AZIRA

BY EDELWEISS

Pride of the
shine

PAGE 1

A PROJECT REPORT
ON OPENING UP
OF A JEWELLERY
SHOWROOM

SUBMITTED BY:
SHARAD KABRA
VIKAS SHARMA
ACKNOWLEDGEMENT
PAGE 2

THERE IS NO SUCH THING AS A SELF MADE MAN, WE ALL

ARE MADE UP THOUSANDS OF OTHERS GEORGE ADAMS.
On account of a great learning and valuable project we would like to acknowledge
each and everyone who have contributed to making this project possible for us.
Firstly we would like to thank EDELWEISS COMMODITIES SERVICES
LIMITED for finding the potential in us and giving us a chance to work on this
project
We are greatful to our project head MR KUNAL PAREKH for guiding us
throughout with his knowledge and experience, for letting us make mistakes and
learn through it
We also would like to thank our fellow INTERNS for their help during our project
Last but not the least we would like to thank NLDALMIA INSTITUTE OF
MANAGEMENT STUDIES AND RESEARCH for helping us associate with the
company for an extraordinary internship experience

PAGE 3

EXECUTIVE SUMMARY
The project report is divided into three major sections
About the jewellery industry
To grow and prosper in each and every business change should be the only
constant.
The unorganized sector leaves a huge opportunity for the branded jewelers to
explore and gain their monopoly from the start
Like every other industry even the jewellery businesses and industry demands
change. There has been a tremendous change from the traditional jewellery designs
to new fashion led mixed jewellery over the past years
People also build trust on branded jewellery these days. They find the need to be
exclusive and different especially the rich and elite class
Less of gold and more of mixed is in demand these days which also helps in
generating better profit margins to the jewelers makes it completely feasible to
open their jewellery businesses

Our jewellery showroom

Based on the above factors that support the jewellery business we plan to open the
jewellery showroom for the classes in a area that demands for it
Financial feasibility of the project
Hence after the finding a scope to extend further business into jewellery we also
come up with the financial feasibility to support this project.
The cost sales and profitability analysis have been carried out after having done a
detailed market research and operation

PAGE 4

TABLE OF CONTENTS
SR.NO

TOPIC

PAGE NUMBER

COMPANY OVERVIEW

INDUSTRY,MARKET,FACTO
R ANALYSIS

7-10

SWOT ANALYSIS

10

PROJECT DESCRIPTION

11

START UP SUMMARY

12-18

STRATEGY FORMATION
AND IMPLEMENTATION

18-22

PRODUCT COUNT

23-24

MANAGEMENT SUMMARY

24-28

FINANCIALS

29-47

10

CONCLUSION

47-48

11

APPENDIX

PAGE 5

1) COMPANY OVERVIEW
1.1) ABOUT THE COMPANY
Incorporated in october 2004 Edelweiss commodities services limited (ecsl) is a
wholly owned subsidiary of edelweiss financial services limited (efsl) that deals in
gold and agri commodities
Having an upper hand in trading gold as compared to its agri commodities trading
with a ratio of 65:35 it further views on expanding its hands into the retail segment
for selling gold
Edelweiss commodities services limited (ecsl) showing a progressive growth from
having started with a loss of 23 crores in the FY13, ecsl had improved to a profit of
12 crores in FY14 to a whooping 35 crores in FY15, making sure it has established
a positive image for funding of its future plans
1.2) PROJECT PLAN OF THE COMPANY
A thorough and detailed research of the complete gold and diamond industry for
checking its feasibility and making azira operational in the retail segment of the
market
1.3) OBJECTIVE OF THE COMPANY
Primary research - Feasibility study of opening up a jewellery showroom by
performing market operations
Secondary research obtaining knowledge and information from published
data by the market players and using them wisely as a helping hand in our
business
Having done a complete search of the opportunities in the market favouring
our store design
Developing a marketing plan for making AZIRA come from reel to real
To carry out a financial feasibility plan for having a view on our profitability
concerns

PAGE 6

2) INDUSTRY ANALYSIS
2.1) CURRENT SCENARIO
The jewellery industry seems very confident for a glittering future. Annual
global sales of rs 10360 billion rupees are expected to grow comfortably at
5-6% every year reaching almost upto 17500 billion rupees by the year 2020
The taste and preference of people all over the world have evolved and if the
jewellery businesses have to survive the fierce competition they need to be
very innovative
Another interesting trend in the jewellery industry is the growth of branded
jewellery,though it accounts for a very small percentage. The following chart
shows the growth trends and the upcoming future of branded jewellery

The graph shows that estimated growth by the year 2020 the branded
jewellery will capture a market of 30-40% of the jewellery industry. Industry
expert when interviewed had an optimistic view of it and they think that
branded jewellery will cover more market than unbranded
There are three types of consumers driving the growth of branded jewelry:

new money consumers who wear branded jewelry to show off their newly
acquired wealth (in contrast to old money consumers, who prefer heirlooms or
estate jewelry)
PAGE 7

emerging-market consumers, for whom established brands inspire trust and

the sense of an upgraded lifestylea purchasing factor quoted by 80 percent of our
interviewees

young consumers who turn to brands as a means of self-expression and selfrealization

People have now started trusting the new brands on account of their trust
associated with the parent company so it is very important to make them feel
the safety they desire to while purchasing jewellery
The next thing for the jewellery industry that makes them work is
their channel of operation.
Different channels have faced various phases of growth, downfall and
stagnation
The arrow diagram below shows the future trend that possibly can take place
2.2) JEWELLERY TRENDS

CHANNEL MONO-BRAND MULTI BRAND

OF OPERATION

DEPARTMENTAL

ONLINE

OTHERS

Mono-brand stores have killed the market and are still growing in the
upward trend. this is because people are having faith in the brand name
For example Swarovski had only 2 stores in the year 1990 but by now there
are approximately 1000 stores all over the globe
Multi brand stores and departmental stores are on a stagnation mode and
might even decline in the nearing time
People often visit to see some brand but end up buying some other which
they might later realize tis not meeting up with their expectations

