Printer Market in India by mry94057

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									  Project Proposal



        Setting up an
     Authenticity Centre
for Gold & Mounted Jewelry

                    By Tehmasp Printer
                     OBJECTIVES


Tap the entrepreneurial spirit of the Parsi Youth.

Establish a resource for the community to enter a sunrise
service industry.

Help develop a Parsi business enterprise in one of the fastest
growing segments in India namely - Jewelry industry.

Participate in initiatives aimed at promoting transparency –
promoting hallmarking and encouraging consumer activism in
matters related to quality, purity, certification etc.
                          STRENGTHS


Cash in on the trust placed on the Parsi community for its
integrity, honesty, dedication & commitment.

Professional expertise available in the Authenticity services
             PRESENTATION FLOW



Part I
Market Potential
  Huge opportunity in providing an Authenticity service to the
   jewelry industry.



Part II
Proposed Authenticity service to be provided:
 Assaying & Hallmarking of precious metals
 Identification & Certification of Gem Stones & Mounted
   Jewelry mainly diamonds
           MARKET UNDERSTANDING



Global Gems & Jewelry industry on the threshold of a large-
scale transformation.

Last 5-6yrs the industry has seen more changes than ever
before.

Next 10yrs likely to bring in more deeper and far reaching
changes across the value chain.

Fascinating industry – traditional on one hand glamorous on
the other.
KEY INDUSTRY SEGMENTS



 Diamonds Diamond studded jewelry is the largest
 segment estimated @ USD 69billion


 Gold Primary use is in jewelry fabrication which
 accounted for 67% of total gold demand (volume
 terms) in 2005.

 Platinum often the metal of choice for high-end
 precious jewelry across the world. Its showing an
 increasing trend in India too.

 Colored gemstones
         GLOBAL : GROWTH IN JEWELRY RETAIL SALES
                                                                        CAGR
                                                                        (2000-2005)


                                                         136   146
                                                   124                      5.2%
                                 113   111   118
            USD Billion



                                                                            6.4%

                                                                            4.4%

                                                                            5.5%

                                                                            5.0%




                          World jewelry sales grew at a steady pace


CAGR : Compounded Annual Growth Rate                                  Source : KPMG Analysis
     INDIA :GROWTH IN RETAIL SALES OF JEWELRY
                                                          CAGR
                                                       (2000 – 2005)

                                                         10.20%
        USD Billion




      India is one of the fastest growing market for Jewelry,
      growing at a rate of 10.20% per annum over the last 5years.


CAGR : Compounded Annual Growth Rate                  Source : KPMG Analysis
GLOBAL & INDIAN BREAKUP OF INDUSTRY - 2005
        % Market Share of various jewelry segments




      Global                                India



                                                     Source : KPMG Analysis
CHANGES IN RETAIL JEWELRY SALES IN KEY MARKETS
                        (USD billion)
  2005

  2010

  2015




                U.K.                    Turkey            China


                                                                 Japan




         U.S.



                Italy




                                                 India
    RoW                         Middle East              Source : KPMG Analysis
INDIAN JEWELRY MARKET – A SNAPSHOT

Indian consumer’s increasing penchant for diamond jewelry and
the rekindling of her affair with gold jewelry meant that its share
in the world market went up to 8% from a low of 5.5% in 2002

Fastest growing diamond jewelry market growing at the rate of
19% in 2005

Largest player in the polished diamond industry 57% of world
produce

Large producer and exporter of various forms of jewelry.
 output in 2005 USD 12.17billion

India is also the emerging jewelry fabrication centre riding on a
number of advantages such as
  cheap skilled labor,
  large domestic demand for jewelry &
  an added advantage of being the largest producer of
    polished diamonds.
INDIA: WORLD JEWELRY FABRICATION SHARE




   India’s share of world jewelry production output
                 in value terms (2005)



                                               Source : KPMG Analysis
GEMS & JEWELRY VALUE CHAIN - INDIA’S PRESENCE



              Mining     Processing   Fabrication   Consumption

   Diamond
                              √            √            √
   Gold
                                           √            √
   Platinum
                                           √            √
   Others
                              √            √            √

     √ Established Presence √ Emerging Centre / Markets
             INDIAN RETAIL LANDSCAPE


Traditionally dominated by small scale local players is rapidly
moving towards greater organization as retail channels
mature and obtain greater penetration across the country.

