A

Summer Internship Project Report On

"Evaluation of Financial Statement" (Sri Balaji Jewellers)"

Submitted to:

As a Partial Fulfillment of the Requirement for the Award of Bachelor of Business

Administration Programme BBA (Class of 2016-2019)

Under the Guidance & Supervision

Of

Mr. Vimal Kumar Salla

Faculty Guide

AGBS Hyderabad

Summer Assignment Project

Submitted by:

Adarsh Gilada

Enrollment No - A30606416050

AMITY GLOBAL BUSINESS SCHOOL

HYDERABAD
 CERTIFICATE

This is to certify that Mr. Adarsh Gilada » ROLL No. A30606416050, a student of Bachelor
of Business Administration Program at “AMITY GLOBAL BUSINESS SCHOOL” has
successfully completed a 60 days internship project in the Finance department at our
organization.
This project has taught Adarsh Gilada, practical implications of the above topic and we
found him to be sincere, punctual and inquisitive during his entire internship. We believe this
practical exposure of Mr. Adarsh Gilada, at our organization will give his a lead in his
upcoming career and nurture of his greater opportunities after he completes his Bachelor of
Business Administration Program at your institution.

Mr. N.L.N.Murthy

Sr. Accounts Manager

Sri Balaji Jewellers

Place:
Date:
 College Certificate

This is to certify that Mr. Adarsh Gilada student of Semester IV Class of BBA
2016-2019 has completed the Summer Internship Project titled “Evaluation
of Financial Statement (Sri Balaji Jewellers)" in under my guidance has
worked sincerely for the partial fulfillment of Bachelor of Business
Administration for the year 2016 to 2019 to the best of my knowledge and
wish him success for the future endeavors.

Mr. Vimal Kumar Salla

Date: -

Place: - Hyderabad
 AMITY GLOBAL BUSINESS SCHOOL

HYDERABAD

DECLARATION

I Adarsh Gilada, Student of Amity Global Business School, Hyderabad hereby

declare that the Project titled “Evaluation of Financial Statement (Sri Balaji
Jewellers)” is the record of authentic work done by me for submission of the
Summer Assignment Project as a partial fulfillment and has not been submitted in
any other university or Institute for the award of any other Degree. An attempt has
been made by me to provide all relevant and important details regarding the topic
to support the theoretical aspect and practical evidence related to the topic.

Adarsh Gilada - A30606416050

Date: -

Hyderabad
 Acknowledgment

My heartfelt sincere thanks to Dr P Prasada Rao, Director General, Amity Global

Business School Hyderabad for giving me this opportunity.

My sincere and grateful thanks to Mr. N.L.N.Murthy (Sr. Accounts Manager) for
providing me this opportunity to work in Sri Balaji Jewellers

My sincere & grateful thanks to my Faculty Guide Mr.Vimal Kumar Salla for
guiding me throughout my Project.

Adarsh Gilada - A30606416050

Date: -

Hyderabad
 Table of Contents
Sl.No. Contents Page No.
1 Executive Summary
2 Objective of the Study
3 Research Methodology
1. Data Collection tools
2. Limitations of Study
4 Literature Review
Chapter- I Evaluation of Financial Statement (Sri Balaji Jewellers)
Chapter-II Sri Balaji Jewellers- A Detailed Profile
Chapter-III

Executive summary

The study was conducted as internship at a firm “Sri Balaji Jewellers”. It is a well established
firm started in 1956 the firm is located at Abid road, Hyderabad. The firm was founded by
Sri Prahalad Rai Gupta. The firm has reached a remarkable position in these 5 decades in the
market by serving their customers in their best moments with fascinating jewellery made of
gold diamonds coloured stones etc.
The study was made using the financial statements of past three years of the firm. Finance is
defined as the provision of money when it is required. Every enterprise needs finance to start
and carry out its operation. Finance is the life blood of an organization. So finance should be
managed effectively. Financial statements are prepared primarily for decision making.
Financial statement analysis refers to process of determining financial strength and weakness
of the firm by properly establishing strategic relationship between the items of the balance
sheet and profit and loss account. Financial statement is used for decision making by various
parties.

First task is to analyse and select the information which is requiring taking decision.

Second task is to arrange the information in a way to highlight significant relationship.

Final task is the interpretation and drawing of interference and conclusions.

Need of study:

The present study is made as a part of BBA programme for training in the form of on the job
training with the following activities.

1. The firm has the strength to fulfil obligation or not.

2. Find out strength and weakness of the firm.

3. Know the liquidity position of the firm.

4. Know the operation efficiency of the firm.

5. Know the overall profitability of the firm

Objectives of study

1. To help the management of the organization in decision making in the subject matter.

2. Calculation of financial statement and ration is only the clerical task whereas the
interpretation of its needs immense skill intelligence and foresightedness.
3. To compare its present ratios with the past ones called comparison and through
development action plan.

4. It gives an indication of the direction of change and reflects whether the organization’s
financial position and predominance has improved or deteriorated remained constant over
period of time.

Here much emphasis is given to historical comparison and on forecasting the immediate
future trends.

RESEARCH METHODOLOGY

The research involved extensive and intensive studies of the firm in the project report is a
sincere effort made to study the financial statements analysis of the company.

During this study, I studied the financial position and performance of the firm.
At last, I have given interpretation and conclusions to the study using rational thinking,
personal judgement and recorded facts.

Data collection:

The whole study is based on secondary data of the firm “Sri Balaji Jewellers”. I have not
taken any primary would not have been helpful to my study. During the tenure I have taken
help of the following secondary data:-

- Balance sheet of the firm

- Profit and loss account of the firm
- Annual audit report of the firm

Limitations:

- They were time constraints.

- Complete information was not available.
- It is only based on mathematical interpretation of the figures and ignores the factors
such as management style, motivation of workers, leadership etc.
- It is affected by price level changes.
- It does not give any clue for future.

Literature Review

Gold Jewellery Becomes Fashion Accessory

According to Samrat Zaveri, CEO of Trendsmith 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. According to Samrat Zaveri, CEO of Trendsmith, "Research shows that the
Indian jewellery sector is in the transition phase with consumers' desire for possession of
jewellery for its aesthetic appeal and not as a form of investment."

Trendsmith conducted a survey to understand the shifting needs, motivations and aspirations
of consumers in the jewellery market, and to identify new trends and opportunities. The
research study arrived at the following conclusions:

• The younger generation was looking at trendy, contemporary jewellery and clearly
avoiding heavy, traditional gold jewellery.

• The consumer wanted a wider selection at a single convenient location and expected an
international shopping experience.

• The Indian consumer was willing to experiment with new designs. The late 1990s and early
2000s, with the increase in the number of designers from design schools such as the National
Institute of Fashion Technology (NIFT), a wide range of new designs.

Strategies for Wooing Customers - Tanishq

According to Kurian the first part of the strategy was "to provide a point of differentiation in
a highly commoditized category - which is the whole point of branding." The second part of
the strategy was to project Tanishq as an unimpeachable mark of trust. According to Kurian,
"If differentiation plays the role of primary attraction, trust takes care of lifelong loyalty.”
One way to create differentiation was through design. The emphasis had to be on design
because local jewelers could offer to design any pattern according to the customer's
specifications. For a national brand a generic design concept with regional variations had to
be evolved. For this, Tanishq set up a seven member in-house design team and also
outsourced designs from freelance designers. The designers travelled the length and breadth
of the country to get feedback on Tanishq's designs and learn about customer preferences. On
the basis of this feedback, each showroom could select the designs it would carry.

Kala, Alok
reported that gems and jewellery industry has registered a 16 per cent increase in the total
gems and jewellery exports in 2009-10. The industry contributes 13 per cent to India’s total
merchandise exports. The figure stated that India’s diamond share in world market witnessed
an increase from 60 to 70 per cent in value terms. The USA remained India’s largest
consumer of jewellery. He stated that Indian diamond industry has now come out of
recession.