PAGE 8

 Online jewellery store at present make only a sale of 4-5% of the entire
jewellery sales but are expected to grow till only 10% by the year 2020
further which even they might become stagnant
The only probable reason why people chose brick and mortar stores over
others is due to the sensory satisfaction they get while purchasing jewellery
worth lacs and also drive away with their fear of being cheated
3) MARKET ANALYSIS
Analyzing the indian market for our brand
The gems and jewellery sector is a leading contribution to the growth
of indian economy of about 6-7% of our gdp
It had a market size of rs 251000 crores and has the potential to
double up or more in the coming 5 years to approximately 500000530000 crores
The growth in this industry is based on healthy business environment
and support of the government relating to this sector
India is a global hub for dealing in diamonds due to its cheap but high
skilled labour as well as low costs
India is the worlds largest cutting and polishing center moreover it
exports to almost 95% of the worlds diamonds as per gems and
jewellery export promotion council(GJEPC)
It is also helping in contributing to foreign exchange earnings and was
able to provide US$ 34747million
The gold consumption jumped up by 8% to 662tonnes as compared to
2013 the year which saw a record breaking accumulation of gold
overall
Hence at present india market as suggested is the most suitable for
dealing in gold and diamond jewellery

4) WHY DO WE MAKE A JEWELLERY SHOWROOM

PAGE 9

Only 20-25% of the Indian jewellery sector is organized. There is a huge

opportunity to be explored in the early stages of this sector.
The family oriented businesses in jewellery are unorganized and still rule the
market but even they feel the need to change with the current trends
Mixed jewellery that is jewellery made of gold and diamond offer more
profitability than only gold jewellery as diamonds have the capacity to generate
almost 100% profits
They latest trend that carries on in the market is designer led fashion jewellery.
There also has been a shift from investment related mentality to fashion fads.
These are the basic reasons why we support the feasibility of this project
5) SWOT ANALYSIS
STRENGHTS
1)
2)
3)
4)

STRONG BRAND NAME

ENOUGH FUNDS FOR OPERATION OF BUSINESS
OWN REFINERY FOR REFINING GOLD
IMPORTING GOLD FROM DUBAI AND SINGAPORE FROM OUR OWN
COMPANY

WEAKNESSES
1) LACK OF EXPERIENCE IN JEWELLERY BUSINESSES
2) NO SUPPLIER BASE FOR SOURCING OF RAW MATERIAL SUCH AS DIAMOND
AND GEMS

OPPORTUNITIES
1) HUGE POTENTIAL IN THE JEWELLERY BUSINESS
2) GOVERNMENT BACKING
3) MULTIPLE STORES CAN BE OPENED

THREATS

1) COMPETITION FACED BY STRONG FAMILY BUSINESSES IN JEWELLERY

BASED FROM A LONG PERIOD OF TIME
2) DIFFICULT TO BUILD TRUST
3) RISKY BUSINESS
4) DEALINGS IN CASH FOR PURCHASING RAW MATERIALS

5) ABOUT THE PROJECT

PAGE 10

5.1) BRAND NAME

After having gone through a list of names that made sense to the world of gold and
diamond jewellery, azira - by edelweiss having the tagline pride of the shine was
strategically chosen as a perfect match
while giving a brand name to the business a lot of factors are taken to consideration
for making it well-versed with the prospect customers as well as everyone, such as
Meaning of the name
Does the name have any conflict with the sentiments of the culture
prevailing in the nation
Easy to remember and pronounce
Different market players having similar names to confuse the customers
Acronyms- making a big long name and then making it known to market by
use of a short form or acronym
After thinking about these factors at every step before naming the b-plan, azira was
selected

Meaning of azira shine of the diamond

No conflicts with the sentiments of Indians
Along with being a unique and classy name it is easy to pronounce
Not used by any other businesses
It has to be pronounced with its original name cant be used in any shortform

5.2) OBJECTIVE
1. To find out the sources for obtaining our operational requirements ie gold
and diamond
2. Making people aware of the new brand coming on the same virtue of trust
they have in edelweiss
3. Being a unique store and first of its type for the upper-middle and upper
sections of the society
4. Using the latest and rarest designs for maintaining exclusivity
5. Maintain a strong position in the segment of retail jewellery
6. To face competition at every level and overcome it from the fellow
competitors
5.3) MISSION
PAGE 11

Aim to open a space and become a leader by offering quality products, customer
service and innovation to the cutomers in the segment of retail jewellery business
in mumbai
5.4) VISION
Changing from a single shop retailer to multi-chain shops all across India

6) START UP SUMMARY
6.1) LEGAL PROCEDURES
Edelweiss being a huge brand name in the market needs to take care of each and
every minute detail that dont interrupt the smooth functioning of its various
businesses
In case of opening a retail jewellery showroom it will require certain legal
documentations for making it operational:
1)
a)
b)
c)

Incorporation of the company

Memorandum of association
Articles of association
The agreement if any which the company proposes to enter with any
individual for appointment as its managing or whole time director or
manager
d) A copy of letter of the registrar of companies intimating the availability of
proper time
e) Documents evidencing payment of prescribed registration and filling fee
f) Documents evidencing the directorship and situation of registered office
inform 32 and form 18 respectively and declaration of compliance with the
requiements of the companies act for giving consent to act as director
POLICY FOR LICENSING OF THE JEWELER
1) GRANT OF LICENSE
a) Every jewellery retailer has to obtain license from the bureau of indian
standards (bis) for selling hallmarked jewellery
b) The license will contain the name and address of the jeweler
c) A licence will be granted for sale of Hallmarked gold jewellery/artefact
conforming to IS 1417 from an outlet.

PAGE 12

d) Similarly, another licence will be granted for sale of Hallmarked silver

jewellery/artefact conforming to IS 2112 from the same outlet.
e) The validity of a licence shall be of three years.
2) JURISDICTION
a) The licence will be issued by Branch Office of BIS having
jurisdiction of the area where the jeweller is located.
b) A jeweller organization having at least five retail outlets anywhere in
India may either apply for separate license for each of its outlets or
opt for Corporate License covering all outlets.
The conditions for Corporate License will be as follows:
i.

ii.