Retail organization will enhance the sales of jeweler in India.
World jewelry sales will be positively impacted because of this
change.

The increasing levels of consumer sophistication, both in terms of
design & product demand as well as a general orientation towards
  gemstone certification
  jewellery hallmarking
          INDIAN RETAIL LANDSCAPE


Experimentation with new retail formats.

Increased emphasis on branding and marketing

Value addition in jewellery will increase due to penetration
of brands

Growth of e-retail in India. Most online jewellery purchases
fall in the 18-35year age group.
 CHANGING TRENDS IN THE INDIAN RETAIL MARKET

                   TRADITIONAL PRACTICE                                                  EMERGING TREND

Jewelry considered an investment, particularly gold jewelry         Wearable’ jewelry as a fashion accessory and gifting.


Marriage and festival season are peak seasons.                      Wearability and gifting dimensions are distributing demand
                                                                    throughout the year.

22 karat jewelry                                                    Acceptance of jewelry of lower karatage, particularly in studded
                                                                    jewelry.

Dependence on the family jeweler in the locality.                   Growing interest in brands which personify quality and trust.


Traditional and ethnic designs.                                     Demand for fashionable, lightweight and innovative designs.


Predominantly ‘gold-based’ jewelry (particularly yellow gold)       Growing interest in white gold and newer precious metals such
                                                                    as platinum, diamond studded jewelry is also generating
                                                                    significant interest across the country.



Reliance on local jeweler’s reputation / trust in local jeweler’s   Introduction of objective means of quality measurements
stated karatage.                                                    through certification and guarantees.


Jewelry largely sold on the basis of prevailing gold price per      Jewelry is being sold at a fixed price basis (maximum retail
gram with additional mark-ups for making charges and profit         price) by branded players.
margins.
          BRANDING – THE NEW MANTRA


Indian consumers are becoming ‘ brand conscious’ and are
willing to pay significant premiums for purchasing branded
products.

Large-scale marketing and branding campaigns by large
diamond marketing companies and industry associations
have created brands that in many ways kick started the
branding trend in the country.
  Nakshatra
  Gold Expression
  Sangini
  USD Billion   A representation of rising income levels in India




  Increasing disposable incomes and the rising number of
affluent/high net worth individuals (HNIs) in the country have
     opened up the market for high-end premium brands.
                                                           Source : KPMG Analysis
        BRANDING AS AN EMERGING TREND


Industry has seen two distinct ‘branding’ waves

   Company level
     in an effort to maximize margins and tap target markets

   Industry level
      pushed by large upstream players for market expansion and
       demand generation
               BENEFITS OF BRANDING

Increasing awareness and interest in the minds of consumers towards
‘jewelry’ as a whole

Preventing commoditization
  branding guards against the erosion of the cardinal value
   proposition of jewelry – its linkages with traditional values and
   emotional expression

Impact on consumer confidence
  branding fulfills the necessary function of demystifying the
   process of purchasing jewellery including quality parameters to
   watch out for

Impact on retail margins
  given that the added value of brands in other luxury goods
   categories (such as watches and perfumes) ranges between a
   whopping 70-90% the jewellery industry has a lot to catch up
            INCREASING TRANSPARENCY

          Vicious circle of low transparency – low growth.




Lack of transparency has constrained the industry from growing fast.