Bijlani, Shanoo and Regan Luis

reported that gems and jewellery industry has the potential to grow at an estimate of $ 45
billion to $100 billion by 2015. They stated that the jewellery industry featured two major
sub-segments gold and diamonds with the former constituting 80 per cent of the jewellery
market. Gems and Jewellery Products (GJPs) are expected to grow at compounded annual
growth rate of 15 per cent. However, the Indian gems and jewellery market is unregulated
and pricing is mostly based on the value of gold and labour charges. Most purchases in
jewellery are investment oriented and so, they get commoditized. The integration of
jewellery, luxury and fashion should be the next step for the ever-growing gems and
jewellery sector.

Mital, Amita
analyzed matters related to competition, demand and supply conditions of India’s gems and
jewellery products. Government initiatives and regulation to promote exports of gems and
jewellery products are also discussed. In his study, Mital pointed out that demand of gems
and jewellery depends on various factors such as economic growth, employment levels,
income levels, tax rates and credit availability and competition is based primarily on the
quality, design, availability and pricing of products. She told that, foreign direct investment
up to 100 per cent was permitted in the gems and jewellery industry under the industrial
policy.

Mukherjee, Ishita
dealt with an emerging global industry the gems and jewellery industry, which is on the way
to a huge information. This industry is extremely global in nature. She told that gems and
jewellery industry can be classified into various sub-sectors such as gemstones, jewellery and
pearls. Over the years, the global gems and jewellery markets have been impacted by various
developments like falling trade barriers, increasing competition, changing customer
preferences and developments in technology in various areas. As one of the most traditional
industries, it has witnessed sweeping changes since the beginning of this millennium. Supply
sources have become fragmented, resulting in shooting up of raw materials prices.
Regulators are cautious and consumer activism is on the rise. These pressures have driven
changes that are more intense and lasting than any witnessed in the previous fifty years.
After exploring the position of Indian gems and jewellery industry, she observed that India
has various advantages to emerge as a gems and jewellery hub. It has the largest and best
artisan force for designing and crafting the jewellery in the world. There is a considerable
scope of value addition in terms of capacity building at the domestic front, quality
management and professionalization. Realizing enormous potential of the industry, the
Ministry of Commerce, Government of India declared gems and jewellery a thrust sector for
export promotion. In this context, the first section of study explained the emerging trends and
evolving dynamics of the global gems and jewellery industry as well as identified the future
trends. The second traced the significance of India within global gems and jewellery
industry, and covered the current scenario of the sector in India.

Garga, Pawan Kumar

studied the various aspects of export promotion activities besides highlighting the hidden
potential of India’s major products and how India can increase its share in the world exports.
The concepts of thrust products have been selected for detailed analysis, viz., handicrafts
and jewellery, readymade garments and electronic goods etc. He told that India’s upcoming
jewellery industry has two loosely defined sectors: the Exports Processing Zones (EPZs)
comprising 100 per cent exportoriented units and the Domestic Tariff Area (DTA) which
caters not only to domestic needs but to international markets as well. The product group of
gems and jewellery makes significant contribution to India’s overall export earnings. Indian
gems and jewellery products are exported to a large number of world markets. The USA,
Hong Kong, Belgium and Japan are the major export destinations. Other important
destinations for India’s gems and jewellery exports are Israel, the UAE, the UK, Singapore
and Switzerland.
 Chapter 1 – A Study of the Evaluation of Financial Statement"
(Sri Balaji Jewellers)"

An Introduction

Introduction of Financial Statement:

Finance is defined as the provision of money when it is required. Every enterprise needs
finance to start and carry out its operation. Finance is the lifeblood of an organization. So,
finance should be managed effectively. Financial statements are prepared primarily
for decision making. Financial Statement Analysis refers to the process of
determining financial strength and weakness of the firm by properly establishing
strategic relationship between the items of the balance sheet and profit and loss
account. There are various methods and techniques used in analyzing financial
statements, such as comparative statements, trend analysis, common size
statements, schedule of changes in working capital, funds flow and cash flow
analysis, cost volume profit analysis and ratio analysis and other operative data.
The analysis of financial statement is used for decision making by various parties.

Meaning and Concept of Financial Analysis:

The term 'financial analysis', also known as analysis and interpretation of financial
statements', refers to the process of determining financial strengths and weakness
of the firm by establishing strategic relationship between the items of the balance
sheet, profit and loss account and opposite data . "Analyzing financial statements,"
according to Metcalf and Tigard, "is a process of evaluating the relationship
between component parts of a financial statement to obtain a better understanding
of a firm's position and performance". In the words of Myers, "Financial statement
analysis is largely a study of relationship among the various financial factors in a
business as disclosed by a single set-of statement, and a study of the trend of these
factors as shown in a series of statements."
The purpose of financial analysis is to diagnose the information contained in financial
statements so as to judge the profitability and financial soundness of the fern. Just like a
doctor examines his patient by recording his body temperature, blood pressure, etc. before
making his conclusion regarding the illness and before giving his treatment, a financial
analyst analysis the financial statements with various tools of analysis before commenting
upon the financial health or weaknesses of an enterprise. The analysis and interpretation
of financial statements is essential to bring out the mystery behind the figures in financial
statements. Financial statements analysis is an attempt to determine the significance and
meaning of the financial statement data so that forecast may be made of the future earnings,
ability to pay interest and debt maturities (both current and long-term) and profitability of a
sound dividend policy
The 'financial statement analysis' includes both 'analysis', and 'interpretation'. A distinction
should, therefore, be made between the two terms. While the term 'analysis' is used to
mean the simplification of financial data by methodical classification of the data given in the
financial statements, 'interpretation' means, 'explaining the meaning and significance of the
data so simplified however, both analysis and interpretation are in tricked and complimentary
to each other analysis is useless without interpretation and interpretation without analysis is
difficult or even impossible most of the authors Have used the term analysis only to
cover the meaning both analysis and interpretation as the objective of analysis is to
study the relationship between various items of financial statements by interpretation.
We have also used the terms Financial statement Analysis or simply Financial
Analysis to cover the meaning of both analysis is and interpretation.

GOALS OF FINANCIAL ANALYSIS:

Financial analysis often assesses the following elements of a firm:

1. Profitability - its ability to earn income and sustain growth in both the short- and long-
term. A company's degree of profitability is usually based on the income statement, which
reports on the company's results of operations;

2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-
term;
3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate
obligations;

Both 2 and 3 are based on the company's balance sheet, which indicates the financial
condition of a business as of a given point in time.
4. Stability - the firm's ability to remain in business in the long run, without having to
sustain significant losses in the conduct of its business. Assessing a company's stability
requires the use of the income statement and the balance sheet, as well as other financial and
non-financial indicators. Etc.

Objective and Importance of Financial Statement Analysis:

The primary objective of financial statements analysis is to understand and diagnose

the information contained in financial statement with a new to judge the profitability
financial soundness of the firm and to make forecast about future prospects of the firm.
The purposed of analysis depends upon the person interested in such analysis and his
object. However the following purposed or objectives of financial statements analysis
may be stated to bring out significance of such analysis.

1. To assess the earning capacity or profitability of the firm.

2. To assess the operational efficiency and managerial effectiveness.

3. To assess the short term as well as log term solvency of the firm.

4. To identify the reasons for change in profitability and financial position of the form.

5. To make inter Stem comparisons.

6. To make forecasts about future prospects of the firm

7. To assess the progress of the firm over a period of time.

8. To help in decision making and control.

9. To guide or determine the dividend action
10. To proved important information for granting credit.
 Types of Financial Analysis

1. On the basis of material used

2. On the basis of modus operandi

3. On the basis of entities used

4. On the basis of time horizon

Procedure of financial statement analysis:

Broadly speaking there are three steps involved in the analysis financial statements. They
are:
1. Selection
2. Classification
3. Interpretation

Methods or Devices of Financial Analysis

A Number of methods or devices are used to study the relationship between different
statements. The following methods of analysis are generally used:

i. Comparative statement

ii. Trend analysis

i. Common size statement
iii. Funds flow analysis

iv. Cash flow analysis

v. Ratio analysis
ii. Cost-volume-profit analysis

Limitations of Financial Statement Analysis

Financial analysis is a powerful mechanism of determining financial strengths and weakness
of a firm. But, the analysis is based on the information available in the financial statements.
Thus, the financial analysis suffers from serious inherent limitations of financial statements.
The financial analysis has also be careful about the impact of price level changes, windows
dressing of financial statements, changes in the accounting policies of a firm, accounting
concepts and conventions, and personal judgment, etc. the readers are advised to relate the
limitations of financial statements as and also the limitations of ratios as a tool of financial
analysis as discussed in Ratio Analysis. Some of the important limitations of financial
analysis are, however, summed up as below:

1. It is only a study of interim reports.

2. Financial analysis is based upon only monetary information and non-monetary

factors are ignored.

