divyash the jeweller jewellery business retail plan by prerna
TRANSCRIPT
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DIVYASH THE JEWELLER
JEWELLERY BUSINESS RETAIL PLAN
By
Prerna Sharma
AN INDEPENDENT STUDY
Submitted in partial fulfillment of requirements for the degree of
Master of Business Administration
Stamford Graduate School
Stamford International University
December 2010
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Copyright © 2010 By
(Prerna Sharma)
All rights reserved.
No parts of this publication may be reproduced, stored in a retrieval system,
or transmitted, in any form or by any means, electronic, mechanical,
photocopying, recoding, or otherwise, without the prior written permission
of the author.
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ACKNOWLEDGEMENTS
With great humility I would like to praise God the Almighty, All gracious
merciful, The compassionate, who bestowed me with enough health and courage to work
on this project.
I would like to express my deep sense of gratitude to Dr. Leonida Ricafort to be
my advisor at the last moment and provide me with constant encouragement which led
this project to its completion.
Member of Advisory committee, Dr. Tanompong Panich must find mention with
honor and gratitude for his whole hearted response for cooperation.
I must then express no less grateful thanks, to Mr. Clifford Gomes for providing
me with never ending prompt guidance and timely suggestion is duly acknowledged.
I am extremely grateful to Mr. Sandeep Kirti who despite of his busy schedule has
always helped me with the healthy discussions, providing me the assistance and
encouragement whenever I needed it the most.
I must thank Mr. Chandan Kumar for giving me the insight regarding the
financing of a firm and also at times correcting my perception regarding the working of
different operations of firm.
This project has been blessed by my parents and I will forever remain indebted to
them for their kind support even at the cost of their comfort.
Prerna Sharma
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TABLE OF CONTENTS Page
1. ACKNOWLEDGEMENT ........................................................................................ ii
2. EXECUTIVE SUMMARY ...................................................................................... iii
3. LIST OF TABLES .................................................................................................... v
4. LIST OF FIGURES .................................................................................................. vii
1. INTRODUCTION TO THE JEWELLERY MARKET OF INDIA
1.1 Introduction ..................................................................................................... 1
1.2 Micro-Environmental Factors ......................................................................... 2
1.3 Advantage India .............................................................................................. 6
1.4 Business Environment of India ....................................................................... 7
1.5 Retail Market of India ..................................................................................... 8
1.6 Jewellery Market of India ............................................................................... 10
1.7 Growth of Jewellery industry in India ............................................................ 11
1.8 Advantage Bangalore ...................................................................................... 12
1.9 Competitive Landscape of Jewellery industry ................................................ 16
1.10 Consumer Market trend ................................................................................ 17
1.11 Income distribution ....................................................................................... 19
1.12 Government initiatives for Gem and Jewellery industry .............................. 20
1.13 Changing face of jewellery retail .................................................................. 21
1.14 Market opportunity ....................................................................................... 22
2. COMPANY DESCRIPTION
2.1 Values of Divyash ........................................................................................... 25
2.2 Business Objectives ........................................................................................ 26
2.3 Product line ..................................................................................................... 26
2.4 Product Benefits .............................................................................................. 27
2.5 Management Summary ................................................................................... 29
2.6 Shop Floor Layout Plan .................................................................................. 35
2.7 Critical issues .................................................................................................. 36
3. MARKET AND STRATEGIC ANALYSIS
3.1 Market summary ............................................................................................. 37
3.2 Jewellery Competition .................................................................................... 40
3.3 Marketing Plan ................................................................................................ 44
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3.4 Marketing Mix ................................................................................................ 44
3.5 Product Life Cycle .......................................................................................... 48
3.6 Market Strategy............................................................................................... 49
3.7 Factors driving the market demand ................................................................. 53
3.8 Expense Forecast ............................................................................................ 55
3.9 Evaluation and Control ................................................................................... 55
3.10 SWOT Analysis ............................................................................................ 56
3.11 Competitive Environmental Analysis ........................................................... 57
3.12 Key success factors ....................................................................................... 59
3.13 Prospects and constraints of industry............................................................ 60
