Survey on small scale bussiness of Gold in sagar city

SUBMITTED TO
For the partial fulfillment of the degree
Of
Masters of Business Administration
By

NAMRATA DEEWAN
(Y142820142)
MBA-1stsemester

Undre the Guidance of

Mr. Ashish Gupta
Assistant Professor

Department of Business Management

Dr. Hari Singh Gour Central University
Sagar (M.P.) India
Year 20114-15

DECLARATION BY CANDIDATE

I hereby declare that the project report titled Survey on small scale
bussiness of Gold in sagar city is my own work under the
supervision of Mr. Ashish Gupta (Assistant Professor), Department of
Business Management, Dr. Hari Singh Gour central university, Sagar. To
the best of my knowledge the report does not contain any work which has
been submitted for the award of any degree anywhere.

Namrata Deewan
MBA 2st sem. 34Batch
Roll No:-Y1428203
Department of Business Management
Dr H.S Gour central university, Sagar
(M.P.)

CERTIFICATE

This is to certify that the Project Report entitled Survey on small

scale business of Gold in sagar city has been successfully
completed by Namrata Deewan, student of MBA 2st sem. which is
presented for the partial fulfilment of Degree of Master of Business
Administration.
The work done has been carried to our entire satisfaction.

Signature of Supervisor

Signature
H.O.D

Signature of Examiner

of

ACKNOWLEDGEMENT
It is indeed of a great moment and pleasure to express my sense of profound
gratitude & in difference to all the people who have been instrumental in
making my project work a rich experience.
In the making of this project report, I have relied upon the valuable assistance
and help of several people without whom this report has not been possible.
I would like to pay my sincere thanks to Prof. Y.S.Thakur, Head of the
Department of Business management, Dr. Hari singh Gour Central
University Sagar for providing me the opportunity to work on project.
I also pay my heartiest thanks to my project guide Mr. Ashish Gupta
(Assistant Professor) for her valuable guidance & support. Without her help
I would not have completed my project report successfully.
I pay my heartiest thanks to my parents and friends for their kind support and
suggestion.

PREFACE
The Project work is field which uses tools and techniques to transfer
subjectivity in the environment into objectives, also the findings of the research,
when applied show results, which can be measured and evaluated so there is
feedback this is what makes it a dynamic activity.
This survey is an analytical study of different facts of the product versus price.
The focus is given on the Brand profile. This project is Survey on small
scale business of Gold in sagar city for the partial fulfilment of the
degree of Masters of Business Administration.
The idea behind this project is to give practical knowledge and to make them to
face real life situation. The project survey is commonly used for the collection
from the respondents through questionnaire. In this method statistical
techniques have been used systematically. This project survey is not only with
my own efforts but also that of others.

Namrata Deewan
MBA 2stsem

TABLE OF CONTENTS
COVER PAGE
NO.

PAGE

DELCELARATION

CERTIFICATE

II

ACKNOWLEDGEMENT

III

PREFACE

IV

TABLE OF CONTENTS

CHAPTER 1 INTRODUCTION

1-6

1.1.SMALL SCALE INDUSTRY

1.2.SMALL SCALE BUSINESS IN SAGAR CITY
1.3.BRICK KILNS INTRODUCTION AND OVERVIEW
CHAPTER II BUSINESS LOCATION AND PROFIT MARGIN
2.1

BRICK MAKING PROCESS

2.2

MARKETING MIX

7-12

CHAPTER III RESEARCH METHODOLOGY

13

(A)

OBJECTIVE OF THE STUDY

14

(B)

SAMPLING PLAN

15

(C)

TYPE OF SOURCE OF DATA

(D)

DATA COLLECTION METHOD

17

(E)

LIMITATION OF THE STUDY

18

CHAPTER IV DATA ANALYSIS AND INTERPRETATION

16

19-28

CHAPTER V FINDING AND SUGGESTIONS

29

CHAPTER VI CONCLUSION

30

BIBILIOGRAPHY

31

ANEXURE

32-52

1. INTRODUCTION
Trading on derivatives first started to protect farmers from the risk of their
values against fluctuations in the price of their crop. From the time it was sown to the time it
was ready for harvest, farmers would face price uncertainty. Through the use of simple
derivative products the farmers can transfer their risk (i.e. fully or partially) by locking the
price of their products. This was developed to reduce the risk of the farmers. Lets take an
example when a farmer who sowed his crop in June which he would receive his harvest in
September may face uncertainty in prices over the period because of the oversupply they are
selling at a very low cost.
In 1848, the Chicago Board of Trade (CBOT) was established to bring farmers
and merchants together. A group of traders got together and created the `to-arrive' contract
that permitted farmers to lock in to price upfront and deliver the grain later. Today, derivative
contracts exist on a variety of commodities such as corn, pepper, cotton, wheat, silver, etc.
Besides commodities, derivatives contracts also exist on a lot of financial underlying like
stocks, interest rate, exchange rate, etc.
Due to the high volatility in Financial Market with high risk & low rate of
return had made investors to choose alternate investments such as Bullion market in
Commodity market. In India gold has traditionally played a multi-faceted role. Apart from
being used for armament purpose, it has also served as an asset of the last resort and a hedge
against inflation and currency depreciation. But most importantly, it has most often been
treated as an investment.
Many people have become very rich in commodity markets. It is one of the
areas where people can make extraordinary profits within a short span of time. For example,
Richard Dennis borrowed $1600 and turned it into a $200 million fortune in about ten years.
Definition of Derivatives: A derivative is a product whose value is derived from value of
one or more underlying assets or variables in a contractual manner. The underlying asset can
be equity, forex, commodity or any other assets.
For example: A wheat farmers may wish to sell their harvest at a future date to
eliminate the risk of a change in prices by that date.
The Forwards Contracts (Regulation) Act, 1952, regulates the forward/ futures
contracts in commodities all over India. However when derivatives trading in securities was