3. It does not consider changes in price levels.

4. As the financial statements are prepared on the basis of a going concern it does
not give exact position. Thus accounting concepts and conventions cause a serious
limitation to financial analysis.

5. Changes in accounting procedure by a firm may often make financial analysis

misleading.

6. Analysis is only a means and not an end in it .If the analyst has to make
interpretation and drawn his own conclusions. Different people may interpret the
same analysis in different ways.
 Chapter 2 – Sri Balaji Jewellers - Company Profile

Firm’s history:
Sri Balaji jewellers originally was founded in 1956 in the name of santlal chaganlal jewellers
and later it floated as a registered firm in the name of Sri Balaji jewellers in 1965 under the
able guidance of late Sri Prahalad Rai Gupta. He hails from a jewellery background and used
to make jewellery for the hyderabadi nawabs, starting with a very small setup in Charminar
he used to go and deliver jewellery on a bicycle.

He always believed jewellery was a royal business and he was proud a jeweller was always
present in the best moments of a woman’s life

‘His dream came true when he opened his store in abids, Hyderabad a busy and prime
location.

His son late Gowri Shankar Gupta joined him in the business later.

Now the business is run by the 2 young Grandsons Praveen Kumar and Anand kumar

Anand kumar is a gemmologist from IGI, Mumbai joined the business in 1998 and takes care
of the purchase, and he always believes a good purchase is half sold

Praveen kumar, a commerce graduate with 2 decades experience in retailing believes sales is
the key to any business joined in 1991

Having great marketing and communication skills he believes in the HIT principle

‘Honesty, integrity and trust are the key factors for success.

He has been the secretary for 6 years for the Hyderabad jewellery trade under twin cities
jewellers association

He has been the most loved in the jewellery business as he always believed there is room for
everyone to do business and feels together we are something

Mission: to ensure the best standards in the jewellery industry through quality and service
and add beauty to a woman’s life with a sense of security.
Vision: to the take the company to the international market as one of the best creators of
jewellery with fully online ecommerce business in the next 5 years with a strong local
presence too and increasing the branches and expanding the business to a chain store model

Structure:

Sri Balaji jewellers is a family owned 3 storied store situated at abid road, Hyderabad in the
heart of the city

The first floor caters to plain gold jewellery and the upper floor to studded jewellery and
third floor is planned for fashion jewellery, pearls and silver.

It is a very low running cost run store with strength of 15 employees.

Back end is the key where the firm focuses.

Milestones:

 The company has been given a b+ rating by crisil.

 Life Member of GJF, the biggest umbrella for the jewellery industry
 Member of GJEPC: gem jewellery export promotion council
 It has now registered for exim: export import license
 The firm went online in 2011,It has its fully developed website with a lovely footfall
overseas and a loyal base
 The company boasts of a turnover of 2.5 times its stock which is by far the best in the
industry with a net profit of 2.5 %

Product and services:

Plain gold jewellery: the range is as low as 300 and as high and 10 lakhs
With a collection of chains, rings, sets, bangles, ear tops, bracelets, pendants, it has all a
woman can look for

The purity ranges from 18 kt to 24 kt with hallmarked BIS standards

Studded jeweller: Rubies, emeralds, sapphire, diamonds, uncut diamonds , pearls – a wide
range from rings, ear tops, bracelets, bangles, sets, pendants and light weight diamond
jewellery.

Diamonds range from vs to vvs quality and the firm boasts of the lightest diamond jewellery
with amazing designs and price

Uncut diamonds, with open setting and pachi setting is a hit in the market and boasts of all
production from Hyderabad

Procurement of stocks and manufacturing:

Lot of in-house production is done and the firm believes self production always adds to
profits and quality control

Mumbai, Calcutta, Jaipur are places of procurement for jewellery and loose stones

Service:

The firm offers the best standards for after sales service and gives a 100 % refund for
dissatisfaction.

The firm offers astrological guidance and offers the best stones for the grahas

Transparency and clarity of price and quality is the key strength.

Target customers:

Middle class and upper middle is the major target base

It does not cater to the too high segment.

It is generally a very mixed store with stocks for all communities with a major south base of
reddy and Telugu sector.

Target is the south Indian young women sector as it has a defined taste and a strong cultural
attachment to jewellery

Also it has found the Telugu woman has a strong individual buying power

The next bas targeted is the young working women through internet as they have a strong
disposable income.

Competitors:

Organised retail sector like Tanishq, Tbz, Kalian, Alukas

Family jewellers like Mangatria, Tibarumal, Mussadilal and chain stores like chandana, RS
brothers are the biggest competitors and also branded jewellery like Gitanjali, Carbon, etc

The firm believes where there is competition there is a market to survive for all.

Healthy competition is what we must promote in the industry.

Financial profile of the firm:

The firm has been growing from a local to a global name having gone online it has a strong
base of overseas customers adding to its growth in sales and profits.

Having ended the year 31st march 2013 it achieved sales of an approximate of 12 cr. It has an
NPM (net profit of margin) of around 2.5% having a consistent growth of around 20-30%
every year, it has been able sustain the stiff competition from big players. It plans to start
exports this year having completed the necessary formalities. The firm expects to close the
year march 2014 at sales of 14 cr.

SWOT analysis of Sri Balaji Jewellers

Strengths:
  Old brand name
 Loyal customer base
 Direct interaction
 Flexible approach
 Low expenses
 Low inventory
 Excellent service

Weakness:

 Lack of funds
 Lack of exposure
 Less choices of designs
 High cost of capital
 Lack of skilled man power
 No branding
 Single dependence

Opportunities:

 Expansion in form of chain stores

 Exports
 Manufacturing and wholesale
 Custom made jewellery

Threats:

 Dirty completion
  Government policies
 Lack of skilled labour
 Price fluctuations
 Change in buying pattern
 Dead stock
 Market segmentation

Social responsibility:

 Secretary to Hyderabad jewellery association-serving and adding value

to the fraternity
 Providing employment and training to people
 Charity at various institutions
 Responsible tax payer
 Chapter 3 – Industry Study

INDUSTRY STUDY
Shift from unorganized to organized retail:

 Indian gold jewellery industry is the largest globally, valued at ~USD 40 billion
(including recycled volumes), driven by a gamut of cultural, Social and demographic
factors. India along with China is the two largest consumers of gold, with jewellery
constituting bulk of the yellow metal consumption. ICRA believes that the domestic
gold jewellery retail industry is witnessing a structural transformation with organized
retailing gaining prominence. Contribution of organized retail to total jewellery
consumed in India has grown to ~18% from less than 5% (largely over the past
decade), aided by the widening retail network of organized players and shifting
consumer preferences towards organized / branded jewellery.

 Jewellery consumption over the past decade has recorded a strong growth upwards of
15% driven increasingly by organized retail. Rising quality awareness of customers
has also provided a fillip to the organized retail segment, which is banking on its
‘reliability’ and ‘quality’ to compete against the highly fragmented unorganized
jewellers. Organized players have steadily chipped away market share from smaller /
unorganized retailers by addressing the need for enhanced experience of a demanding
customer base, which is marked by shifting demographic and socio-economic
profiles.

