A Project on

ANALYSIS OF JEWELLERY OPERATIONS AND MARKETING

FUNCTIONS

Submitted by
SRIRAM.R

In partial fulfillment for the award of

Post Graduate Program in
Business Management

CBS House No 31, Dr. Radhakrishnan

Salai, 9th Lane, Mylapore,
Chennai- 600004, Tamil Nadu

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DECLARATION

Sriram.R as bonafide student of the department of International Business,

Chennai Business School would like to declare that this project done on Sriram
Jewellery and Balaji jewellers is for fulfilment of the Post Graduate Program in
Management of Chennai Business School and is original work.

Date: Signature
Place:

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ACKNOWLEDGEMENT:

I am grateful to respected Prof. Sridar Natrajan, Dean, Chennai Business School

and to our respected Director Mr. J.N. Amrolia, CEO, Chennai Business School
for permitting me to successfully complete the internship project

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4
INTRODUCTION

Till the early 1990s, the average Indian bought jewellery for investment rather
than for adornment. Jewellery made of 18-karat gold was not favored as it was
considered a poor investment.

Confidence in the local jeweler was the hallmark of the gold jewellery trade in
India. A jeweler or goldsmith in a local area had a fixed and loyal clientele. The
buyer had implicit faith in his jeweler. Additionally, the local jeweler catered to
the local taste for traditional jewellery.

However, since the late 1990s, there was a shift in consumer tastes: women were
increasingly opting for fashionable and lightweight jewellery instead of
traditional chunky jewellery. There was a rise in demand for lightweight
jewellery, especially from consumers in the 16 to 25 age group, who regarded
jewellery as an accessory and not an investment. The new millennium witnessed
a definite change in consumer preferences.

Branded jewellery also gained acceptance forcing traditional jewelers to go in for

branding. Given the opportunities the branded jewellery market offered; the
number of gold retailers in the country increased sharply. Branded players such
as Tanishq, Malabar, Jewell one and kalyan opened outlets in various parts of the
country. Traditional jewelers also began to bring out lightweight jewellery, and
some of them even launched their in-house brands. However, the share of
branded jewellery in the total jewellery market was still small (about Rs. 10
billion of the Rs. 400 billion per annum jewellery market in 2002), though
growing at a pace of 20 to 30 percent annually. The branded jewellery segment

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occupied only a small share of the total jewellery market because of the mindset
of the average Indian buyer who still regarded

jewellery as an investment. Moreover, consumers trusted only their family

jewelers when buying jewellery. Consequently, the branded jewellery players
tried to change the mindset of the people and woo customers with attractive
designs at affordable prices.

However branded jewellery players will continue to face lot of competition from
local jewelers. In order to gain market share, they will have to come up with
designs that customers want and win the trust and confidence of consumers by
hallmarking and demonstrating the purity of the gold used by them.

To compete with traditional players, branded players must also find some way to
differentiate themselves. While the success of a particular brand will depend on
differentiation, affordability and quality will be a key element in sustaining a
brand.

In addition, branded players require focused advertising and astute salesmanship

to compete with traditional jewelers. Besides the major brands- Tanishq,
Malabar, Jewell one and Kalyan - several regional players have opened branches
to leverage the trust and reputation that they have built up over the years.

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OBJECTIVE OF STUDY

To study and understand the buying behavior of consumers for gold

The consumers buying preferences

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`

INTRODUCTION ABOUT THE SHOP:

Sriram Jewellery, since 1996 and Balaji Jewellers, since 2002 are one among the
popular jewellery shops located at Sankarapuram. Most of the people belonging
to that locality are farmers, landlords and business men who are more concerned
about investments. The owners of the shop were initially involved in pawn
brokerage, grocery shop foreign money exchange, which them helped in gaining
much more contacts through all these years and attract people of that locality as
their loyal customers and thus progressed successfully in his business. They have
been purely into the retail jewellery business and the products are imported from
various places around India and also from foreign countries like Singapore and
Italy. People buy jewels for different occasions rather than investments so
jewellery is the good business .

