INTERNSHIP PROJECT FIRST DRAFT

AVR SWARNA MAHAL JEWELLERY PVT LTD

JEWELLERY INDUSTRY PROFILE:
BACKGROUND OF THE INDUSTRY:
History of Indian jewellery is as old as the history of the country itself. India has a glorious
history which affects each and every aspect of Indian lifestyle. Jewellery has always
remained an integral part of the Indian lifestyle. The diverse history of India has great
influence on the jewellery styles as well. Indian jewellery history goes back to almost 5000
years. Ever since pre-historic times India people had a penchant for adorning themselves with
Jewellery especially women. Gold, silver, stones, gems, etc. are the defining aspects of Indian
jewellery. The attraction for jewellery has been great in India that it is no more a craft than an
art.

Indian jewellery industry is unique in its design and workmanship. The range of jewellery in
India varies from religious to purely aesthetic types. It is crafted not only for humans, but also
for the Gods, ceremonial elephants and horses. Royal class people have given patronage to
the art of jewellery since ancient times, when rajas and maharajas vied with each other to
possess the most exquisite and magnificent pieces. Regional differences can be observed in
the making of jewellery, depending on the differences in geography, people, culture, and their
lifestyle.
It is also the largest consumer of gold jewellery in the world with 29 percent share of
the total global demand for gold as jewellery. While the designs in solid gold jewellery of
Tamil Nadu and Kerala are inspired by nature, the Meenakari and Kundan styles of jewelry
making have been influenced by the Mughal dynasty. Then there is a huge range of silver
beads found all over India, especially in Rajasthan, Gujarat, Madhya Pradesh and Himachal
Pradesh. Their availability lead to the development of the bead jewellery, popular till date.
While Assamese jewellery is influenced by local flora and fauna, Manipuri jewellery-makers
make use of items like shells, animal claws, teeth and precious and semi-precious stones.
These huge varieties of ornaments bear testimony to the excellent skill of the jewellers and
craftspeople of the country. Indian jewellery in Gold, diamonds, silver, sterling silver,
precious stones and semi-precious stones is a rage all over the world.
BRIEF HISTORY:
Before the liberalization of the Indian economy in 1991, only the Minerals and
Metals Trading Corporation of India (MMTC) and the State Bank of India (SBI)
were allowed to import gold.The abolition of the Gold Control Act in 1992, allowed large
export houses to import gold freely. Exporters in export processing zones were allowed to
sell 10 percent of their produce in the domestic market. In 1997, overseas banks and bullion
suppliers were also allowed to import gold into India. These measures led to the entry of
foreign players like DeBeers,Tiffany and Cartiers into the Indian market. In the 1990s, the
number of retail jewellery outlets in India increased greatly due to the abolition of the Gold
Control Act. This led to a highly fragmented and unorganized jewellery market with an
estimated 100,000 workshops supplying over 350,000 retailers, mostly family owned, single
shop operations.In 2001, India had the highest demand for gold in the world; 855 tons were
consumed a year, 95% of which was used for jewellery.


CONTRIBUTION TO ECONOMY:
India's gems and jewellery industry is a bright star of the economy, and one of the important
foundations of the countrys export-led growth. Exports of Gems and jewellery make India
the second major foreign exchange earner for the country. As more money is flowing into the
industry, a new avenue is open for professionals to enter the field with changing taste and the
jewel is taking new shapes and charm. The industry has registered a remarkable growth over
the last four decades, with exports growing from USD 28 million in 1966-67 when the Gem
& Jewellery Export Promotion Council ( GJEPC) was established, to USD 42.84 billion in
FY 2011-12.

The gems and jewellery industry is crucial to the Indian economy given its role in large-scale
employment generation, foreign exchange earnings through exports, and value addition. It
contributes to 6% to 7% of the country's GDP, apart from large scale employment
generations and foreign exchange earnings. The industry provides direct employment to
roughly 2.5 million people and has the potential to generate employment of 0.71.5 million
over the next five years. This is comparable to the 2.1 million employments provided by IT
services and is 2.5 times that provided by basic iron and steel manufacturing and automotive
manufacturing. I n 20122013, the industry drove jewellery exports to the tune of INR
227,000 Cr, outperforming textiles and apparel exports by 25%. The industry also drove
value addition of more than INR 99,000 Cr to the economy.

However, one of the key inputs for the industry, gold, has been in focus due to almost
complete dependence on imports for supply and an expanding current account deficit (CAD).
As a result, regulatory action has been taken to limit gold imports. Gold has the second-
highest share in imports, increasing from 6% in 20022003 to 14 % in 2013-2014. The
increase in gold imports is largely driven by the spectacular growth in gold prices, with prices
moving from INR 5332 per 10 gm in 20022003 to INR 30000 per 10 gm in 20132014.