An aversion to transparency has meant that companies have missed
out on access to relatively cheaper capital by not accessing equity
markets.
BUILDING ENTERPRISE CAPABILITIES




  Strategic & Business Planning
  Capabilities
                                      Rising capital
  Strategic sourcing capabilities
                                      Managing financial & operational
                                      Risks
  Managing mergers acquisitions
  & alliances
                                      Managing operational costs
  Marketing capabilities    Grow the
                            Jewelry
  Technology & Product       Market Defining robust organization
  innovation.                         modules

  Managing Supply Chain               Sourcing & Managing Talent

  Adopting best practices             Managing Processes
                    Growing the Jewelry market involves undertaking initiatives
                                 at a Consumer & Industry level


    1                                                                                    4
        Promote jewelry as                                            Enhance image of
            a Category                                                   the Industry



                                                                                                 5
                                                                               Enhance talent
                                                                                  supply
2
Identify new products                       Grow the               Industry
& Consumer segments
                             Consumer
                              end           Jewelry                   end
                                             Market                                              6
                                                                              Reduce financing
                                                                                    Cost



    3                                                                                           7
        Manage a portfolio                                        Professionalize and transform
           of markets
                                                                    family owned businesses
                                 CURRENT SCENARIO



                                                            Jewelry
                                                         Authentication




       Assaying & Hallmarking         Gemstones & Diamond Verification /             Mobile Laboratory
                                                Certification



                             Own      Loose                                 Portable equipment for Hallmarking /
        Platinum   Silver                         Mounted       Education
Gold                        Coinage   Stones                                   Assaying / Diamond Grading
                                                  Jewelry        to Trade
                                                                     &       in mounted form at Jeweler’s end
                                                                Consumers
             DEFINING THE SERVICES


Assaying – Purity of the precious metal is ascertained.

Hallmarking – Marking of the tested metal.
                    OUR PROPOSAL


Merger of the two services that will meet the Authentication
needs of mounted jewelry
  Hallmarking of precious metals and
  Analysis of gem stones in jewelry mountings

Mobile Laboratory
  Grading & Hallmarking will be done at the jewelers end
   whereby eliminating the logistics of to and fro transportation /
   security concerns
    INDUSTRY STANDARDS, CERTIFICATION
              & HALLMARKING

By & large jewellery industry indifferent to the adoption &
establishment of formal or informal industry standards

However, a growing industry with more & more global business
transactions, a need has arisen for establishing standards.

India which is one of the largest markets for precious jewelry,
quality standards are conspicuous by their absence.

The Indian government has made hallmarking mandatory
by 2008

Industry will see an increasing level of adoption of hallmarking
in gold and certification in gemstones
                   CURRENT STATUS


Diamonds
 Customers do not usually demand certification of small diamonds,
  as it is not cost-efficient.
 Larger stones are increasingly being sold along with certificates of
  authenticity.
 Consumers in US & Europe rely on certified diamonds and diamond
  studded jewelry.

Jewelry
 Customers do not demand hallmarking for low end jewelry
 Customers in Europe & US are more ‘insistent’ on hallmarking of
  jewelry than customers in India
WHY HALLMARKING AND ASSAYING SERVICE?

Precious metals used in jewelry and giftware are always used as an alloy
mainly gold

The most experienced jeweler or chemist cannot tell how much precious
metal is there in an alloy

High price of precious metals offers a huge opportunity for fraud

To protect the public & honest suppliers from those who are tempted to
cheat them

Hallmarking is mandatory in various countries across the world like UK

India being the largest consumer of gold jewelry, the government of India
has declared the hallmarking of precious metals to be mandatory from
2008 onwards

Hallmarking & Authenticity services can mint their own coins for public
consumption.
          CURRENT PLAYERS / COMPETITION
Place             No. of Centers
Mumbai            5
New Delhi         5
Kolkata           3
Trichur           3
Chennai           4
Coimbatore        3
Surat             1
Rajkot            1
Vizag             1
Calilut           2
Cochin            5
Pune              1
Baroda            1
Ahmedabad         2
                                   As per BIS figures
Hyderabad         1
                                   number there are
Bangalore         1
                                   40 Hallmarking Centers
Kanpur            1
                                   across the country
                 INFRASTRUCTURE