 Jewellery consumption in India has been traditionally driven by the strong cultural
affinity for gold, with it being the preferred form of jewellery worn. Gold jewellery is
an integral part of weddings in India, and is considered as a necessity with wedding
related demand accounting for substantial portion of overall jewellery demand,
especially in the South. Jewellery demand has also been supported by the increasing
appetite for gold jewellery from rural and non-urban markets which constitute a major
chunk (about 70%) of the total consumption. Gold has also served as a means of
 savings especially for the rural sector, owing to the lack of any major alternative
investment options supported by its anti-inflationary characteristics.

 Demand for gold ornaments comprises bulk (~80%) of the domestic jewellery
consumption, with studded jewellery including diamonds / other precious metals
contributing the rest. Keeping in mind the demand profile and the vast untapped tier 2
and tier 3 markets, organized retailers are undertaking large scale geographical
diversification and focused marketing initiatives to improve volume growth tweaking
their product portfolio to suit local needs. The shift can be witnessed with, even the
traditional & regional players undertaking significant scale expansions.

 The demand for value added fashionable jewellery including designer, lightweight,
custom-made, low carat and high fabrication jewellery have gained higher
prominence in the recent years, driven largely by the urban population. Jewellery
consumption / demand in India are also characterized by its inherent seasonality, with
the consumption being at the highest during the festive and wedding seasons. The
seasonal demand and widening market reach has resulted in increasing spends on
advertising and other brand building initiatives by retailers, to
Garner / improve market share in the new and existing markets.

 Operating income for organized jewellers has grown at a considerable pace over the
past few years, driven by the increasing demand for the branded jewellery, aided by
the aggressive expansion undertaken coupled with the continued increase in gold
prices. Profits / accruals within the sector have also expanded with widening sales and
improving value addition, varying across market players based on product mix, scale
of operations, sourcing method and funding mechanism. While demand is likely to be
strong during the current year (2013) aided by lower prices, operating margins of
 retailers are expected to be under pressure on account of the sharp decline in gold
prices during April 2013.

 Further, the recent RBI directive curbing import of gold by banks on consignment
basis for domestic could also moderate margins of domestic retailers to an extent. The
working capital intensity of organized retailers is also likely to increase owing to
rising stock levels necessitated by the aggressive expansion of retailers, funded
primarily by short term borrowings.

 Jewellery volumes after recording a steady growth over the past decade and peaking
in CY2010, has moderated over the last two fiscals weighed down primarily by
unprecedented increase in gold prices (compounded growth of 20% over the last two
calendar years). The decline in jewellery consumption was also accelerated by
increasing investment appetite for gold in the form of medallion and bars (investment
in bars/medallions increased by ~25% as against de-growth in jewellery volumes
during CY11) as a hedge against economic uncertainty and inflation. The declining
trend continued during H1 CY12, exacerbated by regulatory developments including
the imposition of excise duties for unbranded jewellery (repealed subsequently) and
also the increase in customs duty for gold imports, which impacted operations and
profitability of retailers. Further, earnings were also strained by the continued price
volatility, aggravated by the fluctuating exchange rates. Faced with sustained periods
of price and consequent demand volatility, coupled with intensifying competition,
jewellery retailers focused on inventory management strategies to support earnings.
Focused marketing initiatives coupled with moderate recovery in demand driven by
festive seasons and some pre-buying (in Q4, 2012) in anticipation of impending
import duty boosted jewellery volumes during the second half of 2012.

 ICRA believes that the recent sharp decline in gold prices is a positive for retail
jewellery demand. However, growth over the medium term may remain moderate and
would depend on overall macro-economic conditions. Organized retailers are,
however, expected to grow at a relatively healthier pace continuing to gain on
unorganized players. Over the long term, gold jewellery demand is likely to witness
consistent growth driven, primarily, by cultural underpinnings in India, evolving
lifestyle, anticipated recovery in economic conditions and expected improvement in
demand from tier 2 / tier 3 and rural markets which account for a major chunk of the
them

Historical trend gold prices:

Gold ( 10 Gms )Price History

Year Price Year Price Year Price

1971 193.00 1991 3466.00 2011 26400.00
1972 202.00 1992 4334.00 2012 31799.00
1973 278.50 1993 4140.00
1974 506.00 1994 4598.00
1975 540.00 1995 4680.00
1976 432.00 1996 5160.00
1977 486.00 1997 4725.00
1978 685.00 1998 4045.00
1979 937.00 1999 4234.00
1980 1330.00 2000 4400.00
1981 1800.00 2001 4300.00
1982 1645.00 2002 4990.00
1983 1800.00 2003 5600.00
1984 1970.00 2004 5850.00
1985 2130.00 2005 7000.00
1986 2140.00 2006 8400.00
1987 2570.00 2007 10800.00
1988 3130.00 2008 12500.00
1989 3140.00 2009 14500.00
1990 3200.00 2010 18500.00
Entry of big Players in the market:

The Rs 250,000-crore domestic jewellery industry is likely to get a major boost through the
government’s decision for foreign director investment (FDI) in retail.
The government’s decision to open with 51 per cent in multi-brand and 100 per cent in single
brand retail market would allow global players to enter Indian markets by setting up
manufacturing units in India. It will also help overseas majors to acquire regional brands and
promote them to the national level for participation with local players. Indian jewellery
industry to get innovative technology which is widely accepted elsewhere. Global jewellery
peers will also bring technical know-how which will help the industry to grow rapidly.

Not only that, consumers will also get benefit if rare and the most complicated design
jewellery items are brought to India. Apart from widening consumers’ choice, the jewellery
items would be available at least 10 per cent cheaper for Indian buyers.

Bringing jewellery items from abroad attracts 10 per cent import duty on Saturday.
Assuming the cost of production matches in India with abroad, this duty component can
easily be saved. Importantly, overseas players must invest in manufacturing and not only in
retail.

Opening up FDI in retail will accelerate the growth of branded and organised players like us.
We can have strategic partners and inflow of fund to improve the ‘retailonomics’ of the
country. For international retailers it is an opportunity to be a part of Indian consumption
story as well as bring in revolution in the retail experience with their expertise. Beside
window for luxury players to partner with Indian brands, we expect chains like Wallmart,
Carrefour, M&S also to spread their presence and formats.

Branded jewellery sector is likely to get the biggest pie of overall foreign direct investment.
With the industry is expected to witness a double digit growth the entry of foreign players
would escalate the growth further.
Organised retailers like Gitanjali Gems, PC Jewellers, Tanishq and Tribhovandas Bhimji
Zaveri (TBZ), with the growing focus of Tier-II and Tier-III cities, are set to grab greater pie
of the rural economic growth arisen especially from rapidly expanding income from land
bank and farm sector.
Currently, branded jewellery sales contribute six per cent of gold and diamond jewellery
sales which have witnessed over 50 per cent increase from the level of 4-4.5 per cent two
years ago. Two years hence, however, the share of organised sector jewellers is likely to rise
to at least 12-14 per cent. Rural markets contribute nearly 40 per cent of branded jewellery
sales currently which is estimated to rise to 60 per cent in two years.

Expanding reach of service sector especially in Tier-II and III cities is set to drive the
demand of branded jewellery where disposable income remains very high. Employees in this
sector frequently change work place lacking thereby the traditional jewellers of their choice.
In absence of a reliable traditional jewellery supplier, they move to organised retail to buy
branded jewellery where they get trust and guarantee of purity along with a pride of
renowned brand. The entry of foreign retailers will expand availability of jewellery items at
competitive price.

Opening up of FDI in retail can increase organised retail market size to $260 billion by 2020.
This would result in an aggregate increase in income of $35-45 billion per year for all
producers combined; 3-4 million new direct jobs and around 4-6 million new indirect jobs in
the logistics sector, contract labour in the distribution and repackaging centres, housekeeping
and security staff in the stores. The government also stands to gain by this move and can be
expected to receive an additional income of $25-30 billion by way of increased tax collection
and reduction of tax slippages.
 Future trend:

 The Price of Gold is Determined by Supply and Demand

As it is the case with any other freely tradable good, the price of gold is determined by
supply and demand…In case of excess demand, the price of gold rises until demand matches
supply. Conversely, in case of a surplus of gold, the price of gold goes down until the entire
supply is in demand.