MARKET SIZE:
The domestic retail jewellery market size has been estimated by aggregation of individual
elements: gold, diamond, silver, platinum, and gemstones. The Indian jewellery market is one
of the largest in the world, with a market size of $13 billion. It is second only to the US
market of $ 40 billion and is followed by China at $11 billion. India consumes around 800
tonnes of gold that account for 20% of global gold consumption and nearly 600 tonnes is
used in jewellery making in the country. According to the study of KPMG the Indian
Jewellery Industry is estimated to be US$ 13.5 billion in fiscal 2006-07, accounts for 8.3 %
of the global jewellery sales.
Among the all retail sectors available in India like Food and grocery, Apparel, Consumer
electronics, Footwear etc Jewellery retail accounts for the market share of 33%.
The gems and jewellery industry in India caters to both domestic and export demand. The
Domestic gems and jewellery market of around INR 251,000 Cr in 20122013, with a
potential to grow to INR 500,000530,000 Cr by 2018. In addition, there is a large non-
jewellery domestic market of INR 103,000 Cr, which is primarily gold bars and coins. Over
the years, the market for gold bars and coins has grown in size from 134 tons in 2005 to 312
tons in 2012. Currently, demand for gold bars and coins in India contribute to 25 percent of
world demand.
The demand assessment highlights a previously unexplored facet of the industrythe
industry is clearly segmented into two parts, consumption and investment demand.
CONSUMPTION DEMAND:
The consumption demand accounts for around 55 percent of the total market demand. This
demand is led by the need for gold and non-gold jewellery that caters to specific wear
occasions and is essentially similar to that of a luxury product. The jewellery for consumption
demand typically requires high value addition and intricate design-led innovations.
INVESTMENT DEMAND:
Investment demand in either jewellery form or as bars and coins accounts for about 45
percent of the total market demand.

MAJOR PLAYERS:
In India the major retail stores are Tanishq, Reliance jewels, Rajesh Exports, Gitanjali gems,
Kirtilals, G.R.Thanga Maligai, Swarnamandir Jewel Designer etc and several unorganised
sectors.
In these Tanishq is the jewellery business group of Titan promoted by TATA which is one of
the largest, most desirable and fastest growing jewellery brand in India. In 2013 it has 150
stores in India and planned to open 33 new stores in the FY 2014. In 1994, Gili Jewellery was
established as a distinct brand by Gitanjali Jewels, soon after the abolition of the Gold
Control Act by the Indian government. Gili offered a wide range of 18-carat plain gold and
diamond -studded jewellery. Reliance jewels part of Mukesh Ambani led Reliance industries
has 51 stores all over India. Similarly, Joyalukkas has 42 stores and planned for pan-India
expansion for FY14. Rajesh Exports situated in Bangalore has 82 stores.
The Indian gems and jewellery market continues to be dominated by the unorganized sector.
There are over 2.5 million jewellery shops in India and most of them are family run.
However, with the Indian consumer becoming more aware and quality conscious, branded
jewellery is becoming very popular and the market for branded jewellery is likely to be worth
US$ 2.2 billion by 2010. With an increasing number of jewellery houses entering the branded
jewellery sector, retail of jewellery is becoming organized. Moreover, the government allows
51 per cent foreign direct investment in single brand retail outlets, attracting both global and
domestic players to this sector.

GOVERNMENT POLICIES & REGULATIONS:
The steps taken by the Indian Government to liberate Indian Gems & Jewellery sector in the
90's, is one of the important reason for the increase export contribution by this sector. The
liberalization has also resulted in shift from the unorganized to a more organised set of
players which resulted in greater transparency and adaption of higher quality and design
standards. The recent steps taken by Government to restrict import of gold is definitely
having a negative impact on Gems & Jewellery sector.
The Bureau of Indian Standards: This National Standards Body of India is
responsible for hall marking of gold jewellery and certification of its purity.

RECENT TRENDS/ HAPPENING IN THE INDUSTRY:
Penetration of the Organised Players- Organised retail constitutes 8% of the total retail
market and the same is expected to grow rapidly in the coming years in response to the
opening up of FDI in multi brand retail. Gem and Jewellery constitutes 6% of the total
organized retail.
Savings and Investment Tool- The consumers using of jewels as an savings and investment
tools has increased in recent times due to high return as other sectors like real estate and
financial market were not able to generate consistent returns.
CHALLENGES FOR THE INDUSTRY:
Dependence on Import- The gems and jewellery industry is highly dependent on
import for meeting its raw material requirements and India is also one of the largest
importer and consumer of silver in the world.
Fluctuations in Exchange Rate- Gems and Jewellery industry is influenced by the
rupee/dollar exchange rate because it is export & import oriented industry. Any variation in
the exchange rates affects the margins of the players. The currency devaluations also makes
the raw materials more expensive.
Changing Consumer Preference- Global marketing requires keeping pace with
changing fashion of Gems and Jewellery particularly in the context of very high prices of
diamond, gold and silver.
Insufficient coverage and communication by banks- Due to the import dependence and
limited recycling, there have been initiatives to encourage higher recycling such as the Gold
Deposit Schemes of State Bank of India, which targeted the retail customers. However, these
schemes had limited success due to insufficient coverage and communication, unattractive
scheme structure, and consumer inhibitions. The scheme is offered by only a handful of
banks. Of roughly 36 banks authorized to deal in gold only about 4 banks have taken up the
scheme as it was perceived as a non-core activity.
Impact of restrictive regulations- Given the significance of the industry to the nations
economy, it is important to assess the potential impact of regulations on employment,
exports, and value addition. For example, the recent regulatory measures to curb gold imports
that are aimed at reducing the current account deficit can potentially have negative
ramifications on employment. It is estimated that with every 100-ton reduction in domestic
jewellery sales, roughly 2.5 lakh employees in jewellery manufacture and jewellery retail
could potentially lose their jobs. Alternatively, there could be a rise in unofficial imports,
which will lead to higher levels of cash transactions for gold purchase in the domestic market
and a loss of tax earnings for the Government.