Manpower & Training
Assaying and Lab training as well as manpower will be
provided by the consultant

Place
Space required is ideally around 1000 sq.ft.
              WORKINGS OF AN ASSAYING &
                HALLMARKING CENTRE
List & Cost of Equipments
Particulars                       Rate (INR)     Nos.   Amount (INR)
XRF Analyzer                         1,900,000      2       3,800,000
Laser Maker-5markings per piece      1,900,000      1       1,900,000


Analytical Balance                    3,00,000      3        9,00,000
Cupellation (Assaying) Furnace        1,00,000      2        2,00,000

Melting Furnace                       1,00,000      1        1,00,000
Annealing Furnace                     1,00,000      1        1,00,000
Scrubber for Flu Gases                1,00,000      1        1,00,000
Miscellaneous Consumables             3,00,000      1        3,00,000

Air Conditioners                        25,000      4        1,00,000
Computers                                           2          50,000
CCTV                                                4          50,000
Biometric System/Metal Detector                                50,000
One time BIS License Fees                                    1,00,000
Consultant/Turn Key Operator                                 2,50,000
Furnishing & Interiors                                       5,00,000
Total                                                       85,00,000
                             BUSINESS PROJECTIONS


Business Model      Revenue       Investment    Expenses      Gross        Output
                    (INR)         (INR)         (INR)         Profit       per day
                                                              (INR)        pcs.
Case I (Conservative Output)

Operating in         21,600,000     7,000,000    12,060,000    2,540,000       800
1Shift

Operating in         43,200,000     7,000,000    20,340,000 15,860,000       1,600
2 Shifts
Case II (Realistic Output)

Operating in         32,400,000     7,000,000    12,060,000 13,340,000       1,200
1Shift

Operating in         64,800,000     7,000,000    20,340,000 37,460,000       2,400
2 Shifts


                  Projected Income after 5 years
     WHY CERTIFICATION & INFORMATION
            OF GEM STONES?

Prices of gem stones are quality sensitive.
  1carat diamond can cost anywhere from INR 0.1million –
    0.6 million.
  while the size of the diamond is the same the quality is what
    makes the difference.

The most experienced jeweler or manufacturer does not
have the expertise to differentiate the quality of the gem stones.

Hence, the importance of an independent gemological
laboratory for certifying and educating the various public in the
value chain of the international standards of gem stones
       WORKINGS OF A GEM STONE LABORATORY
           AND A TRAINING CENTRE


Gem stone Laboratory entails
    Grading and analysis of loose gem
     stones & diamonds
    Grading and analysis of mounted
     jewelry
    Training courses in gem stones and
     jewelry
               CERTIFICATION UNIT


Certification Unit involves certification of :
  loose stones (Gemstones & Diamonds)
  mounted Jewelry - Melle sizes
  identification of treatments to enhance gem stones &
    diamonds

To start with we shall offer only services for grading mounted
 jewelry

Costing of the services of the mounted Jewelry - Melle sizes
  This part of the service is not machinery intensive more
   important is the human resource and expertise rendered by
   them
        COSTING OF CERTIFICATION UNIT


The main equipment for the identification process
is the microscope
Each microscope costs USD 2,500 (INR 1,15,000)

10 Gemologists would require 10 microscopes costing
USD 25, 000 (INR 11,50,000)


5sets of mounted color master sets each
costing USD 2,000 (INR 90,000) i.e.. USD 10,000 (INR 4,50,000)

Other Equipment USD 15,000 (INR 6,75,000)
         Let’s help create
A Unique One- Stop-Shop for all the
   Authentication needs of the
     Gems & Jewelry Industry

								
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