 Demand for Gold – the Four Pillars

The demand for gold comes from four areas:

Source: World Gold Council

 Development of Individual Demand Factors

Over the five years from 2007 to 2011:
  The industrial demand for gold for technological applications has remained nearly
constant…

 The demand for gold jewellery – traditionally the most important item of the total
demand for gold – has declined by around 18%….

 The investment demand increased – based on the demand for gold in metric tonnes –
by almost 130% from 2007 to 2011.
 Central banks, who for years on balance sold more gold than they bought, have
become net buyers since 2010. In 2011, the purchases by the central banks were almost as
high as the total gold demand from the technology sector.

Source: World Gold Council

 Future Demand Expectations By Area

It is very difficult to forecast the demand for gold for 2014 and the coming years.
Jewellery Demand: The demand for gold jewellery comes [primarily] from Asian countries,
especially India and China. The increase in jewellery demand should continue given the
positive economic development of these countries and increasing prosperity.
Investment Demand: Investment demand, however, is developing in the opposite direction.
In Western countries, gold is often seen as a store of value or as an insurance protection
against crises. In times of economic uncertainty or even acute crises, demand for gold as an
investment tends to increase. In recent years, gold…became more and more easily accessible
for retail investors through the advent of new financial products on gold, such as funds, as
well as non-regulated products such as vaulted gold. These new products facilitate an
increasing private demand for gold as an investment.
Central Banks: There are several scenarios with regard to the demand for gold from central
banks.
 On the one hand, the central banks of emerging market economies, in particular,
could adjust their gold holdings further to the level of many developed countries.

 On the other hand, countries with a precarious debt situation may be forced to sell
gold holdings in order to reduce their debt.

 Supply of gold – mining and recycling

The supply of gold generally consists of the amount of gold mined annually and the amount
of recycled scrap gold coming back into the gold market.

Source: World Gold Council

The current supply of gold is about one third higher than the supply of gold was 10 years
ago.
Recycling: Compared to 2002, the annual quantity of gold coming back into the market by
way of recycling in 2011 almost doubled because the rising price level made sales of scrap
gold more attractive. The amount of recycled gold is beginning to decrease despite the high
price of gold, [however, probably because of] the fact that a large share of scrap gold
holdings were already sold over the last [few] years.
Mining: Actual mine production has increased only about 15% [since 2002 but only] slightly
in 2011 compared to 2010…[offset by the significant reduction in] so-called “de-
hedging” [by] mining companies…[which has] resulted in an increased supply of gold
available in the market (i.e., the mining companies themselves bought less gold to close open
hedging positions).
The mining of gold is getting less productive and more expensive due to less rich deposits,
and for the next few years no significant increase of mining supply is expected.
Thus, the supply of gold will remain rather constant in 2013 and 2014 and from a supply side
perspective no negative pressure on the gold price is to be expected.

 Momentum and Fluctuations in the Gold Market

The total amount of gold ever mined worldwide currently has a value of about 9,000 billion
U.S. dollars. Daily, only a very small part of this quantity is traded in markets. Therefore,
sales or purchases of large quantities of gold hitting the market can affect the price greatly.
The emergence of new investment products and the activities of financial investors have
made the gold price more susceptible to price fluctuations.
The volatility of the gold price has increased significantly and there is no change in sight for
2014 and the next few years.

 Trends and Possible Scenarios for the Gold Price

Due to the many supply and demand factors and their interdependencies, a reliable forecast
of the future price of gold in 2013, 2014 and beyond is very difficult. Below, we discuss
possible scenarios and trends as well as their potential impacts on the gold price.
1. Uncertainty and financial crises
The financial crisis has led to a sharp increase in demand from private investors and central
banks. If the uncertainty persists or perhaps even escalates again, this could drive the gold
price further up, for example in case of a possible euro-exit of Greece or an escalation of debt
problems in other countries like the United States or Japan.
2. Inflation and depreciation of money
One argument of Western investors in favour of the purchase of gold is the fear of high
inflation and thus a loss in value of money. In the wake of the debt crisis and the measures to
ease monetary policy, this may be a legitimate concern, however, in recent years inflation
has been low and some experts rather expect deflation than inflation in the short term.
In emerging economies, such as China or India, however, the situation is different: in those
countries, the respective inflation rates are high by our standards – sometimes even in the
high single or low double digits. This is not due to the debt crisis but due to the high
economic growth in these countries.
Unlike in the developed economies, in China and India a strong investment (and jewellery)
demand for gold is expected in case of a further positive economic development.
3. Normalization of the situation
Accordingly, in case of an economic recovery in the West – if there is a solution to the debt
crisis – there would be opposing effects on the gold price. The very high investment demand
would decline in the West and we could probably not expect to see compensation by an
increase in demand for gold jewellery.
In emerging countries such as China, however, a global economic recovery should lead to
further growth and thus greater demand for both gold jewellery and gold investments (which
are used in these countries to hedge against local inflation).
4. War and political crises
A geopolitical crisis or a war – for example, a military strike by Israel against Iranian nuclear
facilities – would probably quickly drive up the price of oil as well as the price of gold. Let’s
hope that does not happen….
5. Demand from private investors
The value of all mined gold currently represents around 9% of the global wealth in stocks
and bonds. However, if only investment gold is considered, the rate is just 2%. When looking
at the investment behaviour of individual investors, one notices that only a small number of
investors are actually really invested in gold. If gold should continue to establish itself in the
portfolios and assets held by private investors, this could lead to a large additional demand
and consequently to a sharp rise in the gold price.
This trend could be facilitated by further new gold investment products which make an
investment in (physical) gold easy for private investors. Such products include, for example,
vaulted gold.
6. Behaviour by the central banks
Predictions regarding the future demand from central banks are also difficult to make. [On
one hand,] in the wake of the debt crisis, countries such as Portugal could sell gold held by
them, which could potentially result in a decrease of the gold price. On the other hand, a
large part of the official sector demand in recent years came from central banks of (former)
developing countries such as China. China only holds about 2% of their reserves in gold
compared to Western countries such as Germany and the United States who hold more than
70% of their reserves in gold.
The amount of gold held by China has more than doubled – measured in metric tonnes –
since 2000 and if, for example, China were to diversify its foreign exchange reserves further
and invest a portion of them in gold, this could lead to a huge demand and could have a
positive impact on the gold price.
In the so-called “Washington Agreement on Gold”, the central banks of many countries with
large gold reserves and the Bank for International Settlement (BIS) and the IMF have agreed
to sell only a specific quantity of gold annually. In 2009, the agreement was extended until
the year 2014. Therefore, no negative price pressure is expected from this side in the short
term but the mid-term outlook beyond 2014 is unclear.

 Gold Price Predictions by Analysts

The current analyst predictions regarding the price of gold for the years 2013 and 2014
differ, but seem to be mostly positive.
Chapter 4 – Data Analysis
 Increase/ Increase/
As on 31-3-12 As on 31-3-13 Decrease/Rs Decrease/
%
PBIT 9,897,263.25 2,270,414.97 (7,626,848.28) (77.06)
Less Interest 3,888,914.71 4,934,153.84 1,045,239.13 26.88
Less Prior Period
- - - -
Adjustment
Less Misc expenses Written
- - - -
off
PBT 6,008,348.54 (2,663,738.87) (8,672,087.41) (1.44)
Less Tax 639,340.00 350,300.00 (289,040.00) (0.45)
PAT 5,369,008.54 (3,014,038.87) (8,383,047.41) (1.56)

Total Expenses = Total Income- Profit after tax

Total Exp 8,999,505.35 10,451,947.00 1,452,441.65 0.16
Add Depreciation 278,952.36 627,775.00 348,822.64 1.25

Gross Cash Accruals = PAT +Depreciation

Gross Cash accruals 5,647,960.90 (2,386,263.87) (8,034,224.77) (0.31)
Less : Dividends - - - -
: Preference - - - -
: Equity - - - -
Net Cash accuruals 5,647,960.90 (2,386,263.87) (8,034,224.77) (0.31)
Net Cash/Total Income % 0.39 1.00 1.00 1.00