introduced in 2001, the term security in the Securities Contracts Regulation Act, 1956
(SCRA), was amended to include derivative contracts in securities.
Products and participants:
Derivative contracts are of different types. The most common ones are forwards, futures,
options and swaps. Participants who trade in the derivatives market can be classified under
the following three broad categories - Hedgers, Speculators, and Arbitragers.
1. Hedgers: Hedgers face risk associated with the price of an asset. They use the
futures or options markets to reduce or eliminate this risk.
2. Speculators: Speculators are participants who wish to bet on future movements in
the price of an asset. Futures and options contracts can give them leverage; that is, by putting
in small amounts of money upfront, they can take large positions on the market. As a result of
this leveraged speculative position, they increase the potential for large gains as well as large
losses.
3. Arbitragers: Arbitragers work at making profits by taking advantage of discrepancy
between prices of the same product across different markets. If, for example, they see the
futures price of an asset getting out of line with the cash price, they would take offsetting
positions in the two markets to lock in the profit.
Spot versus forward transaction:
Let us try to understand the difference between spot and derivatives contract.
Every transaction has three components like trading, clearing and settlement. A buyer and
seller come together, negotiate and arrive at a price this is trading. Clearing involves finding
out the net outstanding, that is exactly how much of goods and money the two should
exchange.
For example A buys goods worth Rs.1000 from B and sells goods worth Rs.400 to
B. On a net basis A has to pay Rs.600 to B. Settlement is the actual process of
exchanging money and goods.
In a spot transaction, the trading, clearing and settlement happens immediately,
i.e. on the spot. For example on 1March 2009, Suman wants to buy some gold. The goldsmith
quotes Rs.15000 per 10 grams. They agree upon this price and Suman buys 20grams of gold.
He pays Rs.30000 to the goldsmith and collects his gold. This is a spot transaction.
Now suppose Suman does not want to buy the gold on the 1 March, but wants
to buy it a month later. Then the goldsmith quotes Rs.15050 per 10 grams. They agree upon
the forward price for 20 grams of gold that Suman wants to buy and Suman leaves. A month
later, he pays the goldsmith Rs.30100 and collects his gold. This is a forward contract, a
contract by which two parties permanently agree to settle a trade at a future date, for a stated

price and quantity. No money changes hands when the contract is signed. The exchange of
money and the underlying goods only happens at the future date as specified in the contract.
In a forward contract the process of trading, clearing and settlement does not happen
immediately. The trading happens today, but the clearing and settlement happens at the end of
the specified period.
A forward is the most basic derivative contract. We call it a derivative because it
derives value from the price of the asset underlying the contract, in this case gold. If on the
1st of April, gold trades for Rs.15100 in the spot market, the contract becomes more valuable
to Suman because it now enables him to buy gold at Rs.15050. If however, the price of gold
drops down to Rs.15000, he is worse off because as per the terms of the contract, he is bound
to pay Rs.15050 for the same gold. The contract has now lost value from Sumans point of
view. Note that the value of the forward contract to the goldsmith varies exactly in an
opposite manner to its value for Suman.
Commodity trading in India:
The history of organized commodity derivatives in India goes back to the
nineteenth century when the Cotton Trade Association started futures trading in 1875, barely
about a decade after the commodity derivatives started in Chicago. Over time the derivatives
market developed in several other commodities in India. Following cotton, derivatives
trading started in oilseeds in Bombay (1900), raw jute and jute goods in Calcutta (1912),
wheat in Hapur (1913) and in Bullion in Bombay (1920). However, many feared that
derivatives lead to unnecessary speculation in essential commodities, and were harmful to the
healthy functioning of the markets for the underlying commodities, and also to the farmers.
With a view to restricting speculative activity in cotton market, the Government of Bombay
prohibited options business in cotton in 1939. Later in 1943, forward trading was prohibited
in oilseeds and some other commodities including food-grains, spices, vegetable oils, sugar
And cloth. After Independence, the Parliament passed Forward Contracts (Regulation) Act,
1952 which Regulated forward contracts in commodities all over India. The Act applies to
goods, which are defined as any movable property other than security, currency and
actionable claims. The Act prohibited Options trading in goods.
The Act envisages (imagine) three-tier regulation:
1

The Exchange which organizes forward trading in commodities can regulate

trading on a day-to-day basis,

The Forward Markets Commission provides regulatory oversight under the

powers delegated to it by the central Government,

The Central Government - Department of Consumer Affairs, Ministry of

Consumer Affairs, Food and Public Distribution - is the ultimate regulatory
authority.