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KINDS OF GOLD:

Gold is very much a language that all speak, it is popular for its rarity and lustre.
Gold comes in many forms of purity and is often referred to in karat weight. With
the karat, purity and common hallmarks as follows;

24 Karat: 99.9% Pure

22 Karat: 91.7% Pure
18 Karat: 75% Pure
14 Karat: 58.3% Pure
12 Karat: 50% Pure
10 Karat: 41.7% Pure
9 Karat: 37.5% Pure

The more purity of the gold/higher the karat the more expensive the gold will be,
however the benefit is its durability. Now it is a common misconception that the
higher the karat the harder the metal, however it is quite the opposite. Gold in its
pure form is extremely soft, therefore rather than being known as hard we refer to
it as durable, as it can withstand being knocked around a lot better than 9 karat
gold where a larger amount of alloys have been mixed in. Alloys are used in
creating the karat and colour of the gold.

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 Yellow gold comes in various shades of yellow and is created by alloying
copper, zinc and/or silver.

Rose gold comes in a large variety of shades depending on the type of

alloys mixed. It can consist of various shades such as orange-pink, red-pink
and blush pink. It is created by alloying yellow gold with mostly copper
and a small amount of silver.

White gold is created by alloying yellow gold with palladium, zinc, and/or
silver. Traditionally nickel was used in white gold however this caused
quite a large amount of reactions, and has since been relatively unused.
White gold is often selected due to being a less expensive alternative to
platinum and is often plated with rhodium to give it a platinum like sheen.
This is important to remember when considering white gold, as typically
rhodium plating needs to be done every 6 to 12 months and can cost
anywhere from Rs.10000-15000 depending on where you go.

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CAST VS FORGED

Casting is the process where metal is heated to the point of molten, and is
then poured into a mould or vessel of a created design/shape. Casting is
used for more complicated and intricate designs which are unsuitable for
the forging process. It is generally a less expensive process, however it is
important to remember that white gold tends to be more yellow in colour
when used in cast.

Forging is the process of the jeweller manipulating the metal through

stretching, hammering, rolling and pulling, which causes the metal to
change shape whilst in a solid state. It is largely stronger than cast set and is
more reliable than casts due to the grain of the metal being altered. Forging
tightens the grain structure through manipulating the metal, which therefore
makes the metal stronger and more sustainable.

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A-Z OF JEWELLERY TERMS

Akoya A seawater pearl produced by the Japanese Akoya oyster.

Briolette An oval, or pear shaped diamond, entirely faceted in triangular
cuts.
Cameo Conch shell, onyx gem, coral and various gemstones, which were
carved in either relief or intaglio. Cameos are also moulded in synthetics
such as plastic or glass. Cameos generally depict a scene or portrait, but
may be symbolic.
Double Clip Type of brooch consisting of two halves joined together on a
frame which can be detached and worn independently.
Eternity band Today it is most frequently given to mark an anniversary
or the birth of a child, though many have begun exchanging the rings as
bridal bands. Also, known as an Anniversary Ring. It commonly sits on
the outside of your engagement ring.
Feather Any cleavage or fracture on or below the surface of a gemstone.
The appearance is usually white when viewed at a right angle to the break.
Girdle The widest section of a gemstone which divides the crown from
the pavilion.Hammered finish A type of metal finish achieved by
hammering the piece of metal in such a way that it becomes multifaceted.
This type of finish is often used with gold or silver creating more planes
from which light can reflect. Hammered Finishes can be glossy, satin, or
matte depending on the finishing technique.
Inclusion Any internal clarity characteristic of a diamond. Large or
numerous inclusions are considered flaws that seriously diminish the value
of a gem
.
Jet Jet is the name given most black jewellery whether it be genuine or