The Head Office of the jeweller organization shall apply to the

nearest Branch Office (BO) of BIS for grant of Corporate Licence
along with a list of retail outlets to be covered in the licence with
supporting documents. The BO shall grant licence if all outlets are
falling under its jurisdiction.
If these outlets are falling beyond the jurisdiction of the BO as at
(i) above, may be covering several BOs, the application shall be

forwarded by the BO to DDGR in the Region for grant of licence.

This shall be irrespective of the locations of the sales outlets. The
licence will be maintained by the BO as at (i) above. BOs having
jurisdiction over such licensed retail outlets shall be informed
about grant of the Corporate Licence in order to facilitate market
surveillances.
iii. Inclusion of additional outlets will be done in the same manner as
above.
iv.
Every retail outlet, which has been covered under a Corporate
Licence, shall be issued an independent licence document
mentioning the address.
c) The existing multi-chain licences shall be converted to Corporate
Licences, if the organization so desires. Otherwise, individual licence
shall be issued for each retail outlet covered under the multi-chain
licence. This action shall be taken at the time of next renewal of the

PAGE 13

License. The Corporate Licensees shall also be given/converted to this

methodology at the earliest and certainly at the time of next renewal.

3) FEES & HALLMARKING CHARGES

a) The application cum processing fee for grant of fresh licence or its
renewal shall be Rs. 2 000 per outlet.
b) The fees for grant of a license or its renewal for a period of three years
shall be as given in Tables 1 and 2 below in case of a Single License and
for a Corporate License. A single licensee shall also have the option to
pay the fees on an annual basis as per the rates indicated in the Table 1
below.

6.3) STORE DESIGN

Positioning of our brand
we want to position our selves as a high level brand for the classes and not the
masses
PAGE 14

for this we need to offer our customers with the latest trending jewellery designs
and one of its kind
the place of operation is also selected based on ourr positioning
also our complete marketing strategy will be based on serving ourselves as high
level brand
LOCATION
The location chosen for offering the best to the upper middle and upper class
people is the so called new zaveri bazaar in the suburbs that is
bandrawaterfield road
The reasons for chosing this particular location is after taking into
consideration the field visit and market research made by our team
1) Type of market
2) Footfall in that location
Our team has collected the number of footfall in the area on everyday
of the week shown as under
SR NO

DAY OF WEEK

1
2
3
4
5
6
7

Monday
Tuesday
Wednesday
Thursday
Friday
Saturday
Sunday

STORE NAME
tanishq
kalyan
om jewelers
dhanraj
popley
joyallukas
waman hari pethe

FOOTFALL
25 families
28 families
30 families
23 families
45 families
38 families
41 families

3) The standard of living of people and their purchasing power

present in that area
4) Competition that can be faced
5) Future growth expectations in the location
After examining these factors carefully bandrawaterfield road was chosen
as the best place to carry out our operations
STORE OUTLAY
Having done a field visit all over mumbai for our store bandra was selected
due to the reasons mentioned above.

PAGE 15

Different brokers were contacted for availability of showroom and retail

space and ample of them were available in bandra
Location of the showroom turner road bandra(w)-400050
Description of the showroom- basement-1500sqft
ground floor -1500sqft
1st floor -2000 sqft
Total area 5500sqft
Cost of the showroom- rs 500 per sqft

7) START UP COSTS
To start our business the following cost heads are taken that are funded by the debt
of rs 65000000we have raised for the first year
These are as follows
Property cost - the property we have bought on lease is being quoted at
rs500 per sqftfor a 5500 sqft area shop along with an additional deposit to be
paid in the first year of rs 12100000
Interior designing cost- after consulting interior designers for well furnished
and latest interiors required for a jewellery showroom the price being quoted
is 27500000
The insurance premium to be paid for securing our gold and diamond stock
is worth rs 1382253
Stock including pure gold, pure diamonds, mixed(gold+diamond) is costing
us rs545472900
Owing to opening of the store heavy advertisements and brand visibility has
to be done which will give us future benefits are worth rs 46500000
The balance amount left out from the initial debt worth rs17044847 is used
as working capital
The following pie chart explains the breakup of costs being funded by the total
debt raised

PAGE 16

Sales

revenue expenditure

assets

debt

deferred revenue expenditure

Table showing breakup of start up costs

Srno
Cost head
1) Revenue
a) Property cost
b) Interior design
expenditure
c) Insurance
premium
d) Working
capital

Cost in Rs
12100000
27500000
1382253
17044847

2) Deferred
revenue
expenditure
3) Assets
Total
4) Liability

Total cost

58027100

Advertising and brand

visibility

46500000

Gold, diamond stock

545472900
650000000
650000000

Debt

6) MARKET SEGMENTATION
PAGE 17

For purchasing gold and diamond jewellery the market has been segmented
on various attributes that help us chose our target customers and market
Segmentation on basis of income
a) Upper segment of the society
b) Upper middle level segment of the society
c) Lower middle level segment of the society
Segmentation on basis of people preferring
a) Branded jewellery
b) Unbranded jewellery
Segmentation of products
a) Gold
b) Diamond
c) Mix(gold+diamond)
Segmentation of location on basis of taste and preference
a) Traditional style of jewellery
b) New designer jewellery
c) Exclusive jewellery
7) BUYING PATTERNS
Gold bullion as an investment
Jewellery for day to day use
Wedding jewellery
Jewellery as gift
Exclusive showcases
8) TARGET MARKET STRATEGY
Out of the made segments the target market is selected as follows
The target market selected on basis of income are the upper
segment and the upper middle level segment of the society
The reason for targeting them is to maintain our name in the high
end jewellery segment and offer exclusive jewellery
On basis of peoples preference we offer our own branded
jewellery as people have started building trust in branded jewellery
as mentioned above
We target to sell all the segments of the product ie offering all the
three
Gold
PAGE 18