In 1970s and 1980s the Government relaxed forward trading rules for some commodities.
I

Multi-Commodity Exchange of India Limited (MCX)

MCX an independent multi-commodity exchange has permanent recognition

from Government of India for facilitating online trading, clearing and settlement operations
for commodity futures markets across the country. Key shareholders of MCX are Financial
Technologies (India) Ltd., State Bank of India, NABARD, NSE, HDFC Bank, State Bank of
Indore, State Bank of Hyderabad, State Bank of Saurashtra, SBI Life Insurance Co. Ltd.,
Union Bank of India, Bank Of India, Bank Of Baroda, Canara Bank, Corporation Bank.
Headquartered in Mumbai, MCX is led by an expert management team with deep domain
knowledge of the commodity futures markets. Through the integration of dedicated resources,
robust technology and scalable infrastructure, since inception MCX has recorded many first
to its credit.
Inaugurated in November 2003 by Shri Mukesh Ambani, Chairman &
Managing Director, Reliance Industries Ltd, MCX offers futures trading in the following
commodity categories: Agri Commodities, Bullion, Metals- Ferrous & Non-ferrous, Pulses,
Oils & Oilseeds, Energy, Plantations, Spices and other soft commodities. MCX has built
strategic alliances with some of the largest players in commodities eco-system, namely,
Bombay Bullion Association, Bombay Metal Exchange, Solvent Extractors' Association of
India, Pulses Importers Association, Shetkari Sanghatana, United Planters Association of
India and India Pepper and Spice Trade Association.
Today MCX is offering spectacular growth opportunities and advantages to a
large cross section of the participants including Producers / Processors, Traders, Corporate,
Regional Trading Centers, Importers, Exporters, Cooperatives, Industry Associations,
amongst others MCX being nation-wide commodity exchange, offering multiple
commodities for trading with wide reach and penetration and robust infrastructure, is well
placed to tap this vast potential.

Active Contracts Traded in MCX

S.N

COMMODITIY

NAME

Price/Unit

Trading

Delivery Center

Lot

Multiplie

Initial

Margin
%

GOLD

Rs /

1 KG

MUMBAI

100

100Gms

MUMBAI

10

8Gms

MUMBAI

14.5

10Gms
2

GOLDM

Rs /
10Gms

GOLD GUINEA

Rs/ 8Gms

/AHMEDABAD
4

SILVER

RS/ KG

30 KG

AHMEDABAD

30

SIVERM

Rs / 1 KG

5 KGS

AHMEDABAD

MENTHA OIL

Rs/KG

360 KG

CHANDAUSI

360

11

KAPASIA

Rs/50 KG

10 MT

AKOLA

200

6.5

KHALLI
8

ALUMINIUM

Rs/KG

5 MT

MUMBAI

5000

COPPER

Rs/KG

1 MT

MUMBAI

1000

12

10

NICKEL

RS/KG

250 KG

MUMBAI

250

15.5

11

ZINC

RS/KG

5000 KG

MUMBAI

5000

11

12

LIGHT SWEET

Rs/Barrel

100/Barrel JNPT-MUMBAI

100

12

CRUDE OIL

Definition:
The official definitions of a small scale unit are as follows:
(i) Small-Scale Industries:
These are the industrial undertakings having fixed investment in plant and
machinery, whether held on ownership basis or lease basis or hire purchase
basis not exceeding Rs. 1 crore.
Characteristics of Small-Scale Industries:
(i) Ownership:
Ownership of small scale unit is with one individual in soleproprietorship or it can be with a few individuals in partnership.
(ii) Management and control:
A small-scale unit is normally a one man show and even in case
of partnership the activities are mainly carried out by the active
partner and the rest are generally sleeping partners. These
units are managed in a personalized fashion. The owner is
activity involved in all the decisions concerning business.
(iii) Area of operation:
The area of operation of small units is generally localized
catering to the local or regional demand. The overall resources
at the disposal of small scale units are limited and as a result of
this, it is forced to confine its activities to the local level.
(iv) Technology:

Small industries are fairly labour intensive with comparatively

smaller capital investment than the larger units. Therefore,
these units are more suited for economics where capital is
scarce and there is abundant supply of labour.

(v) Gestation period:

Gestation period is that period after which teething problems
are over and return on investment starts. Gestation period of
small scale unit is less as compared to large scale unit.
(vi) Flexibility:
Small scale units as compared to large scale units are more
change susceptible and highly reactive and responsive to socioeconomic conditions.
They are more flexible to adopt changes like new method of
production, introduction of new products etc.
(vii) Resources:
Small scale units use local or indigenous resources and as such
can be located anywhere subject to the availability of these
resources like labour and raw materials.
(viii) Dispersal of units:
Small scale units use local resources and can be dispersed over
a wide territory. The development of small scale units in rural

and backward areas promotes more balanced regional

development and can prevent the influx of job seekers from
rural areas to cities.
Objectives of Small Scale Industries:
The objectives of small scale industries are:
1. To create more employment opportunities with less
investment.
2. To remove economic backwardness of rural and less
developed regions of the economy.
3. To reduce regional imbalances.
4. To mobilise and ensure optimum utilisation of unexploited
resources of the country.
5. To improve standard of living of people.
6. To ensure equitable distribution of income and wealth.
7. To solve unemployment problem.
8. To attain self-reliance.
9. To adopt latest technology aimed at producing better quality
products at lower costs.