Expenditure
Salaries and Staff Expenses 1,065,244.00 1,265,244.00 200,000.00 0.19
Admin and Misc Exp - - - -
Other expenses 7,934,261.35 9,186,702.61 1,252,441.26 0.16
Operating expenses 8,999,505.35 10,451,946.61 1,452,441.26 0.16
Provisions for NPA s - - - -
Other Provisions - - - -
Total Provisions - - - -
Total expenditure =Operating expenses + Provisions
Total expenditure 8,999,505.35 10,451,946.61 1,452,441.26 0.16
Income
 Gross Profit on Sales 18,744,291.00 12,722,361.58 (6,021,929.42) (0.32)
Interest On FDR 152,478.00 - (152,478.00) (1.00)
Interest On Investments - - - -
Income from Operations 18,896,769.00 12,722,361.58 (6,174,407.42) (0.33)
Other Income - - - -
Total Income 18,896,769.00 12,722,361.58 (6,174,407.42) (0.33)
PBIDT = Total Income -Total Expenditure
PBIDT 9,897,263.65 2,270,414.97 (7,626,848.68) (0.77)

Liabilities 39,987,755.59 53,067,831.00 13,080,075.41 0.33

Current Liabilities 6,529,194.00 407,143.00 (6,122,051.00) (0.94)
Total Liabilities 46,516,949.59 53,474,974.00 6,958,024.41 0.15

Net Current Assets = Current Assets-Current Liabilities

Current Assets 93015882.14 105,906,858.30 12890976.16 0.14
Net Current Assets 86,486,688.14 105,499,715.30 19013027.16 0.22

Total Capital Employed = Net Block + Investment + Current Assets

Total Capital Employed

Equity Share Capital 45,938,817.40 56,052,339.36 10,113,521.96 0.22

Reserves & Surplus - - - -
Less Intangibles - - - -
DTA - - - -
Tangible Net worth

Secured loans
Term Loan 213,093.00 1,645,837.77 1,432,744.77 6.72
Cash Credit 32,489,109.11 44,548,086.00 12,058,976.89 0.37
Total 32,702,202.11 46,193,923.77 13,491,721.66 0.41
Unsecured Loans
From Banks 31,107.86 315,661.64 284,553.78 0.07
Others 3,908,379.00 5,659,509.16 1,751,130.16 0.45
Total 3,939,486.86 5,975,170.80 2,035,683.94 0.52
Deferred Tax Liability - - -
Term Deposits 227,387.90 227,387.90 - 0
Cash and other Bank
1,129,781.96 1,753,369.90 623,587.94 0.55
balances
Advances recoverable in
6,700,000.00 13,475,262.67 6,775,262.67 1.01
Cash/kind
 Other Current Assets 83,519,879.43 90,450,837.83 6,930,958.40 0.08
Current Assets Total 91,577,049.29 105,906,858.30 14,329,809.01 0.16
Fixed assets
Own assets 1,583,860.70 4,248,220.70 2,664,360.00 1.68
Depreciation 278,953.00 627,775.49 348,822.49 1.25

Net Block= Own Assets- Depreciation

Net Block 1,304,907.70 3,620,445.21 2,315,537.51 1.77
Investments - - - -
Net block + Investments 1,304,907.70 3,620,445.21 2,315,537.51 1.77
Total Assets= Total Current Assets+ Total Fixed Assets
Total Assets 92,881,956.99 109,527,303.51 16,645,346.52 0.18
Current Liabilities
Sundry Creditors 6,529,193.00 407,143.00 (6,122,050.00) -0.94
Other Current
- - - -
Liabilities/Provisions
EMI payable against
- - - -
Securitisation/Assignments
Other Provisions - - - -
 Graphical representation of total assets and total liabilities

120000000

100000000

80000000

60000000 total assets

Column1

40000000

20000000

0
2012 2013
 Total assets are equal to total current assets + total fixed assets
 Total assets amount to 92881956.99 in 2012
 Total assets amount to 109527303.51 in 2013
 Total liabilities amount to 46516949.59 in 2012
 Total liabilities amount to 53474974.00 in 2013
 The total assets have grown by 16645346.52 that is 18%
 The total liabilities have increased by 6958024.41 that is 15%
 The assets have gone up because of an increase in closing stock value
 The liabilities have increased due to further loans availed from bank
 The increase in assets and liabilities is maintained at a reasonable proportion
 Graphical representation of partner’s capital

60000000

50000000

40000000

30000000
Column2

20000000

10000000

0
2012 2013

 The partners capital in 2012 was 45938817.40

 The partners capital in 2013 was 56052339.36
 The partner’s capital has increased by 10113521.96
 That is an increase of 22% which shows the confidence of promoters in the business.
 Gross profit and net profit graphical representation

20000000

18000000

16000000

14000000

12000000

10000000 gross profit

Column1
8000000

6000000

4000000

2000000

0
2012 2013

 The gross profit in the year 2012 was 18744290.6 has decreased to 12722361.58
 The net profit has in the year 2012 was 9897263.25 has decreased to 2270414.97
 Jewellery business is basically become very volatile due to huge fluctuations in gold
price.
 The fall in GP and NP are both due to change in closing stock valuation
 The sales too decreased which was another major reason for decrease in net profit
 Opening stock and closing stock graphical representation

90000000

80000000

70000000

60000000

50000000
opening stock
40000000 Column1

30000000

20000000

10000000

0
2012 2013

 Opening stock value amounts to 64243625.65 in 2012 and 65578334.43

 There was a increase by 1334708.8 in opening stock
 Closing stock amount to 65578334.43 in 2012
 Closing stock amounts to 85398748.83 in 2013
 There was an increase in closing stock by 19820414.4
 The increase was mainly due to the increase in the gold price.
 Total income and total expenditure graphical representation

20000000

18000000

16000000

14000000

12000000

10000000 Total Income

Column1
8000000

6000000

4000000

2000000

0
2012 2013

 Total income amounts to 18896769.00 in 2012

 Total income amounts to 12722361.58 in 2013
 There was a decrease in total income by 6174407.42
 There was a decrease by 33% in total income; this was due to market fluctuations.
 Total expenditure amounts to 8999505.35 in 2012
 Total expenditure amounts to 10451946.61 in 2013
 There was a increase by 1452441.26 in total expenditure
 There was increase in interest paid to banks which lead to increase in expenditure

RATIO ANALYSIS

Profitability ratios
 Gross profit ratio: It shows the relation between gross profit and net
sales of the firm.
Gross profit ratio = gross profit / net sales *100
Year Gross profit Net sales Gross profit ratio
2012 18744290.60 125368457.57 14.95%
2013 12722361.58 88989392.00 14.30%

Interpretation:
The gross profit margin was maintained by the firm inspite of increase
in competition and bad market scenario.
The percentage is very healthy compared to the industry standards.

 Net profit ratio : It shows the relation between net profit and net sales
of the firm
Net profit ratio = net profit / net sales *100
Year Net profit Net sales Net profit ratio
2012 9897263.25 125368457.57 7.89%
2013 2270414.97 88989392.00 2.55%

Interpretations:
The net profit is generally around 2% for the industry and the firm has
done well seeing the industry standards.
There was a steep difference in two years due to the variation in closing
stock price
 Return on assets ratio: it shows the relation between assets and net
profit of the firm
Return on assets ratio = net profit*100/total assets

Return on assets
Year Net profit Total assets
ratio
2012 9897263.25 92881956.99 10.66%
2013 2270414.97 109527303.51 2.07%

Interpretations:
The net fall is due to fall in closing stock valuation
The closing stock valuation has a drastic effect due to the price
changes.