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 glass. Genuine jet will retain its sparkling polish for many years. Black
glass will crack, scratch, and become dull. Genuine jet is a brown-black
lignite in which the texture or grain of the original fossilized wood
comprised of coal, can still be seen.
Knife Edge Refers to a piece of jewellery wherein the items metals meet
to create a sharp edge. While sharp, the edge is nor sharper than a butter
knife.
Lapis Lazuli Deep blue gemstone, sometimes containing gold-coloured
specks of iron pyrites. Horn, stone, or jasper are all sometimes artificially
coloured to look like genuine Lapis.
Millegrain A decorating style creating a fine bead like effect around the
edge of a metal collet; popular in the Edwardian and Belle poque periods.
Nickel Hard, malleable, and resistant to corrosion, this white metal is
malleable and often mixed with precious metals such as gold and silver.
Oxidise The process wherein a metal mixes with oxygen and becomes
rusted. Platinum and gold do not oxidise. Impurities in any alloys
containing gold or platinum may oxidise but the actual metals do not.
Pave Set Stones placed so closely together that almost no metal shows
between them.
Rhodium-plated A layer of rhodium applied to the surface of an article
by electrolytic process. Recommended with all white gold pieces after a
certain amount of time, this will bring your jewellery back to life! and here
at Gold River we do it on the spot, just go and grab some lunch and by the
time your done, we will be too!
Shank The part of the ring that encircles the finger. Strictly speaking, the
shank of the ring does not include the head or mounting that carries the
gemstones.
Three stone ring A setting wherein three gemstones are set in a parallel
line next to one another representing the past, the present and the future.

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 Ultrasonic Cleaner-A machine that cleans jewellery by vibrating a solution
at an ultra-high frequency. Capable of cleaning tiny cavities of a jewellery
piece without scratching the surface.
White gold Created by alloying yellow gold with palladium, nickel, zinc,
and/or silver, white gold is often selected as a less expensive alternative to
platinum. It is often plated with rhodium (a member of the platinum family
of metals) to give a platinum like sheen.
Yellow gold-In its natural state gold come in varying shades of yellow.
Relatively pure when initially mined, gold is usually alloyed with copper,
zinc, and/or silver when used in jewellery making.

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 A STUDY ON THE JEWELLERY INDUSTRY

India is a leading player in the global gems and jewellery market. The gems and
jewellery industry occupies an important position in the Indian economy. It is a
leading foreign exchange earner, as well as one of the fastest growing industries
in the country.

The two major segments of the sector in India are gold jewellery and diamonds.
Gold jewellery forms around 80 per cent of the Indian jewellery market, with the
balance comprising fabricated studded jewellery that includes diamond studded
as well as gemstone studded jewellery.

The Indian gems and jewellery industry is competitive in the world market due to
its low cost of production and the availability of skilled labor. In addition, the
industry has set up a worldwide distribution network, of more than 3,000 offices
for the promotion and marketing of Indian diamonds.

YESTERDAY TODAY

Unbranded Branded

Silver & Gold jewellery Gold & Diamond jewellery

Investment Investment + Fashion

Traditional design Fashionable & innovative design

Marriage & festival is peak

Wear ability and gifts
season

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 MICHAEL PORTERS FIVE FORCE MODEL FOR JEWELLERY
INDUSTRY

INDUSTRY COMPETITORS

Inter-Firm Rivalry -HIGH

Two types of rivalry. (1) Inside India & (2) Outside India.

Large presence of unorganized sector. 0.2 Million Gold jewelers and over 8,000
Diamond jewelers

International rivals Such as, China

Threat from producing nation like S.A. & Russia.

Bargaining Power of Suppliers - Medium

In jewellery industry the suppliers are S.A., UAE, Australia, US, Congo,
Botswana, Russia, DTC.

Few Alternatives of cutting & polishing.

Skilled labor

Bargaining power of India is enhanced because India is largest consumer.

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 Bargaining Power of Buyers - Low

Divided in two types 1. Domestic buyers & 2. Foreign buyers

As investment (Demand increase)

Bargaining power of Indian exporter is high because Majority of the world's

rough diamond production is cut and polished in India.

Threat of Substitutes: Low

Substitutes are Real assets, Stock market, & Bank deposits & mutual fund
investment and Other types of jewellery like imitation jewellery, bagasra
jewellery, stone jewellery etc.

Second preferred investment behind bank deposits

Status and standard of living increase so demand is increasing at high rate.

