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Project Proposal
Setting up an
Authenticity Centre
for Gold & Mounted Jewelry
By Tehmasp Printer
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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 transparencypromoting hallmarking and encouraging consumer activism in
matters related to quality, purity, certification etc.
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STRENGTHS
Cash in on the trust placed on the Parsi community for its
integrity, honesty, dedication & commitment.
Professional expertise available in the Authenticity services
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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
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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 reachingchanges across the value chain.
Fascinating industry traditional on one hand glamorous onthe other.
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KEY INDUSTRY SEGMENTS
Diamonds Diamond studded jewelry is the largest
segment estimated @ USD 69billion
Gold Primary use is in jewelry fabrication whichaccounted 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
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0
40
80
120
160
200
Others 5.4 5.3 5.6 5.9 6.5 7.3
Plain Platinum Jewelry 7.3 7.1 8.0 9.1 9.5 9.0
Plain Gold Jewelry 46.4 41.5 44.4 46.3 54.0 60.7
Diamond Jewelry 54 56.7 59.5 62.5 65.7 68.9
2000 2001 2002 2003 2004 2005
113 111 118124
136 146 5.2%
6.4%
4.4%
5.5%
5.0%
USDB
illion
GLOBAL : GROWTH IN JEWELRY RETAIL SALES
CAGR
(2000-2005)
World jewelry sales grew at a steady pace
CAGR : Compounded Annual Growth Rate Source : KPMG Analysis
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0
2
4
6
8
10
12
14
7.49 7.16 6.4 7.4 9.9 12.2
2000 2001 2002 2003 2004 2005
10.20%
USD
Billion
INDIA :GROWTH IN RETAIL SALES OF JEWELRY
CAGR
(2000 2005)
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
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GLOBAL & INDIAN BREAKUP OF INDUSTRY - 2005
Global India
Plain gold
jewelry
42%
Others
5%
Diamondjewelry
47%
Plain
Platinum
jewelry
6%
Diamond
jewelry
12%
Others
5%
Plain gold
jewelry
83%
Plain
Platinum
jewelry
0%
Source : KPMG Analysis
% Market Share of various jewelry segments
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5 5 7
2005 2010 2015
45 58
77
2005 2010 2015
U.S.
1221
37
2005 2010 2015
12 9 8
2005 2010 2015
1318
24
2005 2010 2015
13
2743
2005 2010 2015
35
49
66
2005 2010 2015
4 712
2005 2010 2015
7 7 6
2005 2010 2015
U.K. Turkey China
Japan
Italy
Middle EastIndia
RoW
CHANGES IN RETAIL JEWELRY SALES IN KEY MARKETS(USD bi l l ion )
2005
2010
2015
Source : KPMG Analysis
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INDIAN JEWELRY MARKET A SNAPSHOT
Indian consumers increasing penchant for diamond jewelry andthe 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 of19% in 2005
Largest player in the polished diamond industry 57% of worldproduce
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 anumber of advantages such as
cheap skilled labor,
large domestic demand for jewelry &
an added advantage of being the largest producer ofpolished diamonds.
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Indias share of world jewelry production output
in value terms (2005)
RoW
86%
India
14%
INDIA: WORLD JEWELRY FABRICATION SHARE
Source : KPMG Analysis
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Established Presence Emerging Centre / Markets
Mining Processing Fabrication Consumption
Diamond Gold
Platinum Others
GEMS & JEWELRY VALUE CHAIN - INDIAS PRESENCE
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INDIAN RETAIL LANDSCAPE
Traditionally dominated by small scale local players is rapidlymoving 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 thischange.
The increasing levels of consumer sophistication, both in terms ofdesign & product demand as well as a general orientation towards
gemstone certification
jewellery hallmarking
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Experimentation with new retail formats.
Increased emphasis on branding and marketing
Value addition in jewellery will increase due to penetrationof brands
Growth of e-retail in India. Most online jewellery purchases
fall in the 18-35year age group.
INDIAN RETAIL LANDSCAPE
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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 studdedjewelry.
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 suchas platinum, diamond studded jewelry is also generating
significant interest across the country.
Reliance on local jewelers reputation / trust in local jewelersstated karatage.
Introduction of objective means of quality measurements
through certification and guarantees.
Jewelry largely sold on the basis of prevailing gold price per
gram with additional mark-ups for making charges and profit
margins.
Jewelry is being sold at a fixed price basis (maximum retail
price) by branded players.
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BRANDING THE NEW MANTRA
Indian consumers are becoming brand conscious and arewilling to pay significant premiums for purchasing branded
products.
Large-scale marketing and branding campaigns by largediamond marketing companies and industry associationshave created brands that in many ways kick started the
branding trend in the country.