1.2 Small business

Small

businesses are

normally

privately

owned corporations, partnerships, or sole proprietorships. What

businesses are defined as "small" in terms of government
support and tax policy varies depending on the country and
industry. Small businesses range from 15 employees under

the Australian Fair Work Act 2009, 50 employees according to

the definition used by the European Union, and fewer than 500
employees

to

qualify

Administration programs.

for

many

Small

U.S. Small

businesses

can

Business
also

be

classified according to other methods such as sales, assets, or

net profits.
Small businesses are common in many countries, depending on
the economic system in operation. Typical examples include:
convenience

stores,

other

small

shops

(such

as

a bakery or delicatessen), hairdressers, tradesmen, lawyers,

accountants, restaurants,guest houses, photographers, smallscale manufacturing, and online businesses, such as web
design and programming, etc.
Characteristics of small businesses
Researchers

and

analysts

of

small

or

owner-managed

businesses generally behave as if nominal organizational forms

(e.g.,

partnership,

consequent

legal

sole-trader
and

or

accounting

corporation)
boundaries

and
of

the

owner-

managed firms are consistently meaningful. However, ownermanagers often do not delineate their behavior to accord with
the implied separation between their personal and business
interests. Lenders also often contract around organizational
(corporate) boundaries by seeking personal guarantees or
accepting privately held assets as collateral. [1] Because of this
behavior, researchers and analysts should reject the relevance
of the organizational types and implied boundaries in many
contexts relating to owner-managed firms. These include
analyses that use traditional accounting disclosures, and

studies that view the firm as defined by some formal

organizational structure.

Active Contracts Traded in NCDEX

S.N

COMMODITIY

Price/Uni

Trading

Delivery

Multiplie

Initial

NAME

Lot

Center

Margin
%

PURE KILO

Rs /

1 KG

MUMBAI

100

GOLD

10Gms

PURE SILVER

Rs / 1 KG

30 KGS

DELHI

30

18

SILVER 5 (mini

Rs / 1 KG

5 KG

DELHI

GOLD 100 (mini

Rs / 10

100

MUMBAI

10

Lot)

Gms

Gms

JEERA

Rs /

3 MT

UNJHA

30

1 MT

KOCHI

10

15

10 MT

NIZAMABA

100

12

Lot)
4

Quintal
6

PEPPER

Rs /
Quintal

TURMERIC

Rs /

FINGERS

Quintal

CHILLI LCA

Rs /

334

Quintal

MAIZE

Rs /

D
5 MT

GUNTUR

50

33

50 MT

NIZAMABA

500

21

Quintal
10

GUAR SEED

Rs /

D
10 MT

JODHPUR

100

15

5 MT

JODHPUR

50

15

Quintal
11

GUARGUM

Rs /
Quintal

2 BUSINESS LOCATION AND PROFIT MARGIN

The process of arriving a figure at which a person buys and another sells a
futures contract for a specific expiration date is called price discovery. The process of price
discovery continues from the market's opening until its close and also free flow of
information is also very important in an active future market. Futures exchanges act as a focal
point for the collection and distribution of statistics on supplies, transportation, storage,
purchases, exports, imports, currency values, interest rates and other relevant formation. As a

result of this free flow of information, the market determines the best estimate of today and
tomorrow's prices and it is considered to be the accurate reflection of the supply and demand
for the underlying commodity. Price discovery facilitates this free flow of information, which
is essential to the effective functioning of futures market.
We try to understand the pricing of commodity futures contracts and look at
how the futures price is related to the spot price of the underlying asset. We study the cost - of
- carry model to understand the dynamics of pricing that constitute the estimation of fair
value of futures.
Investment assets versus consumption assets
When we are studying futures contracts, it is essential to distinguish between investment
assets and consumption assets. An investment asset is an asset that is held for investment
purposes by most investors. Stocks, bonds, Gold and silver are examples of investment
assets. However investment assets do not always have to be held entirely for investment. As
we saw earlier silver for example, have a number of industrial uses. However to classify as
investment assets, these assets have to satisfy the requirement that they are held by a large
number of investors solely for investment. A consumption asset is an asset that is held
primarily for consumption. It is not usually held for investment. Examples of consumption
assets are commodities such as copper, oil, and pork bellies.
We can use arbitrage arguments to determine the futures prices of an
investment asset from its spot price and other observable market variables. For pricing
consumption assets, we need to review the arbitrage arguments a little differently. We look at
the cost of carry model and try to understand the pricing of futures contracts on
investment assets.

The above table gives the indicative warehouse charges for qualified warehouses that
will function as delivery centers for contracts that trade on the NCDEX. Warehouse charges
include a fixed charge per deposit of commodity into the warehouse, and as per unit per week
charge. Per unit charges include storage costs and insurance charges. We saw that in the
absence of storage costs, the futures price of a commodity that is an investment asset is given
by F = S erT Storage

Costs add to the cost of carry. If U is the present value of all the storage costs that will be
incurred during the life of a futures contract, it follows that the futures price will be equal to
Where:
r = Cost of financing (annualized)
T = Time till expiration
U = Present value of all storage costs
For understanding the above formula let us consider a one year future
contract of gold. Suppose the fixed charge is Rs.310 per deposit up to 500kgs and the variable
storage costs are Rs.55 per week, it costs Rs.3170 to store one kg of gold for a year (52
weeks). Assume that the payment is made at the beginning of the year. Assume further that
the spot gold price is Rs.13763 per 10 grams and the risk free rate is 7% per annum. What
would the price of one year gold futures be if the delivery unit is one kg?