Barriers to entry -Low to Medium

Low capital requirement

Government subsidy

EXIM policy & governments rules-regulations are high

Skilled manpower is essential

Advanced technology required

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TRENDS IN JEWELLERY

Indian Jewellery market in 2007 was valued at 70,000 cr.INR (Business

Standard).
Indias Jewellery market size is US$ 13 billion
Gold Jewellery market CAGR 10 -15%
India remains in worlds largest consumer of gold.
Exports about $ 17 Million in 2006Share of India's Gem and Jewellery
Sector
About, 96% of Indian Jewellery Market is unorganized. The unorganized
sector represents 300,000 traditional retailers or Family jewelers who are
present only in one town. The organized sector accounts to only 4 percent

Today

The industry of jewellery has flourished in the past few years due to the
increased demand of fashionable jewellery. The export and import of jewellery
has also amplified. People nowadays have a passion for jewellery which accounts
for the growth of this industry all over the world. Jewellery is used for fashion as
well as decoration. In the past jewellery was used to adorn bible monuments and
other decorations were made using different pieces of valuable jewels. A wide
variety of jewellery is available; costume jewellery, fashion jewellery, body
jewellery, antique jewellery, traditional jewellery, modern jewellery and many
more.

LATEST TRENDS
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a) Recent fluctuations in the stock market, reduced Interest rates made
investment attractive on jewellery.

b) The gems and jewellery industry occupies an important position in the Indian
economy.

c) It is a leading foreign exchange earner, as well as one of the fastest growing

industries in the country.

d) The Indian gems and jewellery industry is competitive in the world market due
to its low cost of production and the availability of skilled labor.

e) The industry has set up a worldwide distribution network, of more than 3,000
offices for the promotion and marketing of Indian diamonds.

f) India is the diamond polishing capital of the world specially the states of
Gujarat and Maharashtra.

g) 100% FDI is permitted in gems and jewellery sector.

h) The growth of Branded Jewellery is eminent in the coming days.

Till now, Indian households in villages used to buy gold from their nearby
jeweler who used to be an acquaintance also in most circumstances because
the shop owners used to know almost everybody in the village. But, things
are changing fast in India with the onset of reforms. Now, Indians, the
biggest buyers of yellow metal in the world, are increasingly aware of the
quality of gold and they now started looking for the branded jewellery.
This change in trend in Indias urban and rural areas has lured several big
names in global jewellery trade like Cartier to India. Branded gold,
diamond and silver jewellery showrooms are opening up across Indian

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 cities and village towns.
Till now, Indians used to buy gold from the traditional jewellery shop
owner whom they trust.But, with GenNext Indians having enough
disposable income want a change from that and they are opting for brightly
lit showrooms with marble floors, glass display cases and professional
salespeople, preferably at a company whose brand name implies social
status and wealth.
Tatas Tanishq opened their first outlet in 1994 and now has 117
showrooms across the country. Avenue Montaigne, Indias largest branded
jewellery retail outlet, suggests the shift towards brands reflects social
changes, but also new ways of viewing gold. In India, the precious metal is
traditionally given to brides at the time of marriage as a store of wealth
providing financial security.
Some of the most famous companies in Western jewellery such as DeBeers,
Tiffany and Cartier have also moved into India since 1997 when overseas
banks and bullion suppliers were allowed to import gold. They are drawn
by the enormous size of the market, rising incomes and the fracturing
relationship between buyers and traditional family jewelers. About 15,000
tones of gold are privately held in India. Demand remains strong despite
new records being set for the price of the metal on an almost daily basis.
Premium international brand Cartier launched their plush showroom in
New Delhi in 2008 and also operates through a strong dealer network to
sell their jewellery and watches in India. Share of branded jewellery in
Indias total market was growing at a pace of 20-30 per cent annually.
The number of gold retailers in the country has increased by 40 per cent
since the year 2000, with 150 domestic and over 65 international
established brands. Reliance has opened 14 jewellery stores in 23 Indian
cities since 2007 and has announced that it will launch showrooms in

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 various other cities and towns across the country.