4. ACTION PLAN
4.1 Functional level strategies ............................................................................. 62
4.2 Business Level strategies ............................................................................... 71
4.3 Future Plan of Divyash .................................................................................. 71
5. FINANCIAL PLAN
5.1 Startup Expenses ............................................................................................74
5.2 Important assumptions and key financial indicators......................................75
5.3 Break Even Analysis ......................................................................................76
5.4 Capital Equipment needed .............................................................................77
5.5 Financial Projections of Divyash ...................................................................78
5.6 Payback Period Review .................................................................................84
6. RISK ANALYSIS AND CONTINGENCY PLANNING
6.1 Risk Analysis ................................................................................................. 85
6.2 Contingency Planning ..................................................................................... 91
7. CONCLUSION AND RECOMMENDATIONS ...................................................... 94
BIBLIOGRAPHY ..................................................................................................... 97
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LIST OF TABLES
Page Table 1. The Indian Gem and Jewellery highlights ................................................ 2
Table 2. Forecasted Economic Growth Data .......................................................... 6
Table 3. Economic Snapshots of Bangalore ........................................................... 14
Table 4. The industry turnover and Employment base in various categories ......... 14
Table 5. Forecasted Population Growth ................................................................... 16
Table 6. Proposed schedule for start up of Divyash ................................................ 31
Table 7. Current verses old marketing trends .......................................................... 40
Table 8. Consumer profile and Company Preference ............................................. 51
Table 9. Start up Expenses ...................................................................................... 74
Table 10. Sources of funds ..................................................................................... 74
Table 11. Initial Financing Plan ............................................................................... 74
Table 12. Break- Even analysis ............................................................................... 76
Table 13. Marketing Budget .................................................................................... 76
Table 14. Salary Expense ........................................................................................ 77
Table 15. Personnel Plan.......................................................................................... 77
Table 16. Miscellaneous and Capital Equipment needed ........................................ 77
Table 17. Depreciation Expenses ............................................................................ 78
Table 18. Sales Projections. .................................................................................... 79
Table 19. Cash Flow Projections ......................................................................... 79
Table 20. Pro Forma Balance Sheet ...................................................................... 80
Table 21. Pro forma Profit and Loss ...................................................................... 81
Table 22. Pro forma Income Statement ................................................................. 82
Table 23. Business Ratio Analysis .......................................................................... 83
Table 24. Calculation of Quick Ratio/Acidity Ratio .............................................. 83
Table 25. Calculation of Return on investment ...................................................... 83
Table 24. Calculation of Working Capital turnover ............................................... 84
Table 24. Calculation of Pay Back Period .............................................................. 84
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LIST OF FIGURES
Page
Figure 1. Ease of doing business in India ................................................................ 8
Figure 2. Organization chart of Divyash ................................................................. 32
Figure 3. Perceptual matching of Divyash .............................................................. 53
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1. INDIAN JEWELLERY MARKET SCENARIO
1.1 Introduction
The jewellery market of India is a most promising segment in terms of returns as
compared to other sectors of India like insurance, oil, steel etc. The sector has a
remarkable growth of history and will show fabulous increase in the share of the market
by 15 percent in 2015 unlike other Developed Nations like U.S whose share will slump
down to 25 percent. The market has a total worth of US $ 27 Billion. The country has
attained a world wide fame in the sector of jewellery and had named itself as the Global
Competitive Sector in the world. Out of the total percentage of Diamonds polished in
World, the majority portion is polished in India. The retailers like Waltmart, JC Penney
etc also are on the verge of entering this attractive segment. The eye catching causes for
the growth of this sector is the availability of well- skilled cheap labors due to which
India became competitive in offering the wide range of discriminating designs in the
Market. Not only this, but the sector is also able to attain the cost competitiveness as
compared to World wide Jewellery sectors (Scribd, 2010)
The Indian market is categorized into two main segments such as Gold jewellery
and the Diamond jewellery. The market is dominated by the Gold jewellery more as India
is the world‟s fourth largest Gold consumer comprising around the total demand of 80
percent, the other 20 percent is comprised of Diamond studded as well as precious stone
studded jewellery. However it‟s the other way round when we see the consumption
pattern of jewellery categories. Large portion of the jewellery is consumed domestically.