We see that the one year futures price of a kg of gold would be Rs.1479493. The one year
futures price for 10 grams of gold would be about Rs.14794.93.
Now let us consider a three month futures contract on gold. We make the
same assumptions that the fixed charge is Rs.310 per deposit up to 500kgs, and the variable
storage costs are Rs.55 per week. It costs Rs.1025 to store one kg of gold for three months
(13 weeks). Assume that the storage costs are paid at the time of deposit. Assume further that
the spot gold price is Rs 13763per 10 grams and the risk free rate is 7% per annum. What
would the price of three month gold futures if the delivery unit is one kg?
We see that the three month futures price of a kg of gold would be Rs. 1401640.30. The
three month futures price for 10 grams of gold would be about Rs. 14016.40

Pricing futures contracts on consumption commodities

We used the arbitrage argument to price futures on investment commodities.
For commodities that are consumption commodities rather than investment assets, the
arbitrage arguments used to determine futures prices need to be reviewed carefully. Suppose
we have
To take advantage of this opportunity, an arbitrager can implement the following strategy:

I.

Borrow an amount S + U. at the risk free interest rate and use it to

purchase one unit of the commodity.

II.

Short a forward contract on one unit of the commodity.

If we regard the futures contract as a forward contract, this strategy leads to a profit of
F - (S+U) erT at the expiration of the futures contract. As arbitragers exploit this opportunity,
the spot price will increase and the futures price will decrease until Equation (5) does not
hold good.
Suppose next that
In case of investment assets such as gold and silver, many investors hold the commodity
purely for investment. When they observe the inequality in equation 6, they will find it
profitable to trade in the following manner:
I.

Sell the commodity, save the storage costs, and invest the proceeds at the risk
free interest rate.

II.

Take a long position in a forward contract.

This would result in a profit at maturity of (S+U) e rT F relative to the position that the
investors would have been in had they held the underlying commodity. As arbitragers exploit
this opportunity, the spot price will decrease and the futures price will increase until equation
6 does not hold well. This means that for investment assets, equation 4 holds good. However,
for commodities like cotton or wheat that are held for consumption purpose, this argument
cannot be used. Individuals and companies who keep such a commodity in inventory, do so,
because of its consumption value not because of its value as an investment. They are
reluctant to sell these commodities and buy forward or futures contracts because these
contracts cannot be consumed. Therefore there is unlikely to be arbitrage when equation 6
holds good. In short, for a consumption commodity therefore
That is the futures price is less than or equal to the spot price plus the cost of carry.

2.2 MARKETING MIX

Gold produced from different sources and demanded for consumption in form
of Jewellery, Industrial applications, Government & Central bank Investment and Private
investor, which has been worth US$ 38 billion on average over the past five years in world.

Total of world gold produced is mostly consumed by different sectors are

Jewelers 80%, Industrial application 11.5% and rest of gold is used as investment purpose
8.5%. Considering the situation in India, the demand for Gold consumption is far more ahead
than its availability through production, scrap or recycled gold. Where gold production in
India is only 2tonnes, where demand is 18.7% of world gold consumption, which make India
a leading consumer of gold followed by Italy, Turkey, USA, China, Japan. According to
Countries wise demand, the following graph shows the demand in each country. Large part
constitute by Jewelry consumption with 85.56% during 2004 by Indian consumers, who seem
to spend a disproportionate percentage of their disposable income on gold and gold jewelry.
Gold fabrication for domestic and international market, also formed large part of
business in India with 527 tonnes of gold fabricated in India in 2004, making world largest
fabricator which is 60% more than its closest competitor Italy, Turkey, USA. But this Jeweler
Fabrication is unable to generate much revenue, as most of its consumed in India (479
tonnes).

Consumption of Gold

GOLD CONSUMPTION IN INDIA

India consumed around 18% of world Gold produced. Even though it only contribute 1.6% of
Global GDP.
Traditionally, Gold has been a good safety net for Indian households. However,
the sharp rise in gold imports over the last three years when the rupee has started
appreciating, inflation is relatively low, banking facilities are improving And economic can
confidence has picked up, is surprising say Market watchers.(Source: -Economic Times,
Article, Forget sensex, the Gold rush is on, July 18 05)
The demand is much that it consumed more than 1.5 times of US consumption
of gold. Increasing by nearly 60% in 2003-04, but during this fiscal Gold imports increased
by another 58%, with Import of gold and silver account around $11 billion consumption
increased by 88% during March05quarter.
Uses of Gold
1. Jewellery fabrication: The largest source of demand is the jewelry industry. In
new years, demand from the jewelry industry alone has exceeded Western mine production.
This shortfall has been bridged by supplies from reclaimed jewelry and other industrial scrap,
as well as the release of official sector reserves. Gold's workability, unique beauty, and
universal appeal make this rare precious metal the favorite of jewelers all over the world.
India is the world's foremost gold jewellery fabricator and consumer with fabricator
and consumption annually of over 600 tons according to GFMS. Measures of consumption
and fabrication are made more difficult because Indian jewellery often involves the remaking by goldsmiths of old family ornaments into lighter or fashionable designs and the
amount of gold thus recycled is impossible to gauge. Estimates for this recycled jewellery
vary between 80 tons and 300 tons a year. GFMS estimates are that official gold bullion
imports in 2001 were 654 tons. Exports have increased dramatically since 1996, and in 2001
stood at over 60 tons. The US accounted for about one third of total official exports.
Manufacturers located in Special Export Zones can import gold tax-free through various
registered banks under an Export Replenishment scheme.

2.

Industrial applications: Besides jewelry, gold has many applications in a

variety of industries including aerospace, medicine, electronics and dentistry. The

electronics industry needs gold for the manufacture of computers, telephones, televisions,

and other equipment. Gold's unique properties provide superior electrical conducting
qualities and corrosion resistance, which are required in the manufacture of sophisticated
electronic circuitry. In dentistry, gold alloys are popular because they are highly resistant
to corrosion and tarnish. For this reason gold alloys are used for crowns, bridges, gold
inlays, and partial debenture.
3.