Diamonds
Mixed products
On basis of taste and preferences of people and to make our name
in the elite jewelers we give new designer jewellery and exclusive
designs only affordable for the upper middle class and the super
rich
The customers in todays world have a varied view about how to
buy gold for different purposes
The buying pattern reflected included
a) Gold purchased as an investment
b) Casual jewellery people use for daily purposes
c) In india wedding is a season where people like to celebrate with
jewellery.
So we target bridal wear jewellery as well
d) It is every womens dream come true to be gifted diamonds and
expensive jewellery
e) All the elite families like to be unique by showcasing that one rare
thing which no one has

9) STRATEGY AND IMPLEMENTATION SUMMARY

COMPETITIVE EDGE

Competitive edge will be achieved in azira through different mediums such

as
a) Store operations and human resources
The personnel appointed will be highly representable, properly
trained,specialized in the jewellery market to add to the aura of our
grand flagship showroom
b) Merchandising the latest designs
Latest and the most uncommon designs from world renowned and
famous designers will give us the edge over others
Customized as well as demand driven designs will be presented to
our customers
c) Marketing plan

PAGE 19

The marketing plan is developed in such a way that people are

aware of our brand through all the mediums without leaving any
scope
a) Through hoardings in south Mumbai and suburban areas from
andheri to bandra where we can target the elite people
The cost breakup for such hoardings is given as under
PLACE OF
HOARDING
Worli, near Atria Mall
Worli flyover
Juhu, Haveli
Juhu, Tulip Star
Juhu, JW Marriot
Bandra, WEH
Bandra Station
BandraLinkin Road, near
KFC
Lower Parel, opposite
Palladium
Lower Parel, Indiabulls
Byculla flyover
Mahalaxmi, race course
Mahalaxmi, Haji Ali
Mahalaxmi station
Cadbury Junction
Babulnath junction
Total

COST (PER
MONTH)
250,000
750,000
500,000
1,000,000
500,000
500,000
50,000

DIMENSIO
N
40x20
40x20
30x20
40x20
30x50
40x40
20x20

100,000

10x20

250,000
100,000
100,000
125,000
125,000
700,000
400,000
500,000

20x20
15x30
15x35
20x20
20x20
60x20
20x20
20x20

5950000

b) NEWSPAPER ADVERTISING
Through full front page adverting in leading newspapers such as

PAGE 20

 Times of india
Dna and
Mumbai mirror
It is one of the major source of advertising as no ones morning gets completed
without newspapers. Majority of the population can be made aware of our brand
through it

The cost break up for the advertisements is as follows

Store opening full page advertisement, front page
Reach
(daily)
Times of
India
DNA
Mirror

Cost

810365
601000
715208

Total

(at Rs 5000 per square cm for

8580000 33*52)
3432000 (at Rs 2000 per square cm)
1350000 (at Rs 1800 per square cm)
13,362,00
0

The month of October thats brings indias one of the most auspicious festival of
Diwali is a target time where more advertisements need to be done as most of the
people in india buy jewellery in Diwali considering it to be a good time for buying
gold
The wedding seasons in January and april is again a prime time to showcase our
new collection which also needs to be told to the people residing in india through
the newspapers
They incur the following cost
Advertising during the months of October, Januaury
and April
Half page, front page
Times of India
4125000 (at Rs 5000 per square cm for
PAGE 21

33*25)
DNA
1650000
Mirror
720000
Total
6495000
Hence the total cost for the first day advertisement and the special monthly times
attract a total cost of rs19,485,000
c) RADIO STATIONS
Mumbai is jampacked nowadays due to heavy utilization of vehicles by individuals
But this commotion gives a scope of advertisement for new comings in the market
through radio stations as most people are stuck in traffic and find it a good way to
hear songs,advertisments some news and updates for a little span of time, but also
an effective medium
Latest radio stations such as radio mirchi,big 92.7 fm,redfmetchave given us the
following quotation
1

radio mirchi
98.3
( 15 secs, 10 spots a day
30 days)
Total
Big 92.7 fm
10 secs , 10 spots, 30 days
Total

Rs 1200 per 10 secs

540000 Negotiable
Rs 1000 per 10 secs

93.5 red fm
10 secs , 10 spots, 30 days
Total cost of
radio

300000 Negotiable
700000 Negotiable
1500000

Advertising during the first month and the months of october, januaury and
April
Cost of radio
6,000,000 advertising
d) ONLINE MEDIA MARKETING
PAGE 22

The most commonly used form of advertising these days. From small to big
everyone now a days use online. Online media marketing is very trending effective
as well as helps to bring in a lot of people to our brand
Even if online methods are used it can be done through certain ways
Internet Advertising
Search engine
optimization
pay per click
Social media
advertising

per
month
25000
20000

300000
240000

20000

240000

Total
10)

780,000
PRODUCTS

Azira will offer a varied and unique collection of jewellery in gold as well as
diamond
The gold jewellery stock is maintained keeping in mind their weights and karats
A varied collection of 2860 designs will be offered comprising of different
ornaments as shown in the table below
21,21.5,22,24 karat gold will be available in our showroom
Approximately 54 kgs of gold be kept in the store for being sold and replenishment
will be done according to the demand and new patterns available in the market
over the year
The pricing strategy adopted is day to day pricing but for an estimation a margin of
15% is charged for preparing our financials
The following table shows the product count according to their weights

Jewellery

1-5

5-10

1015

1520

2030

3040

4050

EARINGS

100

100

80

60

50

20

10

5075

75
AND
ABOV
E

TOTAL

420
PAGE 23

RINGS
CHAINS
NECKLACES
MANGALSUTRA
S
PENDANTS
BRACELETS
BANGLES
MANGTIKKAS
NOSEPINS
GOLD COINS
PENDANT SETS
DESIGNER SETS
TOTAL