However the varieties of Diamonds whether it includes rough, polished, cut or uncut are
exported to other countries in the form of finished products (Scribd, 2010:pp. 4)
The structure of import as well as exports of jewellery varied widely. The major
portion of the jewellery is consumed domestically. The Gold jewellery segment is much
more in demand as comprises of 80 percent of the total demand while the remaining 20
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percent is occupied by other studded and diamond jewellery. Thus the two major sectors
of importance in India are the Gold as well as the Diamond sector. Major portion of
Diamonds whether in cut form, uncut form, polished or unpolished are all made to the
tune of final finished goods to be exported and then are exported all across the World
(Scribd, 2010 :pp.4)
Its attractiveness is due to the skilled labor presence and the low cost of
production. India has a wide distribution network. More then 3000 offices have been set
to market and distribute the diamonds across the world. Western jewellery is generally
offered in 18 Karat which is of lesser impurity as compared to that of 24 Karat gold.
The Indian Gem and Jewellery industry has acquired leadership in this particular
segment because of the large number of distribution networks all across the world. It is
also famed to export the high quality jewellery and finished diamonds all across the
world at relatively lower price compared to other countires (Scribd, 2010 :pp.5)
.
TABLE 1. The Indian Gem and Jewellery industry highlights
Jewellery Market size of India US $ 13 billion
Gold Jewellery Market Growth on a year 15 percent
Diamond Jewellery Market Growth on a year 27 percent
(Source: Commodity online, 2007)
1.2 Micro-Environmental Factors of India
India is believed to be the largest economy in the upcoming decades. The huge
demand can be predicted for the high end luxuries products because it is the country with
the fourth largest billionaire population. Also the country housed the large number of
middle class population which proves it has a chance to be the upcoming consumer
market. India has risen as the most lucrative market among the Asian markets. It recently
became the member of the Trillion Dollar GDP club. It has shown a tremendous growth
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rate of 8.5 percent and many sectors are booming up. India now presents a huge
opportunity for the entrepreneurs to fill a void which was created by the government as
most of the sectors were held by Government. Sectors like insurance, retail, banking etc
are now been on the drastic rise. On the other side Courts have been set up catering to the
consumer needs and business needs (Gautam Patil, 2010)
The intensifying market of India offers a huge prospects for the growth of outside
companies in diverse sectors comprising the energy, health- care etc. One needs to have
an Bird‟s eye to nail this opportunity and hit the dart at the right time. Companies
offering the right products at right time with all the commitment can flourish easily in
India as with the growing span of Indian Economy it offers a huge potential for the
sectors with requirements exceeding the billion of Dollars. In order to be at advantage,
the early entry to the market is preferred which will offer advantages such as posing
threats to new entrants, making it difficult for them to enter, study the trends and set the
prototypes for the consumer buying behavior, to utilize the incentives offered by
Government (Amritt Ventures, 2010)
Framework for Macro-Environmental factors used in the study of Indian
Environment are:
1. Political Environment of India: India is the largest known democracy and has
given a secular status to all the people and parties to follow their own religions and
political parties. It has proven to be the most stable country in South- Asian region. It has
come up as the major trading partners for both European union as well as for U.S. (Eeas,
2010)
The main bodies interfering with taxes are the central as well as the state
government. The parliament and state legislature has clearly defined the procedure to
levy the taxes on the requited goods (Wikipedia, 2010)
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The Government efforts are worth appreciable in the growing jewellery sector of India. It
has given a huge boom to investment coming from outside. It has specially given boom to
the platinum sector of India, the import duty over the platinum has been dropped
drastically and no import duty has to be levied on other gemstones. Government has set
up various special economic zones which will allow the firms to have lower cost of
operations. To subsidize the effects of various taxes and duties on the jewellery trade,
Government has abolished the taxes, raised the parcel value of jewellery drastically. Thus
one can expect a huge bright prospects from the sector which is expected to grow at
compounded annual growth of 14 percent (Commodity online, 2010)
2. Economic Environment of India: Despite of the global economic shock, The
economy of India has still done well. It is the main preferred destination of outsourcing
by the western countries which helped it to sustain even at the time of slump, the other
factors such as labor intensive factors are also responsible for that. Government of India
has offered fiscal stimulus package to fight the slump. Being strong manufacturing
country it has worked in close co-corporation with that of China, Brazil etc (Economy
Watch, 2010)
The strong economic indicators have caused the large amount of FDI increase i.e.