Governments and central banks: The third source of gold demand is

governments and central banks that buy gold to increase their official reserves. Central banks
holds 28,225.4 tons, the holdings of Reserve Bank of India are only a modest 397.5 tons.
4. Private investors: Finally, there are private investors. Depending upon market
circumstances, the investment component of demand can vary substantially from year to year.
11 Days Highest, Lowest and Closing prices of Silver
Highest Price
18358
18432
18208
18193
17990
17345
17203
17200
17116
17778
17380

Lowest Price
17204
18000
17953
17975
16941
16837
16884
16900
16500
16556
17001

Closing Price
18200
18129
18062
18014
17060
17124
17062
17061
16770
17422
17203

Bar Chart

10Days Highest, Lowest and closing prices of Gold

Highest Price

Lowest Price

Closing Price

12030

11779

11903

11990

11780

11885

12100

11924

11997

12200

12080

12141

12820

12225

12797

13155

12830

12941

13226

12785

13105

13288

13004

13145

13192

13000

13051

13179

12985

13125

Bar Chart
India is the worlds largest gold consumer market and in 2010, Indian gold demand is likely
to recover near to its pre-credit crunch level following the fall in demand in 2009. This
should drive gold imports up from the relatively low levels experienced last year. In 2009,
total Indian gold demand reached US$19bn, or Rs874bn, accounting for 15% of the global
gold market. Over the past ten years, the value of gold demand in India has increased at an
average rate of 13% per year,
invested in gold. Continued rapid economic growth and urbanization will create greater
wealth but also inflationary pressures stimulating gold demand.

Asian demand for gold will be a key driver of the gold market for decades to come.
Currently, India and China together account for approximately 25% of annual gold outpacing
the countrys real GDP growth by almost 6%.

In India, gold is seen as a symbol of security and as a sign of prosperity. Unlike other gold
markets, the love for gold has not only spread across many generations but also across all
social strata within the country. Indian consumers regard gold jewellery as an investment and
are well aware of golds benefits as a store of value. Gold is also recognized as a form of
money in India, a tradable liquid asset. It is one of the foundation assets for Indian
households and a means to accumulate wealth. At the end of 2009, Indian consumers price
expectations were strengthened by the Reserve Bank of Indias purchase of 200 tonnes of
gold from the IMF and the transaction reinforced the perception among local consumers that

gold is reliable and safe as a monetary asset.

India will remain pivotal to the global gold market. In the Indian culture, gold is an integral
part of daily life where purchases of gold jewellery are considered as a form of a liquid and
tradable investment for the accumulation of wealth. It is important to highlight that in
analyzing the gold market in India, traditional perceptions of the division between jewellery
and investment demand and demand drivers do not apply.
As consumers have adjusted their price expectations upwards, a further rise in gold jewellery
and investment demand could be anticipated and this trend is projected to continue over the
long-run as local investors are buying gold driven by wealth accumulation motives.
The fact that Indian gold jewellery and investment demand remains robust, despite the rising
price emphasizes the enduring desire among local consumers to purchase gold driven mainly
by its allure as a jewellery and its properties as a hedge to offset the effects of depreciation
and erosion of both savings and income. The country currently has one of the highest saving
rates in the world; estimated at around 30% of total income, of which 10% is demand. They
are likely to grow further as a proportion of demand in years to come
In the longer term, we are confident that Indias favourable demographic trends, the growing
affluent middle classes and declining age profile, should ensure buoyant consumption
growth. The investment sector exhibits great potential for further growth and will play an
increasingly important role in the domestic gold market as it overlaps with gold jewellery
consumption, boosted by increasing accessibility and opportunities in new gold investment
products. Despite being the largest global gold consumer, Indian jewellery consumption
intensity is still relatively low. Its consumption of jewellery on a per capita basis of 0.4 grams
in 2009 remains below countries such as Italy and the US. This is a reflection of both the
countrys large population and low incomes. The strategic outlook for India will be the
subject of a subsequent report in Q1 2011.
JEWELLERY CONSUMPTION
Gold jewellery accounted for around 75% of total Indian gold demand in 2009, the remainder
being investment (23%) and decorative and industrial (2%). Indian consumers also regard
gold jewellery as an investment and are well aware of golds benefit as a store of value.

Gold plays a fundamental role in the marriage ceremony, and when it comes to Indian
weddings, gold is said to be considered a necessity rather than a luxury. The gold (and other
gifts) the bride receives are called her Streedhan (Stree meaning woman and dhan
meaning wealth) and are a means of passing on some inheritance to daughters, as Hindu
tradition dictates that the familys assets are only passed down.
Gold is especially important in this respect as it remains directly under a wifes control,
whereas she may not be privy to the familys other financial affairs.
Wedding-related demand accounts for a substantial proportion of overall jewellery demand.
This is particularly true in the south of India, where the most popular wedding jewellery sets
tend to be the more traditional, intricate but bulky styles in heavier weights. In the northern
cities there has been a trend towards more western styles, and lighter wedding sets, as well
as diamond-set pieces, are becoming increasingly popular.