TYPES OF INDIAN JEWELRY

Tradition of adoring oneself with jewelry is 5000 years old in India. Indian
women and jewelry have always formed a great combination. The tradition is
still alive and time has made it only more vigorous than earlier. The art of making
beautiful ornaments, with delicacy and acumen, has been developed throughout
the historical times. Rulers and feudal gave patronage to art and artists, to
develop the same to optimum. There is jewelry for almost all the body parts,
including neck, ear, nose, arms, ankles, fingers, waist, hair parting, etc.

In India, jewelry is designed to match with the attire. The theme of its design as
well as the color of the jewelry is taken into consideration while adoring. To
make jewelry more attractive, it is topped by diamonds and various types of
gems. Traditionally, Indian jewelry has been made of heavy and voluminous gold
pieces, but recently jewelry made of silver, platinum and other metals has
become quite popular among people. The popularity of jewelry made of stone,
encrusted on metal, has grown more recently. In the following paragraphs I will
tell u about the types of jewellery.

Antique Jewelry-The jewelry which is not in mainstream production and

of which the mode of production is no longer popular is known by the name
of 'Antique Jewelry.' This kind of jewelry has dull and rough look,
combined with an old world-world charm, and this serves as the major USP

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 of such jewelry.

Bead Jewelry-Bead art in India is five thousand year old and dates back to
the time of Indus Valley Civilization. People of that civilization used to
make beads out of gold, silver, copper, clay, ivory and even wood. The
excavated carried out there came out with finished and unfinished beads
from the site.

Bridal Jewelry-India has great tradition of wedding jewelry. Made of

superior metals and excellent quality, jewelry accentuates the beauty of
bride in multiples. Though these days silver and platinum jewelry is gaining
popularity, gold jewelry still holds the most popularity among Indians.

Custom Jewelry-Custom jewelry is personalized jewelry, which a

customer gets her made on her interest and fancy. This happens particularly
in cases where readymade jewelry does not match the taste of person.
Custom jewelry gives total freedom to customer about the specifics.

Fashion Jewelry-Fashion jewelry is also called costume jewelry, mainly

for the reason that it is not made of precious metals and stones, rather
lighter and cheaper material are used. Fashion jewelry is trend-conscious
and keeps on changing as per changing needs.

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 Filigree Jewelry-Filigree work is done on silver and involves lots of
precision and technicality, added with great amount of patience and an eye
for minute details. Historically, filigree work was quite popular in countries
like Egypt, Italy, and Spain. India's history of filigree work goes back to
early centuries.

Gold Jewelry-Gold is a metal that lures many. It gives the security against
any financial crisis, because of its easy liquidity, and is also used by women
for adorning themselves. Traditionally, gold has been considered auspicious
among Hindus and is regarded to be symbolic of Lakshmi, the Goddess of
Wealth.

Handmade jewelry-Talking about jewelry manufacturing in India is as

good as talking about handmade jewelry in India. A major chunk of jewelry
in the country is made by independent craftsmen. Traditionally also, a
significant part of jewelry manufacturing has been handmade jewelry.

Ivory Jewelry-Jewelry that is made from the tusk of an elephant is called

ivory jewelry. Importance of ivory jewelry can be guessed from the fact that
in Gujarat, the bride receives an ivory bangle from her family just before
marriage as jewelry. During marriage ceremony wearing of ivory bangles is
must for bride.

Jadau Jewelry-Jadau Jewelry forms one of the major examples of high

skilled craftsmanship that was brought into India by Mughals. Historically

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 speaking, the tradition of Jadau work has been in practice in the states of
Rajasthan and Gujarat since the Mughal era. Jadau jewellery is also called
engraved jewelry.

Kundan Jewelry-During Mughal period, the art of kundan work reached

Rajasthan from Delhi. Later on, craftsmen from the different part of the
country migrated to the place and made Rajasthan a hub of Kundankari.
Rulers and feudal lords gave patronage to the art and it developed into
perfection.

Lac Jewelry-Lac jewelry, also known as lacquer jewelry, originated in

Rajasthan and has gained considerable popularity in India today. Lac
jewelry is available in versatile designs, which add to its beauty. Among the
various items in lac jewelry, the bangles need a special mention.

