Presentation on theme: "Project Proposal Setting up an Authenticity Centre for Gold & Mounted Jewelry By Tehmasp Printer."— Presentation transcript:
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
113111 118 124 136 146 5.2% 6.4% 4.4% 5.5% 5.0% USD Billion 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
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
GLOBAL & INDIAN BREAKUP OF INDUSTRY - 2005 GlobalIndia Source : KPMG Analysis % Market Share of various jewelry segments
U.S. U.K. Turkey China Japan Italy Middle East India RoW CHANGES IN RETAIL JEWELRY SALES IN KEY MARKETS (USD billion) 2005 2010 2015 Source : KPMG Analysis
INDIAN JEWELRY MARKET – A SNAPSHOT Indian consumers 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.
Indias share of world jewelry production output in value terms (2005) INDIA: WORLD JEWELRY FABRICATION SHARE Source : KPMG Analysis
Established Presence Emerging Centre / Markets MiningProcessingFabricationConsumption Diamond Gold Platinum Others GEMS & JEWELRY VALUE CHAIN - INDIAS PRESENCE
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
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. INDIAN RETAIL LANDSCAPE
CHANGING TRENDS IN THE INDIAN RETAIL MARKET TRADITIONAL PRACTICEEMERGING TREND Jewelry considered an investment, particularly gold jewelryWearable 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 jewelryAcceptance 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 jewelers reputation / trust in local jewelers stated 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.
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.
Grow the Jewelry Market Industry end Promote jewelry as a Category Growing the Jewelry market involves undertaking initiatives at a Consumer & Industry level Consumer end Identify new 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
CURRENT SCENARIO Jewelry Authentication Assaying & Hallmarking GoldPlatinumSilver Own Coinage Mobile Laboratory Portable equipment for Hallmarking / Assaying / Diamond Grading in mounted form at Jewelers end Gemstones & Diamond Verification / Certification Loose Stones Education to Trade & Consumers Mounted Jewelry
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
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 INDUSTRY STANDARDS, CERTIFICATION & HALLMARKING
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 As per BIS figures number there are 40 Hallmarking Centers across the country PlaceNo. of Centers Mumbai5 New Delhi5 Kolkata3 Trichur3 Chennai4 Coimbatore3 Surat1 Rajkot1 Vizag1 Calilut2 Cochin5 Pune1 Baroda1 Ahmedabad2 Hyderabad1 Bangalore1 Kanpur1
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 ParticularsRate (INR)Nos.Amount (INR) XRF Analyzer1,900,00023,800,000 Laser Maker-5markings per piece1,900,0001 Analytical Balance3,00,00039,00,000 Cupellation (Assaying) Furnace1,00,00022,00,000 Melting Furnace1,00,0001 Annealing Furnace1,00,0001 Scrubber for Flu Gases1,00,0001 Miscellaneous Consumables3,00,0001 Air Conditioners25,00041,00,000 Computers250,000 CCTV450,000 Biometric System/Metal Detector50,000 One time BIS License Fees1,00,000 Consultant/Turn Key Operator2,50,000 Furnishing & Interiors5,00,000 Total85,00,000
BUSINESS PROJECTIONS Business ModelRevenue (INR) Investment (INR) Expenses (INR) Gross Profit (INR) Output per day pcs. Case I (Conservative Output) Operating in 1Shift 21,600,0007,000,00012,060,0002,540,000800 Operating in 2 Shifts 43,200,0007,000,00020,340,00015,860,0001,600 Case II (Realistic Output) Operating in 1Shift 32,400,0007,000,00012,060,00013,340,0001,200 Operating in 2 Shifts 64,800,0007,000,00020,340,00037,460,0002,400 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)
Lets help create A Unique One- Stop-Shop for all the Authentication needs of the Gems & Jewelry Industry