80
50

80
50
40
25

60
50
40
25

60
50
50
25

30
40
50
25

20
30
50
10

10
20
40
10

20
30

200

100
50
30
15
25
20
30

100
50
40

20
40
40

20
40
40

30
40

20
30

10
30

50

565

495

20
30
395

20
25
340

30
25
255

20
20
180

10
100

15
25
20

490

20
20

40

340
330
320
120
440
240
250
30
50
40
170
110
2860

The prices of gold as per karat as on 1st july,2015 are as follows

a) 24kt- rs26482/10gms
b) 22kt- rs24275.17/10gms
According to these prices the overall costing of our gold stock totals to
rs128735400 approximately and selling the stock worth the above value at
approximately 131,729,191.92 will help us give a profit of approximately
15%

Whereas those in diamond are offered according to the price range and
affordability of people based on number of karats
PRODUCT NAME

PRICE RANGE(RS)

NUMBER OF PRODUCTS

Diamond rings

20000-800000

380

Diamond earrings

10000-450000

420

Diamond pendants

10000-200000

390

Diamond bangles

85000-1000000

130

Diamond necklaces

100000-3000000

330

Diamond nosepin

10000-50000

390
Total-1740
PAGE 24

All the products are offered after having a product count by visiting various
jewellery showrooms across Mumbai

11)MANAGEMENT SUMMARY
The management team for running the jewellery business will have wide expertise
and broad knowledge of the jewellery market, the current practices in the industry
and the intricacies of the segment. If these activities are planned well, it will help
the business realize its goals in a potent and efficient manner. As the business
grows, there will be need of additional consultants and market experts who will be
able to guide the store on the right path.
The primary task of the management team will be to stay in terms with the on
going market practices, the shifting trends in the markets, the shift in consumer
ideology and to analyze the competitor behaviour. They will have to make sure that
the store does not go awry from its pre-decided goals and that it keeps registering
continuous growth.
The team will also function as an intermediary between the store and its public.
Hence, it will fall to the efficiency of the management team that the customers are
satisfied with the products and services offered, the creditors are confident of the
business being well off, the employees are happy with the working conditions and
the store doesnt indulge in any malpractices.
12)

STORE HIERARCHY

Azira will follow a vertical organisational pattern and at the helm will be the store
manager who will be in charge of the daily operations of the store. Moreover, the
store manager will make sure that the employees under him are working efficiently
and that if any dispute or conflict arises, he will make sure that a solution is
reached in the best interest of the business. The store manager will be assisted by 2
floor managers who will be overlook the functions of the two floors of the store.
One floor manager will be at the helm of the GOLD section and the other one of
the DIAMOND section. The managers will be assisted in operations by 24 well
trained and educated sales personnel, 4 cashiers (2 on each floor), 4 cleaners and
helpers and 4 security men.
PAGE 25

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13)

TRAINING AND DEVELOPMENT

Sales Personnel are the patrons of the store, they are the first point of contact for
the customers and are the ones whose interaction with the customers can either
give the store a loyal customer force or pull the sales down. Hence, it is vital that
the sales personnel along with the managers and other staff are always on their best
behaviour and make sure that the customers always leave satisfied. The expenses
incurred on training and development will help the employees sharpen their skills
which would mean that the whole work force is reliable and the store wont have to
be over dependent on only a few employees.
A properly trained employee becomes more informed about procedures for various
tasks. The worker confidence is also boosted by training and development. This
confidence comes from the fact that the employee is fully aware of his/her roles
and responsibilities. It helps the worker carry out the duties in better way and even
find new ideas to incorporate in the daily execution of duty.
Training and development makes the employee also feel satisfied with the role they
play in the company or organization. This is driven by the great ability they gain to
execute their duties. They feel they belong to the company or the organization that
they work for and the only way to reward it is giving the best services they can.

PAGE 26

Employees gain standard methods to use in their tasks. They are also able to
maintain uniformity in the output they give. This results with a company that gives
satisfying services or goods.
Hence, the expenses incurred in training and development of the sales force can
only yield returns for the store in the short and long run. It will particularly
enhance the customer experience and propel the name of the brand forward. It is
necessary that the employees stay in tune with all the current market practices and
the amount of training and development will be ushered in from the Reserves that
the store has and after a few years, from the Revenue the store makes.

14)

REMUNERATION

The detailed annual personnel plan is included in the appendix. The annual
personnel estimates are included here. We believe this plan is an acceptable
compromise between fairness and expedience, and meets the commitments of our
mission statement. We intend to be an easily recognized and trusted brand and we
know that the workforce has to be remunerated fairly for them to enhance the
experience of our customers. We want the company to stay lean and flexible so that
we can respond to a client's needs quickly. However as we expand and increase in
size (increase in the number of footfall and sales) we expect to increase our
personnel.

We intend to compensate our personnel well, so as to retain their invaluable

expertise and to ensure job satisfaction and enrichment through delegation of
authority. In-house training shall be continuous with regular external training
being undertaken particularly following any new developments in the market. This
is to ensure that we are continuously able to anticipate our customers needs.
The monthly remuneration plan for the first 3 years as listed below
Designation

No. of
employees
1

Monthly Salary
(Year 1)

Monthly Salary
(Year 2)

Monthly Salary
(Year 3)

Rs. 1,20,000

Rs. 1,30,000

Rs. 1,40,000

Floor managers

Rs. 1,50,000

Rs. 1,60,000

Rs. 1,70,000

Sales Personnel

24

Rs. 4,80,000

Rs. 5,28,000

Rs. 6,00,000

Store Manager

PAGE 27

Cashiers

Rs. 80,000

Rs. 88,000

Rs. 96,000

Security
Personnel
Cleaners and
Helpers

Rs. 48,000

Rs. 52,000

Rs. 56,000

Rs. 40,000

Rs. 40,000

Rs. 48,000

Total

39

Rs. 9,18,000

Rs. 9,98,000

Rs. 11,10,000

As per the remuneration package decided by us, the store manager gets the highest
pay package of Rs 14, 40,000 annually followed by the store managers who will
take home an annual package of Rs 9, 00,000 each. Each Sales representative and
cashier will get a monthly salary of Rs 20, 000 each in the first year. The security
men and the helpers will get Rs 12,000 each and Rs 10,000 each respectively.
Provisions have been made in the cost sheet that will allow the management of the
store to pay performance and festive bonuses in each year.
Within the next five years in lieu of the growing sales and customer footfall, the
sales staff will be expanded to a size of 30 from the first year size of 24 and within
the next five years i.e. 10 years of operation, the sales staff will be expanded to a
size of 36 with additional staff requirement been fulfilled as and when the need is
felt by the store management.
The detailed remuneration for 10 years is attached in Appendix 1.