from $123.4 billion to $ 161.3 billion in 209 coming in India, Global investors consider it
the safest haven to share the risks and invest in this country. Thus it a right destination for
such an investment as one can see the huge rise in the levels of incomes (Economy
Watch, 2010)
India believes in having the ethical political system which could make the lives of
citizen better and worth living. Thus it will keep crafting Economic reforms and policies
which will be sufficient to gather the world wide fame and help fight corruption and other
malpractices (Economy Watch, 2009)
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3. Social Environment: The improved literacy rates, the decreased poverty
levels and increased life expectancy one can conclude that India has progressed a lot in
terms of social status. India will rise as one of the largest education hubs and lot of
progress has been made in this sector. The only current problem is the with the
employment opportunities which are fairly less as compared to that of population (Eeas,
2010)
As different religion exist in the same country, thus after every now and then
India keeps celebrating the festivals all across. Besides having the main religion as the
Hindu religion, the other religions such as Christianity, Islam etc do exist in this. When
talking about the Indian culture, the marriage is the most important component of the
society. People celebrate this occasion lavishly with lots of metals. Gold jewellery and
Diamond Jewellery always form an part of the Indian Society in pursuing the marriage
(India Maps of India, 2010)
4. Technological Environment: The technological environment of India has
changed a lot since past. Earlier there were no efforts made to invest in Technology in
India but now the R&D is quite open towards the investment in this sector. But to cope
up with the growing competitiveness in the Global market, the government of India
planned to come up with the liberalized policies towards the technology as well as the
investment for the same (Scribd, 2009))
The implementation of Jewel CAD/CAM have started implementing in India to
stay in pace to that of other jewellery producing nations. As India exports large
proportion of jewellery to the nations like U.S, Europe etc which are demanding towards
the designs as well as finishing thus to meet their quality standards and requirements,
Indian started implementing these technologies greatly in the jewellery designing. Thus
most of the jewellery corporate have started implementing this technology to have
increased production and save time as well (Jckindia.com, 2010)
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TABLE 2. The forecasted economic growth data of India
(Source: Central Statistics Office (CSO), Ministry of Statistics & Programme Implementation, Government of India
1.3 Advantage India
India is an emerging economy and choosing India as compared to other countries
provides lot of benefits which are not available in other countries. Huge tax benefits are
offered unlike any other country in the world. Special Economic Zones in India provides
the tax free incomes as the companies which set their operations in SEZ‟s or Special
Economic Zones referred to as the foreign territory for business gives waiver from
indirect and direct taxes like VAT, Income Tax, Excise Tax and the hike. This will lead
to saving the huge amount of money by foreign countries. (Amritt Ventures, n.d.)