RESEARCH METHODOLOGY
Research Methodology is a careful investigation or inquiry specially to search
new facts in any branch of knowledge the research word is combined word to
words, first is re and second is search means to search again. It is also
systematically way to solve the research problem.
The main function of research is to add new knowledge. In simple
word research can be defined as critical investigation search for truth facts or
for certainty.
Research Methodology, it is a way to systematically solve the research
Problem. It may be understood as a science of studying how research is done
scientifically. In it we study the various steps that are generally used by the
researcher in studying his research problem along with the logic behind them.

In this Project Report ,Descriptive and Exploratory research design is

used.
Descriptive research design is the one that simply describes
something such as demographic characteristics of consumer who use the
product. This study is typically guided by an initial hypothesis.

OBJECTIVES OF THE STUDY

1. To know the scope of small scale business of Gold in sagar city.
2. To study channel of distribution and services of Gold businessmans.
3. To know the market position of small scale business of sagar city.
4. To study the problems and challenges faced by the Gold businessmans.
5. To study the promotional schemes followed by the Gold owners.

SAMPLING PLAN
10 respondents were considered for data collection i.e. Gold owners.
Sampling Techniqe
Deliberate sampling technique is used in the report. Deliberate sampling
method involves purposive or deliberate selection of particular units of the
universe for constituting a sample which represents the universe.
Different Types Of Sample Design
There are different types of sample designs based on two factors, i.e., the
representation basis and the element selection technique. On representation
basis, the sample may be probability sampling or it may be non-probability
sampling. On element selection basis, the sample may be either unrestricted
selection technique or restricted selection technique.
Thus, the sample designs are basically of two types, i.e., non-probability
sampling and probability sampling.
Sample size: I have taken sample size of 10 respondents. Because the population is too large
so it is difficult to survey.
The Marketing Research Process:
As marketing research is a systemic and formalized process, it follows a
certain sequence of research action. The marketing process has the following
steps:
Formulating the problems
Developing objectives of the research
Designing an effective research plan
Data collection techniques
Evaluating the data and preparing a research report

TYPES AND SOURCE OF DATA

After identifying and defining the research problem and determining specific
information required to solve the problem the researcher will look for the type
and sources of data which may yield the desired results, while deciding about
the method of data collection to be used for the study, there are two types of
data.
Primary Data:
Primary data are those, which are collected for the first time. Primary data is
collected by framing questionnaires. The questionnaire contained questions,
which are both open ended and closed-ended. Open-ended questions are
questions requiring answers in there spenders own words. Closed-ended
questions are those wherein the respondent has to merely check the appropriate
answer from a list of options available. Any doubts raised by the respondents
were clarified to get the perfect answers from the distributors. Open ended
questions yielded more insightful information, whereas closed-Ended questions
were relatively simple to tabulate and analyze.
Secondary Data:
Secondary data means data that are already available i.e. they refer to the data
which have been collected and analyzed by someone and can save both money
and time of there searcher. Secondary data sources are as follows:
Daily Newspaper
Various Websites

DATA COLLECTION METHOD

The collection of data required through:
SCHEDULE QUESTIONNAIRE
PERSONAL DIRECT INTERVIEWS
The most important part of any research is collection of data. The task of data
collection begins after the research problem has been defined. While deciding
about the method of data collection to be used for the study, the researcher
should keep in mind that the data are of two types:
Primary Data: Primary may be described as those data that have been observed
and recorded by the researchers for the first time to their knowledge, and thus
happen to be original in character for ex:-questionnaires, personal direct
interviews .
Secondary Data: Secondary data are statistics not gathered for the immediate
study at hand but for some other purposes for ex :- newspapers, magazines.
Research Design
There are three types of research
*Exploratory Research
*Descriptive Research
* Casual Research
The Descriptive research designThe basis of my
research was primary data which I collected from 10 peoples i.e. sample size in
the service centre through Questionnaire.

Limitations of the study

1. Some of the persons were not so responsive.
2. Difficulty in getting primary data .
3. Some respondents were reluctant to divulge personal information which
can hinder the validity of all responses.
4. Industry is in remote area.
5. The research study was confined to SAGAR city only.

DATA ANALYSIS AND INTERPRETATION

5- Excellent 4- Very Good 3- Good 2- Fair 1- Bad

I.

Rate of interest

Table 5.2
Manappuram
Opinion

Muthoot Response

% of

Response

% of Muthoot

Manappuram

Excellent

20

Very good

10

33.33

Good

11

30

36.6

Fair

16.67

23.3

Bad

fig. 5.2

INTERPRETATION
The above chart was designed to understand the satisfaction of the customers with the interest
rate on gold loan offered by Muthoot and Manappuram.

II.
Table 5.3

Location of the institute

Opinion

Muthoot Response

Manappuram
Response

% of Muthoot

% of
Manappuram

Excellent

26.67

16.6

Very good

17

11

56.67

36.6

Good

16.66

26.6

Fair

16.6

Bad

3.3

fig. 5.3

INTERPRETATION
The above chart shows the customer response on the location of both the institutes.
Here, Muthoot has a superior lead over Manappuram. This is easily recognisable as 26.67%
of Muthoots respondents believe that location of the institutes is excellent while 56.67% of
them believe it is very good.

III.
Table 5.4

Staff behavior

Manappuram
Opinion

Muthoot Response

% of

Response

% of Muthoot

Manappuram

Excellent

23.33

23.3

Very good

12

30

10

33.33

23.3

Fair

13.34

13.3

Bad

Good

fig. 5.4

INTERPRETATION
Staff behavior is interpreted in the above chart. About 23.33% of both the organizations
thought that the behavior of staff is excellent.