PAGE 28

15)

SALES

Jewellery is viewed with a lot of fervour in India and hence the sale of gold and
diamond jewellery is not just related to a pure business transaction. The project
required indentifying potential areas in Mumbai where the sale of jewellery has a
strong prospect with customers accepting a new brand as well as getting
acclimatised to how jewellery is sold in the city and what are the different target
markets. To get an estimation of the sales figure at our selected location that is
Bandra, we undertook a study of sales figure of influential stand alone stores in the
area. With the sales figures based on that of Notandas and Ghanasingh, we derived
our sales amount of first year. In lieu of the sales made by the above mentioned
influential jewellers, we determined our sales to roughly around 25% of that made
by these jewellers.

The sales in the first year is kept at an estimated Rs 18,45,00,000, with an expected
growth rate annually pegged at 25% year on year basis. Sale of gold jewellery will
contribute 70% towards the total sales and the sale of Diamond jewellery will be
30% of the total sales for the first 5 years from the start of the store. Once the store
establishes itself as an ardent quality manufacturer of jewellery, the share of
diamond is to increase by a further 5% to make it 35% overall of the total sales.
The margin on gold jewellery is kept at 10% for the first five years and 15% for the
next five years. This margin will include all different income heads. The margin on
diamond jewellery is kept at 35% for the first five years and 40% for the remainder
of the sales data. Since, the cost of selling and storing diamond jewellery is higher
compared to that of gold jewellery, the margin on diamond is kept considerably
high going with the industry standards
PAGE 29

16)
IMPORTANT ASSUMPTIONS
The sales figure is derived after considering the annual reports of standalone
stores in the proposed area of store operations
First year sales are kept at 25% of the 2014 annual sales recorded by
Notandas and Sons
The sales is expected to grow at an annual rate of 25% (year on year basis)
Of the total sales, 70% will be gold and 30% diamond jewellery will be sold
for the first five years. The figure for diamond jewellery will increase to
35% after the 5th year and proportionately, the gold jewellery sales will
reduce to 65%
The margin on pure gold jewellery is 10% for the first five years and
thereafter it will increase by a further 5%
The margin on diamond jewellery is kept at 35% for the first five years and
it will increase to 40% from the 6th year of operations.
Increase in Sales as shown below (Amounts in Crores)
Rs. 200
Rs. 180
Rs. 160
Rs. 140
Rs. 120
Sales

Rs. 100

Gold sales

Rs. 80

Diamond Sales

Rs. 60
Rs. 40
Rs. 20
Rs. 0
1

10

11

No of YEARS - - - - - ->

PAGE 30

17) EXPENSES

The expenses incurred for operating the store, include the interest amount that has
to be repaid for the funds borrowed, the lease rental that will be paid on an annual
basis, the salaries to be paid to the employees (the breakdown of which is given in
the remuneration section), the advertising and marketing expenses, the insurance
premium to be paid for the amount of stock insured, maintenance, miscellaneous
and other expenses and the depreciation on the furniture and interior design.
18)

INTEREST ON BORROWED FUND

The interest amount to be payable on the borrowed fund is divided into two parts,
the amount borrowed for buying gold (interest charged at 7%) and the amount
borrowed for all other expenses (interest charged at 12%). The interest amount that
will be paid in the first year of operating the store is Rs 5,95,63,230.
The schedule of interest payment is shown below:

Since, the store makes part principal payments every year, the interest liability will
reduce every year. The store will never default on the interest payment and keep
making part principal payments till it is self sustaining.
19)

LEASE RENTAL

The flagship store of Azira will come up at a prime Bandra location on Linking
Road. The store will be approximately 5000 sq ft in size and the lease rental
amount in the area is Rs 500 per sq ft. Hence, the lease rental every year will be Rs
3,30,00,000 with a deposit of Rs1,21,00,000 to be paid in the first year.

PAGE 31

20)

INSURANCE PREMIUM

The inventory will have to be insured against various hazards like fire and theft.
Since, it is a jewellery store all security measures will be in place to make sure that
no burglary or theft takes place. Fire clearance certificate will be obtained from the
BMC and necessary fire deterrent measures will be in place. The insurance
premium for the first year for stock consisting gold jewellery worth Rs
12,87,35,400 and diamond jewellery worth Rs 41,67,37,500 will be Rs 13,82,253.
Gold jewellery will be insured with a premium amount of 0.75% per year and
diamond jewellery will be insured with a premium amount of 1% per year. With an
increase in the stock requirement, the amount will swell up over the years.
21)

MAINTENANCE AND OTHER CHARGES

Every business has to keep provisions for sundry and unforeseeable expenses. This
cost head will include all the maintenance and miscellaneous expenses that will be
required in operation of the store over the years. This cost head includes items like
catalogues, jewellery boxes, weighing machines, purity check machines, cash
counting machines, legal expenses, maintenance of electrical equipments,
provision for expenses on electricity and pantry expenses among other things.

