Tehmasp Printer Presentation

7/28/2019 Tehmasp Printer Presentation

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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



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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



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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.



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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

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