IV.

Gold loan application procedure

Table 5.5
Opinion

Muthoot Response

Manappuram

% of Muthoot

% of

Response

Manappuram

Excellent

12

30

Very good

10

11

14

36.67

Fair

13.33

Bad

Good

fig. 5.5

INTERPRETATION

The above chart was designed to interpret the response of customers to Muthoots and
Manappurams gold loan procedure.

V.

Infrastructure facilities

Table 5.6
Manappuram
Opinion

Muthoot Response

Response

% of
% of Muthoot

Manappuram

Excellent

26.67

Very good

14

46.67

Good

12

16.66

Fair

10

Bad

fig. 5.6

INTERPRETATION
The above chart represents the rating given by the customers on the infrastructure facilities of
both institutes.
26.67% was the share of Muthoot customers who thought that these facilities were excellent
and almost half of the total respondents (47.67%) believed it is very good.

1. Time taken for the whole gold loan procedure?

Table 5.7
Manappuram
Opinion
Less than 5 minutes

Muthoot Response
4

% of

Response

% of Muthoot
0

13.33

Manappuram

5- 10 minutes

30

11- 30 minutes

15

19

50

31- 60 minutes

6.67

Others (Please
mention)
fig. 5.7

fig. 5.8

INTERPRETATION
The above pie diagrams represents one of the main factors which decides the fate of any gold
loan financing company i.e. time taken for clearing a gold loan.
13.33% of Muthoots respondents believed that it takes less than 5 minutes for the whole gold
loan procedure. But this option was not at all selected by any of the Manappurams
respondents.
Those respondents who thinks the whole gold loan procedure takes 5- 10 minutes stands at
30% (Muthoot) and 20% (Manappuram).
The option 11-30 minutes was selected by 50% (Muthoot) and 63.33% (Manappuram)
respectively.

V FINDINGS AND SUGGESTIONS

1)

50% of the Goldowners operate for 9months of year. So as to maximise their profit
the owners must try to increase their working months.

2)

70% of the Goldowners produce Gold and from times point of view they must try
to produce cement bricks as now they are being preferred by the customers.

3)

30% of owners produce 1,50,000 of units per month and they must try to
Increase the production units to maximise their profit.

4)

30% of owners sales a batch of 1000 bricks for Rs.5000 (cement bricks)
30% of the owners sales a batch of 1000 bricks for Rs.3000 (Gold) .the owners
must make strategies for reducing the price of bricks.

5)

40% of the owners have individuals with small construction projects as their main
customers. the owners must try to increase their customer by adopting new
promotional techniques.

6)

48% from the total workers of all the Goldare permanent workers and 52% are
daily wages workers.

7)

40% of the owners recruit labour by their own self so therefore majority of owners
must try to recruit efficient workers in order to improve quality of production.

8)

40% of the owners have invested Rs. 20 lacks so the owners must try to increase
their rate of investment.

9)

40% of the owners promotional tool are brokers so the owners must try to increase
their contact with other customer.

10)

40% of the owners face problem due to rainfall loss. So the owners must try to
improve their sight of production.

CONCLUSION

The objective of the project of studying the scope and marketing strategies used by
different business units has been achieved during the course of time. Gold industry is a
rapidly growing sector.
After analyzing the responses of the various Gold owners about the scope and
marketing strategies used by the marketer, the result shows that most targeted market
preferred by the various units are government projects ,construction companies, small
construction projects and local households.
In my survey it is found that now a days costumers are purchasing cement bricks because of
the good quality and the size of the brick. Gold are not good in quality and can be get broken
easily but the cement bricks are of very good quality and made up of the mixture of

Limitations of the study

6. Some of the persons were not so responsive.
7. Difficulty in getting primary data .
8. Some respondents were reluctant to divulge personal information which can hinder
the validity of all responses.
9. Industry is in remote area.
10. The research study was confined to SAGAR city only.

ANNEXURE
Survey on small scale business of Gold Business in sagar city
[For Answers Put Tick Mark in the boxes

Name the owner:

______________________________

Address:

______________________________

Age:

______________________________

1. How many months out of the year does this Goldoperate?:

(a). 6 months

(b).9 months

(c.) 12 months

2. Which type of bricks do you make?

a) Gold
b) Cement bricks
3. How many bricks do you produce per month?:
(a) 50000

(b) 75000

(c) 100000

(d) 150000
4. On average, how much do you sell a batch of 1000 bricks for?:(a) RS.2500
(c)RS.3000

(b) RS.2700
(d) RS.5000

5. Who are your main customers?:

(a) Individuals with small construction projects
(b) Construction companies
(c) Local households
(d) Others

6. How many workers do you have?:

a) Permanent workers
b) Daily Wages
7. How do you recruit workers?:
a) Recruit myself
b) Recruit through other employees
c) Purchase contracts from other kilns
d) Other
8. How much do you invest :
a) 10 lacks
b) 20 lacks
c) 30 lacks
d) 40 lacks
1. Who serves you as a promotional tool?:a) Contractors
b) Builders
c) Brokers
d) Others
2. Which problems do you face?:a) Labour turnover
b) Low sales
c) Investment
d) Loss due to rainfall

Thank you

BIBLIOGRAPHY

www.dcmsme.gov.in

www.udyogmitrabihar.com

www.undp.org

www.teriin.org

www.cosmile.org

www.firedbrickmachine.com