 Return on capital: it shows the relation between net profit and capital
employed
Capital employed = net profit*100/capital employed
Capital
Year Net profit Capital employed ratio
employed
2012 9897263.25 45938817.40 21.54%

2013 2270414.97 56052339.36 4.05%

Interpretations:
Inspite of the net profit going down the partners have increased the
capital showing their confidence in the business.
There was a decline in net profit due price fluctuations in the market

 Return on investments: It shows relation between investments and

capital employed
 Return on investments = PBIT/ capital employed*100
Year PBIT Capital employed Percentage
2012 9897263.25 45938817.40 21.54%
2013 2270414.97 56052339.36 4.05%

Interpretation:
There was a decrease in the PBIT due to the price fluctuations, but the
capital employed was increased due to the trust in the business by the
partners. This was reason for the decrease on the percentage of ROI
 Chapter 5 – Findings & Conclusion

Findings

 Total assets amount to 92881956.99 in 2012

 Total assets amount to 109527303.51 in 2013
 Total liabilities amount to 46516949.59 in 2012
 Total liabilities amount to 53474974.00 in 2013
 The total assets have grown by 16645346.52 that is 18%
 The total liabilities have increased by 6958024.41 that is 15%
 The assets have gone up because of an increase in closing stock value
 The partners capital in 2012 was 45938817.40
 The partners capital in 2013 was 56052339.36
 The partner’s capital has increased by 10113521.96
 The gross profit in the year 2012 was 18744290.6 has decreased to 12722361.58
 The net profit has in the year 2012 was 9897263.25 has decreased to 2270414.97
 Jewellery business is basically become very volatile due to huge fluctuations in gold
price.
 The fall in GP and NP are both due to change in closing stock valuation
 The sales too decreased which was another major reason for decrease in net profit at
is an increase of 22% which shows the confidence of promoters in the business.
 Total income amounts to 18896769.00 in 2012
 Total income amounts to 12722361.58 in 2013
 There was a decrease in total income by 6174407.42
 There was a decrease by 33% in total income; this was due to market fluctuations.
 Total expenditure amounts to 8999505.35 in 2012
 Total expenditure amounts to 10451946.61 in 2013
 There was a increase by 1452441.26 in total expenditure
 There was increase in interest paid to banks which lead to increase in expenditure
 Opening stock value amounts to 64243625.65 in 2012 and 65578334.43
 There was a increase by 1334708.8 in opening stock
 Closing stock amount to 65578334.43 in 2012
 Closing stock amounts to 85398748.83 in 2013
 There was an increase in closing stock by 19820414.4
 The increase was mainly due to the increase in the gold price.
 The firm has seen a steep fall in the net profit leading to other ratios also getting
distorted.
 It has been found that the fall the net profit was due a onetime adjustment in stock
valuation procedure from an average of 5 years to weighted yearly price
 The sales too have gone down due to overall recession in the economy
 Overall the firm has maintained a decent GPM and NPM
 The partners have increased their capital showing trust and confidence in the
business.

SUGGESTIONS AND RECOMMANDATIONS

 The firm has to aggressively advertise and go online to increase its market share.
 The firm look into hedging procedures to save guard from price fluctuations in gold.
 The firm can expand more branches as the market is segmented.
 The firm must look into ways to reduce it interest burden through internal financing
and other options.
 The firm must increase its stocks to provide more designs and choices to its
customers.
 The firm must start branding itself as it has a loyal customer base and good old track
record.
 The jewellery industry is in for tough times due change in the buying pattern and also
fall in disposable income, the firm must look into new ways of tapping the younger
generation and focusing on export market.
 Chapter 6 - Annexure

Income from Business or Profession (Chapter IV D)(Maximum Salary Rs.3152701) 1975200

M/s.SRI BALAJI JEWELLERS

Profit as per Profit and Loss 1936200
Appropriation a/c
Add:
Donation 39000
Depreciation Debited in P&L A/c 278952
Interest Paid to Partners 4831760
Remuneration Paid to Partners 3129302
Total 10215214
Less:
Depreciation as per Chart u/s 32 278952
Interest as per Deed u/s 40(b) 4831760
5110712
5104502
M/s.SRI BALAJI JEWELLERS
Loss as per Profit and Loss a/c 0

Profit Before Remuneration 5104502

Remuneration Allowable 3129302
1975200

Gross Total Income 1975200

Less: Deductions (Chapter VI-A)

u/s 80 G Donation
Eligible for 50% 39000
Eligible Deduction 19500
19500
Total Income 1955700
Round off u/s 288 A 1955700

Tax Due 586710

Educational Cess 17601
604311
T.D.S. 76
604235
Advance Tax 250000
354235
Interest u/s 234 A/B/C 35105
 389340
Deposit u/s 140A 389340
Tax Payable 0

Interest Charged (Rs.) T.D.S./ T.C.S. From (Rs.)

u/s 234B (6 Month) 21252 Non-Salary(as per Annexure) 76
u/s 234C 13853
(2436+7875+3542)

Computation of Total Income

Interest calculated upto September,2012, Due Date for filing of Return September 30, 2012

Prepaid taxes (Advance tax and Self assessment tax)

Sr.No.
BSR Code
Date
Challan No
Bank Name & Branch
Amount

1
6390010
15/09/2011
23
ICICI BANK LTD. Khairatabad
100000

2
6390340
15/03/2012
2001
ICICI BANK LTD. Uttam Nagar
150000

3
6390340
24/09/2012
40825
ICICI BANK LTD. Uttam Nagar
389340

Total

639340

Salary & Interest Allowable to Partners

Name of Partner
Share %
Salary
Interest
Profit

RAJ KUMARI BAI

35.00
Nil

1346117

677670

URMILA BAI
35.00
Nil
 1216867

677670

PRAVEEN KUMAR
15.00
1564651

1040491

290430

ANAND KUMAR
15.00
1564651

1228285

290430

Total

3129302

4831760

1936200

Details of Depreciation M/s.SRI BALAJI JEWELLERS

Particulars
 Rate
Opening
More Than 180 Days
Less Than 180 Days
Total
Sales
Balance
Depreciation (Short Gain)
WDV Closing

Refrigirator
15%
6676
0
0
6676
0
6676
1001
5675

Sony Camera
15%
22801
0
0
22801
0
22801
3420
19381

Car I10
15%
0
550171
0
550171
0
550171
82526
467645
Weighing Machine
15%
31215
0
0
31215
0
31215
4682
26533

Xerox Machine
15%
5280
0
0
5280
0
5280
792
4488

Fans
15%
2036
0
0
2036
0
2036
305
1731

Currency Counting Machine

15%
4170
0
0
4170
0
 4170
626
3544

Air Conditioner
15%
0
136670
0
136670
0
136670
20501
116169

Computer
60%
0
11194
0
11194
0
11194
6716
4478

Furniture
10%
110140
0
0
110140
0
110140
11014
99126

Generator
15%
410
0
 0
410
0
410
62
348

Invertor
15%
0
21668
0
21668
0
21668
3250
18418

Machinery
15%
5119
0
0
5119
0
5119
768
4351

Scooter
15%
935
0
0
935
0
935
140
795

T.V Camera
 15%
12104
0
0
12104
0
12104
1816
10288

Car I20
15%
0
621583
0
621583
0
621583
93237
528346

Coffe Machine
15%
0
7608
0
7608
0
7608
1141
6467

Motor Car Monido

15%
0
313035
0
313035
0
313035
46955
266080
Total

200886
1661929
0
1862815
0
1862815
278952
1583863

Details of Depreciation M/s.SRI BALAJI JEWELLERS

Particulars
Rate
Opening
More Than 180 Days
Less Than 180 Days
Total
Sales
Balance
Depreciation (Short Gain)
WDV Closing

Total

0
0
0
0
0
0
0
0
Details of T.D.S. on Non-Salary

S.No
Name of the Deductor
Tax deduction A/C No. of the deductor
Total Tax deducted
Amount out of (4) claimed for this year

1
INDIAN OVERSEAS BANK
HYDI00129D
76
76

TOTAL

76

Maximum Allowable Salary to Partners

Profit Before Remuneration

5104502
Maximum Allowable Salary to Partners

1. 90% On First 3,00,000 of Book Profit

270000

2. 60% of the rest (4804502 x 0.6)

2882701

Maximum Allowable Salary to Partners

3152701

Sri Balaji Jewellers

ASSESSMENT YEAR
2012-2013

Abids, Hyderabad
PREVIOUS YEAR ENDING
31-03-2012

Trading and Profit & Loss A/c

 
 