Meenakari Jewelry- Meenakari jewelry, precious stones are set and then
enameled with gold. Historically speaking, the art was introduced to
Rajasthan artisans by Raja Mansingh of Amer. He invited Lahore-based
skilled artisans to his kingdom, and their intermingling with the locals
craftsmen resulted in an amalgam.

Navratna Jewelry- Navratna jewelry, nine auspicious stones are used in a

single ornament. The belief behind this is that the nine stones together

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 ensure well being of the person who wears it. In India, Navratna jewelry
has been given major importance, because of its astrological significance as
well as its innate charm.

Pachchikam Jewelry-In the world of fashion and design, old trends tend to
come over again and again, though with slight changes. Pachchikam
jewelry making craft is one of the examples of jewelry that come back once
again. Originated in Gujarat and Kutch, centuries ago, this again become
popular.

Silver Jewelry-Silver Jewelry, along with gold jewelry, is quite popular

amongst Indian women. Ornaments made of silver, such as rings, bracelets,
chains, necklaces, nose rings, earrings, toe rings, heavy kadas, and armlets,
form integral part of Indian jewelry.

Stone Jewelry-Jewelry studded with different gems is quite popular among

Indians. For reasons ranging from spiritual to aesthetic to health, gemstone
jewelry has become the part of life of Indian women and men both. These
stone jewelries are worn according to the individual's astrological chart and
ruling of planet.

Temple Jewelry-Indian jewelry art is at times divided into three kinds -

temple jewelry, spiritual jewelry and bridal jewelry. Temple jewelry of
India initially used to be described as the jewelry used to adorn the idols of
Gods and Goddesses. The statues In India were ornamented with chunky
necklaces.

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 Tribal Jewelry-Tribal jewelry in India is quite rich. Each tribe has kept its
unique style of jewelry intact even now. The original format of jewelry
design has been preserved by ethnic tribal. Jewelry that is made of bone,
wood, clay, shells and crude metal, by tribals, is not only attractive, but also
holds a distinct rustic charm.

HISTORICAL GOLD RATE TREND IN INDIA

2012-Rs. 31,050 2013-Rs. 29,600 2014-Rs. 28,006

2015-Rs. 26,343 2016-Rs. 28,423

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Studying the gold rate trend in India could offer an insight into future
fluctuations and investment plans can be made accordingly. The gold rate
depends on a number of factors like the stability of the central bank, the supply
and demand of gold in the market, quantitative easing, government reserves, the
health of the jewellery industry and overall yearly production to name a few.

MELTING PROCESS OF GOLD ORE

Consolidation is a method for obtaining metals from ores or metals. This usually
involves the reduction of metal oxides (ore) to metal (reduction reaction are those
which take electrons away from the elements, the reduction becomes the opposite
of oxidation reactions), and the formation of non-metal oxide waste known as
slag.

It is a chemical process and involves more than just melting the gold. In the
process of smelting gold metallic mineral ore concentrates the results of gold, the
melting process is a fire burning at a temperature of 1800 C, causing an
oxidation of minerals and melt and form a solid system - liquid. And in the
process of smelting, the ore minerals may be added by Chemical Fusing Metallic
Minerals such as borax, backing soda, or with ammonium chloride (NH4Cl) to
mineral-borne heavy metals along with gold ore minerals can be separated.

At the initial stage of fusion is to place the mineral ore concentrate which
was completed in the extraction into a container shaped like a fusion of
glass or a large bowl made of carbon materials.
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 Then the container was put into a melting furnace, because the fireplace can
help keep a certain chemical conditions and hot temperatures in order to
stabilize the mineral ore into a metal melt easily.
Metallic mineral ores need to be heated to very high temperatures to
produce pure metals as well as temperatures higher temperatures. Iron melts
at 1800 C (3270 F) and gold melts at 1062 C (1943 F).
Because iron has a higher melting temperature than gold. After the melting
process was finished and the metal has completely melted as liquid water is
clear and shiny metal can then immediately pour into a mold to form an
ingot that would be cool if it has a gold metal bars.

Step-1: step-2: step-3:

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