Nakshatra
Gold Expression
Sangini
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2328.7 31
22.1
30.433.95.5
12.314.9
0
10
20
30
40
50
60
70
80
90
1996 2002 2005
Low Income Mass Affluents High Income Groups
USD
Billion
A representation of rising income levels in India
Increasing disposable incomes and the rising number ofaffluent/high net worth individuals (HNIs) in the country have
opened up the market for high-end premium brands.
Source : KPMG Analysis
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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
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BENEFITS OF BRANDING
Increasing awareness and interest in the minds of consumers towardsjewelry as a whole
Preventing commoditization
branding guards against the erosion of the cardinal valueproposition of jewelry its linkages with traditional values andemotional expression
Impact on consumer confidence
branding fulfills the necessary function of demystifying the
process of purchasing jewellery including quality parameters towatch 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 awhopping 70-90% the jewellery industry has a lot to catch up
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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 missedout on access to relatively cheaper capital by not accessing equity
markets.
BUILDING ENTERPRISE CAPABILITIES
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BUILDING ENTERPRISE CAPABILITIES
Strategic & Business Planning
Capabilities
Strategic sourcing capabilities
Managing mergers acquisitions
& alliances
Marketing capabilities
Rising capital
Managing financial & operational
Risks
Managing operational costs
Technology & Product
innovation.
Managing Supply Chain
Adopting best practices
Defining robust organization
modules
Sourcing & Managing Talent
Managing Processes
Grow the
Jewelry
Market
Growing the Jewelry market involves undertaking initiatives
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Grow theJewelry
Market
Industry
end
Promotejewelry as
a Category
Growing the Jewelry market involves undertaking initiatives
at a Consumer & Industry level
Consumer
end
Identifynew products
& Consumer segments
Manage a portfolio
of markets
Enhance image of
the Industry
Enhance talent
supply
Reduce financing
Cost
Professionalize and transform
family owned businesses
1
2
3
4
5
6
7
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CURRENT SCENARIO
Jewelry
Authentication
Assaying & Hallmarking Mobile LaboratoryGemstones & Diamond Verification /
Certification
Gold Platinum SilverOwn
Coinage
Loose
StonesEducation
to Trade
&
Consumers
Mounted
Jewelry
Portable equipment for Hallmarking /
Assaying / Diamond Grading
in mounted form at Jewelers end
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DEFINING THE SERVICES
Assaying Purity of the precious metal is ascertained.
Hallmarking Marking of the tested metal.
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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
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By & large jewellery industry indifferent to the adoption &establishment of formal or informal industry standards
However, a growing industry with more & more global businesstransactions, 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
INDUSTRY STANDARDS, CERTIFICATION
& HALLMARKING
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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 ofauthenticity.
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 ofjewelry than customers in India
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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 preciousmetal 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 tocheat them
Hallmarking is mandatory in various countries across the world like UK
India being the largest consumer of gold jewelry, the government of Indiahas declared the hallmarking of precious metals to be mandatory from
2008 onwards
Hallmarking & Authenticity services can mint their own coins for publicconsumption.
CURRENT PLAYERS / COMPETITION
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CURRENT PLAYERS / COMPETITION
As per BIS figures
number there are
40 Hallmarking Centers
across the country
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 1Baroda 1
Ahmedabad 2
Hyderabad 1
Bangalore 1
Kanpur 1
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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 &
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WORKINGS OF AN ASSAYING &
HALLMARKING CENTRE
List & Cost of EquipmentsParticulars Rate (INR) Nos. Amount (INR)
XRF Analyzer 1,900,000 2 3,800,000Laser 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 5,00,000Total 85,00,000
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BUSINESS PROJECTIONS
Business Model Revenue
(INR)
Investment
(INR)
Expenses
(INR)
Gross
Profit
(INR)
Output
per day
pcs.
Case I (Conservative Output)
Operating in1Shift 21,600,000 7,000,000 12,060,000 2,540,000 800
Operating in
2 Shifts
43,200,000 7,000,000 20,340,000 15,860,000 1,600
Case II (Realistic Output)
Operating in1Shift
32,400,000 7,000,000 12,060,000 13,340,000 1,200
Operating in
2 Shifts
64,800,000 7,000,000 20,340,000 37,460,000 2,400
Projected Income after 5 years
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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 whatmakes 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
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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
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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 moreimportant is the human resource and expertise rendered by
them
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COSTING OF CERTIFICATION UNIT
The main equipment for the identification processis 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)
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Lets help create
A Unique One- Stop-Shop for all the
Authentication needs of theGems & Jewelry Industry