Most of the people in India are degree holder in their respective fields which
allows the easy communication in foreign language and gives confidence to foreign
companies for setting up their operations in India. The greatest advantage of India is that
it comprises the highest amount of the youngest population i.e. 54 percent of the total
population of India is under the age of 25 years which make it the most suitable country
to be the destination for foreign companies as it is ideal for them because youngsters are
Industry
Percentage change over
the previous year
2009-10 2010-11
1 Agriculture, forestry & fishing 1.9 2.8
2 Minning and quarrying 8.2 8.9
3 Manufacturing 3.8 12.4
4 Electricity, gas & water supply 6.6 6.6
5 Construction 4.6 7.5
6 Trade, hotels, transport & communication 5.5 12.2
7 Financing, insurance, real estate & business services 11.8 8
8 Community, social & personal 7.6 6.7
9 Total GDP 6 8.8
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more adaptable to any kind of changes and the literacy rate among youngsters are quite
high. (Amritt Ventures, n.d)
The Indians are quite readily open and accept every challenge open- mindedly.
This is the another possible reason that why most of the western countries prefer to set-
up business in India. Indians are risk takers by birth only so that accept every new idea
and are open to criticism too. Therefore the countries whose MNC‟s have based their
operations in cities of India like Bangalore, Hyderabad etc are benefitted to do so. The
younger population of India are adapting to the western trends and preferences and are
quite flexible in working as well. They are self motivated and have a know how target to
meet the demands and expectations of the employers. The status of Indians are also
known by the kind of job they pursue hence Indians generally are committed towards
their work and they don‟t mind working long hours with the time
difference.(Articlesbase, 2010)
1.4 Business Environment of India
On an average India takes lesser days for the incorporation of newly start business.
For the foreigners who are keen in starting a business in India have to wait around 35
days for certain industries as for few sectors the procedure are simplified. There might be
the case that the investment amount is variable across the sectors in India (Gautam Patil ,
2010)
The good networking is always an key in the success of business. Despite of having
large capital inflows as well as sound investors some business don‟t succeed due to the
lack to good networking. India provides a conducive for numerous of centres and
institutions providing favour to the entrepreneur. The well known IT sector of India is
fetching the most of foreign direct investment all across the globe (Gautam Patil, 2010)
But one need to be careful while crafting the strategy to work in India, the strategy
will vary along with region to region i.e the strategies crafted while operating in the
eastern India cant be followed in the Northern India. Because of the diverse nature of
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ethnicity, the preference pattern as well as the operation pattern is different. The northern
part of India is still conservative and allows lesser women to work as compared to the
southern part who gives majority of roles to the women. Thus the same strategies cannot
be successful in every region as the culture varies drastically in India ( Bhumika Ghimire,
2009)
Figure 1. Graph below shows the Ease of doing Business in India compared to
Global economies
(Source: IFC, 2010
1.5 Retail Market of India
Retailing in India is a segment that never sees soar in the profit, the vast portion
of the retail is unorganized despite of the fact of good monsoons, liberalized reforms,
entry of foreign players. As the growing trends in population and the rising incomes offer
quite a scope in the sector therefore the future looks brighter. Lot of private players have
entered to take advantage of this opportunity and hence it has become highly competitive.
0
20
40
60
80
100
120
140
160
180
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Earlier India witnesses a slow growth in retail sector as the classes of India were not
flexible enough to adopt the western trend, the education was less prevalent and the
income levels were low but today it was at the boom with lot of International and
National brands coming in. with the changing times the concept of Malls, Hypermarkets,
Supermarkets have become more prevalent and people prefer to hang out at such places
very frequently. Hence with the growing demands and consciousness the consumer has
started looking towards the concept of branded goods. With this lot of malls are coming
in as the consumers are adaptable towards it and they provide them with all the day to
day offerings. Domestic players like Tata, Birla and Reliance are taking the advantage
out of it and even the international players like Walt- Mart are entering the Indian market
through the joint venture with the known chains of India (Pradhyumansinh Gohil, 2008)
The growth in this sector is expected to give rise to lot of employment
opportunities which will again helpful in growth of our Economy. Already the sector
contribution is 10 percent to the GDP of our nation. And in future the visibility of
hawkers, grocers etc will decline and the malls will have the high visibility. This kind of
format has lead to increased spending by the customer. If a customer has to buy from the
local vendor or hawker he might buy the little quantities which will be sufficient enough
for a day or so but if the consumer buys it from a mall or retail hypermarket, he buys the
same in more quantities as he is offered with discounts on buying the bulk quantities
(Corporate Catalyst India, 2010)
As the customers are urbanized and they are willing to accept the products as
lifestyle products in various categories therefore retail is expected to face tough
competition and to face it the retailers should make the product as the brand to survive
this. If the retailers will start building their brands and position them properly in
customer‟s mindset, it will help them to sustain long run and assure the quality products.
