an individual can set up a manufacturing unit of gold jewellery & labour employed in it.
The second alternative is that an individual can buy the gold jewellery from the suppliers & sell in to market i.e. Buying & Selling.
17
The alternative which has been selected is buying the gold jewellery from the suppliers & sell in to market i.e. Buying & Selling.
Target Customer:
Target Customers
Upper Class
Middle Class
18
Amritsar Meerut
19
Industry
Sector
Gold jewellery
New/Expansion/Diversification Project
New project
Product
18.47 crore
20
PARTICULARS OF PROJECT
1. Location & Site: The showroom will be located at mall road, Ludhiana. The proposed site is a posh area of the city with high footfall.
2. Building:
It includes infrastructure, furniture & fixtures, interior and the cost of all this is estimated to be at one crore.
The minimum stock of 50 kg will be maintained at starting level which will cost around 15 cr (30000/10g). Gold jewellery further includes variety of articles mentoned as follows:
Necklaces (20kgs):
Polka set Ranihaar Collar set Pendant set Oxodise necklace Plain necklace Kundan set Semi- diamond (jarkan)
21
Ring (5 kgs):
Plane ring (ladies & gents) Semi- diamond Oxodise ring Radium ring Stone ring (gents only)
22
23
Earings:
Chains (5kgs):
Machine made Hand made Hollow chains Coloured chains (meena chain)
24
Bracelets (5 KGS):
Plane 25
Articles
Weight (kgs)
Rate/10gms
Necklace
20
30000
Rings
30000
1.5
26
Bangles
10
30000
Earings
30000
1.2
Chains
30000
1.5
Bracelets
30000
1.5
Nose pin
30000
0.3
Total
50
15
Selling arrangements: For selling the products total number of 21 persons will be hired on salary basis. Their salaries will differ according to the job they will be doing.
Job
Salary/person (rs)
Selling
12000
1.56
27
Supervisor
15000
0.30
Security guard
7000
0.14
Cleaners
5000
0.20
Total
21
2.20
Particulars
Cost (cr)
Stock
15
Staff
0.022
Total
19.022
28
29
30
31
32
LEARNING
I learnt how to start a new business unit by using skills.
I learnt how to apply skills and knowledge at the right time, in the right direction.
33
Constitution Public ltd. Co. Private ltd. Co. Co-op society Others Public Pvt. Join Cooperative
Tehsil
District
State
Project type
Expansion
34
CONCLUSION
It has been concluded that Ludhiana is industrial hub of Punjab. Jewellery industry has a very good scope in Ludhiana.
It has been concluded that I proved one statement with the help of this management Project An individual can start a new with his skills and knowledge.
35
36