22)
EXPENSES COMPARED WITH SALES AND PROFIT
(AMOUNT IN CRORES)

PAGE 32

Rs. 200

Rs. 150

Rs. 100

Sales (Revenue)
Expenses
Profit (Balance)

Rs. 50

Rs. 0
1

10

11

-Rs. 50

23)

NO OF YEARS

Breakdown of expenses Year 1

Interest Payment

0.6 0.9
0.33

lease Rental
Salaries

1.1
5.95

Depreciation
Maintenance
Principal repaid

3.3

(Amount mentioned in crores)

PAGE 33

Break down of expenses year 11

Interest Paid
Lease Rental

0.48

Salaries

2.43
0.09

4.52

Advertising
Insurance

0.62

Depreciation

0.3

Principal Repaid

2.3

Maintenance
3.3

(Amount mentioned in crores)

As is seen from the above pie chart analysis of year 1 and year 11, the interest
expenses have reduced over the years and the principal repaid has increased. This
is because the store meets its timely instalment payments.

PAGE 34

24)

INVENTORY AND BREAK EVEN ANALYSIS

The store will start with inventory levels refurbished to full capacity i.e. Rs
54,54,72,900 comprising of gold and diamond jewellery. This is the maximum
capacity of inventory the store can carry in the first year. Out of the total
requirement, Rs 44,12,88,525 worth of inventory would be taken on loan and the
rest on credit. Since, the amount of Diamond stock that will be taken on credit will
bear no interest expenditure, it is a cost saving avenue for the store. Interest will
only be paid on the sum borrowed for gold purchases, a part of diamond jewellery
purchases and other expenses like advertising and lease rental.
The following table shows the breakdown of the borrowed fund essential to
support expenses in the 1st year.
PARTICULARS
Property Lease
Interior Design
Stock
Advertising &
Marketing
Insurance
Premium
Working Capital

Total
Borrowed
Fund

BORROWE
D FUND
Rs.
1,21,00,00
0
Rs.
2,75,00,00
0
Rs.
44,12,88,5
25
Rs.
4,65,00,00
0
Rs.
13,82,253
Rs.
2,12,29,22
2
Rs.
55,00,00,
000

The following table provides the breakdown of total stock

PAGE 35

Gold Jewellery (7% interest)

Diamond Jewellery on loan (12%
interest)
Diamond Jewellery taken on credit
Total Stock
Inventory taken on loan

Rs 12,87,35,400
Rs 31,25,53,125
Rs 10,41,84,375
Rs 54,54,72,900
Rs 44,12,88,525

The estimated sales in the first year as mentioned above is Rs 18,45,00,000 but, the
actual cost of goods sold in the year is Rs 15,84,09,091 which is inclusive of the Rs
1,02,50,000 worth of diamond jewellery that will be re-stocked on credit. For the
first six years, in order to save the amount spent on maintaining the inventory
levels and also to make sure that the store never under stocks, it is recommended
that the store only refill 90% of the actual sales made in the next year. For instance
if the cost of goods sold in the 2nd year is Rs 18,51,98,684, the store will only
replenish 90% of the sales made i.e. Rs 16,66,78,977.
This model can be continued till the 6th year because 90% inventory levels take
care of the projected demand for the next year. But, since the sales forecast is
progressive, the store will have to maintain 100% levels from 7th year onwards,
sometimes even refurbishing the sock multiple times in the same year.

25)

HEADS OF INCOME

For running a jewellery business, it is important that certain factors like the heads
of income are predetermined.
Normally for a jewellery business there are a few heads of income as mentioned
below:

Cost Hedge
Making Charges
Buy back of gold jewellery
Selling under 24 carat gold at 24 carat prices
Certain instalment and gold purchase schemes

The amount of income administered from buy back of jewellery and the instalment
schemes are negligible for the store as it is hardly enough to sustain a fraction of
the sales. Selling under 24 carat gold at 24 carat prices is unethical, not to mention
PAGE 36

that the customers are now educated through various means and only seek gold
jewellery with purity mark that signifies the carats of gold in the jewellery.
This leaves cost hedge and making charges as the two primary heads of income via
which jewellers earn their revenues.

26)

COST HEDGE:

Generally, jewelers buy gold/ready-made ornaments in bulk and at the current

market rate in the form of gold-bars. They stock this gold and sell at a time when
the prices have increased. Normally, golds rate increase and they make money
selling it to you at a higher current gold rate than what they purchased it on.
This source of margin is not a big one unless there is huge increase in gold prices
over the period of buy and sell. Historically, price of gold has always moved in
upwards direction over the period of time. There may be some price fluctuations
across short span of time, but gold price trends suggest that its price has only gone
up over the long period of time.
27)

MAKING CHARGES

The amount of making charge that has to be accounted in the final price of the
jewellery is determined on the basis of the labour charges paid and the intricacies
of the design. During our research duration, we found various jewellers charging
different making charges in the range of Rs 250 Rs 400 on per gram of gold used
in making the ornament. This income forms a substantial part of the margin that a
jeweller charges and normally jewellers negotiate on the making charges.
In keeping with the industry standards, the margin on gold jewellery is kept at 10%
for the first 5 years and 15% for the next 5 years. The margin on diamond
jewellery is normally kept high with jewellers claiming to earn returns in excess of
100% over the selling price on a few categories of diamond ornaments. The margin
on the diamond jewellery is kept at 35% with a plan to shift it upwards to almost
40% when the consumers have gained trust in the brand.

PAGE 37

PAGE 38

28)

LOAN REPAYMENT SCHEDULE

For setting up the store, initial amount of Rs 55,00,00,000 will be borrowed from the
market.
The following table gives the breakdown of the amount that will be borrowed for
initializing the store.
PARTICULARS
Property Lease
Interior Design
Stock
Advertising &
Marketing
Insurance
Premium
Working Capital

Total
Borrowed
Fund

BORROWE
D FUND
Rs.
1,21,00,00
0
Rs.
2,75,00,00
0
Rs.
44,12,88,5
25
Rs.
4,65,00,00
0
Rs.
13,82,253
Rs.
2,12,29,22
2
Rs.
55,00,00,
000

Out of the total borrowed fund of Rs 55 crore, Rs 12,87,35,400 will be borrowed at

an interest of 7% for buying gold for the ornaments and remainder of the amount will
be borrowed at 12% interest rate.
Since in the first few years, the revenue made from sales is not enough to sustain the
costs as well as refurbish the inventory levels, the store management will have to
borrow additional funds every year till the 6th year i.e. the year the store makes its

PAGE 39

first profit. With an increase in the additional borrowed funds, the interest liability
will also increase as shown in the table below:

Hence, as shown in the above table by the end of the 6th year, the store would have
borrowed capital in addition of Rs 80 crores.
The store will keep making part principal payments and try to offload the entire debt
fund within 20 years of operations.
The following table will show the loan amortization schedule for the first 10 years of
debt raised at 7% and 12% separately.