 

 
 
  
 

Particulars
 
Particulars
 

Opening Stock
64,243,625.65
Sales Accounts
125,368,457.57

22 Ct Gold Ornaments Stock

36,715,723.00
Sales Gold 22Ct
110,785,064.53

24 Ct Gold Stock
1,091,574.00
Sales Gold 24 Ct
560,000.00

Jewellry Stock
24,314,998.00
Sales (Jewellery)
11,261,861.36

Loose Diamond Stock

902,250.00
Sales (Loose Diamonds)
1,164,772.28

Loose Real Beeds Stock

570,880.65
Sales (Real Beeds)
279,232.68
 Silver Stock
648,200.00
Sales Return
(175,643.56)

Purchase Accounts
106,733,627.75
Sales (Silver)
984,925.73

Purchase Return (22 Ct Vat)

(120,667.32)
Silver Jewellery
508,244.55

Purchase Return (CST)

(4,277,189.00)
Closing Stock
65,578,334.43

Purchase Return (Jewellery Vat)

(6,280,406.94)
22 Ct Gold Ornaments Stock
37,406,650.72

Purchases 22 Ct Gold (CST)

10,140,143.00
24 Ct Gold Stock
 

Purchases 22 Ct Gold (Vat)

46,076,658.90
Jewellry Stock
25,517,245.69

Purchases 24 Ct Gold (CST)

854,000.00
Loose Diamond Stock
2,313,812.20
 Purchases 24 Ct Gold (Vat)
35,029,752.48
Loose Real Beeds Stock
317,748.82

Purchases Jewellery (CST)

7,316,554.00
Silver Stock
22,877.00

Purchases Jewellery (Vat)

15,022,700.99
 
 

Purchases Loose Daimonds (CST)

2,358,346.00
 
 

Purchases Loose Diamonds (Vat)

198,019.80
 
 

Silver Jewellery Pur

415,715.84
 
 

Direct Expenses
1,225,248.00
 
 

Making Charges
797,492.00
 
 

Packing Material
427,756.00
 
 

Gross Profit c/o

18,744,290.60
 
 

 
 
 
 

 
190,946,792.00
 
190,946,792.00

 
 
 
 

 
 
 
 

Indirect Expenses
8,999,505.35
Gross Profit b/f
18,744,290.60
 Advertisment Exp
1,400.00
 
 

Bank Charges
27,794.83
 
 

Bank Charges (Service Tax)

10,825.84
Indirect Incomes
152,478.00

BONUS
94,000.00
Discount Received
 

Building Insurance
43,414.00
Interest FDR IOB
 

Business Activity Exp

275,800.00
 
 

Business Pramotion
355,476.00
 
 

Car Repairs
21,800.00
 
 
 Computer Repair
21,770.29
 
 

Consultancy Exp
185,000.00
 
 

Courier Exp
2,746.00
 
 

Credit Car Commission

105,090.89
 
 

Depreciation
278,952.36
 
 

Donation
39,000.00
 
 

Electrical Charges
219,853.00
 
 

General Exp
69,950.00
 
 

Gold Saving Schem Interest

9,000.00
 
 

Hall Marking Exp

65,540.00
 
 

Insurance Car I 20
10,726.00
 
 

Interest Car (I20)

19,018.00
 
 

Interest C.C. A/c. ING Vysya Bank Ltd.,)

2,369,129.71
 
 

Interest C.C A/c. (IOB)

1,519,785.00
 
 

Interest (I-10)
18,883.72
 
 
 Internet Exp
12,000.00
 
 

Jewellers ( Subscription Fess)

5,000.00
 
 

Jewellery Association Fee

8,000.00
 
 

Labour License Fee

133.00
 
 

Muncipal Tax
34,606.00
 
 

Petrol Expenses
135,850.00
 
 

Polishing Exp
128,450.00
 
 

Printing & Stationery

11,540.00
 
 
 Processing Charges (MCPL0
5,610.00
 
 

Processing Expenses (ING Vysya Bank)

350,000.00
 
 

Professionla Tax 2011-12

2,500.00
 
 

Rama Devi (Int Paid Unsecured Loan)

148,500.00
 
 

Ravi Teja (Int Paid Unsecured Loan)

111,375.00
 
 

Rent
240,000.00
 
 

Rent (IInd & IIIrd Floor)

120,000.00
 
 

Repairs Expenses
85,900.00
 
 

Repiars & Maint

24,867.00
 
 

Salaries
1,065,244.00
 
 

Loss On Sale Of Commodities

111,306.71
 
 

Staff Welfare
33,507.00
 
 

Stock Insurance
111,886.00
 
 

Telephone Exp
44,689.00
 
 

Trade License Renewal

6,223.00
 
 
 Transporation Exp
2,304.00
 
 

Travellings Exp
245,519.00
 
 

Water Bill
13,540.00
 
 

Website Exp
175,000.00
 
 

Weight & Measures Fee

1,000.00
 
 

 
 
 
 

 
 
 
 

Nett Profit
9,897,263.25
 
 
 Total
18,896,768.60
Total
18,896,768.60

Sri Balaji Jewellers

ASSESSMENT YEAR
2012-2013

Abids, Hyderabad
PREVIOUS YEAR ENDING
31-03-2012

Balance Sheet

1-Apr-2011 to 31-Mar-2012

 
 
 
 

Liabilities
 
Assets
 

Capital Account
45,938,817.40
Fixed Assets
1,583,860.70

Anand Kumar Cpital A/c.

 12,174,312.95
Air Conditioner
116,169.21

Praveen Kumar Capital A/c.

13,059,649.57
Car I10
467,645.53

Smt Raj Kumari Bai

9,700,601.27
Car I20
528,345.46

Smt Urmila Bai

11,002,695.98
Coffee Machine Purchased
6,466.37

Sri Balaji Maharaj Ji

1,557.64
Computer
4,477.60

Loans (Liability)
39,987,755.59
Currency Counting Machine
3,544.58

Bank OD A/c
32,489,109.11
Fans
1,730.18

Secured Loans
213,093.48
Furniture
99,126.18
 Unsecured Loans
3,908,379.00
Generator
348.65

Customer Advance
2,542,260.00
Invertor
18,417.83

Dhanuka Agrotech Adv

219,014.00
Machinery
4,350.94

Gold Saving Scheme A/c.

465,900.00
Motor Car - Mondio
266,079.55

Praveena Adv
150,000.00
Refrigerator
5,674.51

 
 
Scooter
794.68

 
 
Sony Camera
19,381.06

Current Liabilities
6,529,193.29
T.V.Camera
10,288.14
 Sundry Creditors
6,529,193.29
Weighing Machine O
26,531.97

 
 
Xerox Machine
4,488.26

Investments
2,143,980.00
 
 

Margadarshi Chit Fund P Ltd.,

2,143,980.00
Current Assets
93,015,882.14

 
 
Closing Stock
65,578,334.43

 
 
Deposits (Asset)
227,387.90

 
 
Loans & Advances (Asset)
6,700,000.00

 
 
 Sundry Debtors
17,917,197.00

 
 
Cash-in-hand
1,129,781.96

 
 
Bank Accounts
31,107.86

 
 
Sales Tax Vat Receivable
24,348.99

 
 
Sundry Creditors (Advances)
1,407,724.00

 
 
Diff. in Opening Balances
3.44

Total
94,599,746.28
Total
94,599,746.28
 BIBLOGRAPHY

 www.managementparadise.com

 http://icra.in/Files/ticker/SH-2013-H1-1-ICRA-Jewellery.pdf

 http://portal.indiainfoline.com/datamonitor/Others/Commodity-Research/Gold-
Performance/The-Gold-10gms-Price-History-year-wise.aspx

 http://www.business-standard.com/article/markets/jewellery-sector-to-get-a-major-
boost-from-fdi-in-retail-111120400018_1.html

 http://www.munknee.com/how-will-the-price-of-gold-evolve-into-2013-2014-and-
beyond-a-perspective/

 www.sribalajijewelers.com

 Firm’s annual report, journal.