PAGE 40

LOAN TAKEN AT 7%

LOAN TAKEN AT 12%

PAGE 41

29)

PROFIT & LOSS ACCOUNT

The following table shows the Profit & Loss account for the first, sixth, seventh and
ninth years.

As can be seen from the chart below, the loss incurred on the business is steadily
falling and the business registers its first profit in the 6th year. The store registers a
year on year increase in profit of 44.97% from year 9 to year 10 and 39.12% from
year 10 to year 11.

PAGE 42

30)
THE PROFIT REGISTERED BY THE STORE (AMOUNT IN
CRORES)
35
30
25
20
15
Column2
10
5
0
1

10

11

-5
-10

No of YEARS
31)

CASH FLOW STATEMENT

The following table shows the cash flow statement of the store for the first, sixth,
eighth and ninth years.

PAGE 43

As shown in the table above, the profit margin that the store has over the years will
considerably increase over a period of the predicted 10 years. Though the annual
expenses and the interest expenses are increasing considerably, the sales are
increasing at a higher pace to register positive Profit after Tax from 6th year
onwards.

PAGE 44

32)

PROPOSAL II THE DEBT : EQUITY MODEL

IMPORTANT ASSUMPTIONS
The sales are the same as the previous model
The store raises capital in the debt : equity ratio of 4:1 i.e. out of the total
requirement of Rs 55 crores, the store uses debt fund of Rs 44 crore and
equity fund of Rs 11 crore
To maximise the returns from this model, the opportunity cost on equity
fund and dividend payment to the owners is avoided

33)

EXPENSES

All expenses under this model will stay the same expect for the interest and
principal payments that the store management will make on the borrowed funds.
The store will borrow Rs 44 crore on which Rs 4.63 crore will be due as an interest
payment in the first year. Since, the store will make regular principal payments; the
interest burden will keep on reducing every year.
The following table shows the interest liability of the store for the first eleven years

The above table also includes the interest due on the additional borrowed funds as
the store borrows in the surplus of Rs 60 crores

PAGE 45

34)
EXPENSES COMPARED WITH SALES AND PROFIT
(AMOUNT IN CRORES)
200
150
100

Sales (revenue)
Expenses
Profit (Balance)

50
0
1

10

11

-50

No of Years

As compared to the previous model, this model establishes that the store can start
earning surplus from the 5th year of operations as opposed to the 6th year from the
previous model. Moreover, the overall profitability of the business also increases.
35)

COMPARISON OF EXPENSES (AMOUNT IN CRORES)

Expenses Year 1

Interest Payment
Lease rental

0.6 0.75
0.33
1.1
3.3

4.63

Salaries
Depreciation
Maintenance
Principal Payment

PAGE 46

Expenses Year 11

Interest Payment
Lease Rental
Salaries

0.61 0.09
1.96
3.63
0.48
0.3
2.3
3.3

36)

Advertisng
Insurance Premium
Principal Payment
Maintenenca
Depreciation

USE OF CAPITAL

The following table shows the requirement of capital for the store to initiate
operations

THE SOURCE OF CAPITAL

Requirement
Property Lease
Interior Design
Advertising & Marketing
Insurance Premium
Working Capital
Diamond Stock
Gold Stock (7% Interest)
Diamond Stock (12%
Interest)

Amount
Rs 1.21 crores
Rs 2.57 crores
Rs 4.65 crores
Rs 0.14 crores
Rs 2.12 crores
Rs 0.13 crores
Rs 12.87 crores
Rs 31.13 crores

Equity/Debt
Equity
Equity
Equity
Equity
Equity
Equity
Debt
Debt

PAGE 47

Total debt fund employed Rs 44 crores and total equity fund employed Rs 11
crores.
37)
THE PROFIT EARNED THROUGH THIS MODEL (AMOUNT
IN CRORES)

Profit Earned
35
30
25
20

Profit Earned

15
10
5
0
-5

10

11

-10

No of Years

38)
CONCLUSION
The focus of this project is to sell branded designer jewellery to the upper
class and the upper middle class of Mumbais highly influential population.
The segmentation of this project is highly based on the fact that target
market for Azira is the elite class of Mumbai
As mentioned above, there is a huge scope for the business to flourish under
the organized jewellery sector. The jewellery industry has out high impetus
on the performance of the organized sector, to break away from the trend of
family oriented businesses dominating the sector.
The jewellery business is highly profitable as in India, gold jewellery is
viewed with a lot of sentiment and fervour. It is not just an investment buy
but, people attach their self respect and pride with jewelleries. Indian culture
promotes the purchase of jewellery through various occasions and the
jewellers have been cashing in on this prospect since a long time ago. The
PAGE 48

margin on jewellery is really high and the segment heavily relies on trust a
customer has with the seller.
With government initiatives like BIS Hallmark etc, the people are waking up
to the fact that the jewellery that they purchase has to be of the best certified
quality. Consumers are recognising the fact that branded jewellery is more
reliable when it comes to quality.
Various equity investors have begun investing not only in bullion but also in
gold and diamond jewellery, which highlights that the investor sentiments
regarding the jewellery sector is positive and they expect the sector to churn
money.
And lastly, the buyers of jewellery are really faithful and loyal. They do not look
for cost efficiency but target satisfied buying experience. They seek to build trust
on the sellers and the market for such branded jewellery is only opening up to new
possibilities.

PAGE 49

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