Thus branding building is an important concept in today‟s world. The growth of real
sector is largely dependent on this particular sector hence its growth is directly
proportional to that of retail segment‟s growth. As more and more players will enter into
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market, it will draw more investments towards the infrastructure etc and thus will lead to
the growth. There is a need to modernize the retail industry which offers the attractive
opportunity to international retailers and projects India as the top destination for the
investment. The untouched retail consists of over 5 million outlets which are still not
enough modernized thus an organized sec tor will grow at a faster pace due to the
changing lifestyles, preferences etc (Dr. M Dhanabhakyam and A. Shanthi, 2010:pp. 3-
4)
1.6 Jewellery Retail Market of India
Jewellery has been the continuous fascination of Indians. Indians have been in
love with jewellery since decades and jewellery has been their part of lives in every
minor to major occasions. The jewellery assumes an important role in Indian society and
hence this market is expected to reach at the US $ 26 billion by 2010 as per a report
„Indian Gems and Jewellery Market – Future Prospects to 2011‟, by RNCOS. Now the
diamond industry is also offering huge prospects as the demand is continuously
increasing and price remaining stable (IBEF, 2010)
The increased marketing practices and providing innovative products in the
market will help consumer to stick to the particular brand. The total expected demand for
gem and jewellery is expected to increase to US $ 20 billion by 2010 and US $ 30
billions in 2015. The increase in disposable income is not concentrated just to the urban
markets but is also well spanned across rural area. The consumer of India is consuming
800 tonnes of Gold and 20 percent of the Gold consumption of the world (Diamond
World, 2008)
As the literacy rates are improving the rural population is no more dependent only
on agriculture for the sustainability but they are drawing income levels equivalent to
that of urban population on an average the income levels of rural population vary
between $4,573 to $22,800 per annum. Other factors such as influence of movies, easy
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availability of bank loans have caused their consumption to increase for the rural goods
(jewellery outlook, 2010)
1.7 Growth of Jewellery industry in India
1. Gold: India is one of the largest bullion markets in the world. It has been
until now, the undisputed single-largest Gold bullion consumer. Gold imports stood at
739 tonnes during April 2009-March 2010. The imports of gold has been increased
drastically as compared to 2009. India consumes huge quantity of Gold and it stands at
11th
position in Global gold consumption in the world. India was holding the gold in
2010 and the total gold held was 557.7 tonnes of gold reserve. Therefore both
unbranded as well as branded retail outlets have increased the import efforts as the
demand for gold jewellery is increasing and consumers are demanding the new trends.
The Gold market of India is believed to be the strongest now as the demand for Gold is
increasing drastically both in terms of fashion jewellery as well as in terms of
accessory. Customers are also more confident on the positive growth of Jewellery
market of India especially the Gold (IBEF, 2010)
2. Platinum: Due to the increasing gold prices, platinum jewellery has gained
momentum in the past few years not only worldwide but also in India. As per the
Platinum Guild International (India), the number of outlets selling platinum jewellery
increased from 12 in 2000-01 to over 300 currently. It is predicted that the number of
outlets selling platinum jewellery would increase in the coming years. It is the
upcoming segment in India. It is still not popular with the consumer market of India
Most platinum jewellery manufacturers are targeting consumers in the age group 20-40
years with high disposable income (IBEF, 2010)
3. Costume Jewellery: The Indian costume jewellery market is also witnessing
growth in the international market as well as the domestic market as well because
costume jewellery has always been a affordable jewellery and is the preferred ones in
small occasion which is of lesser importance in one‟s life but with the inflation rate
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growing too high and the gold prices touching sky costume jewellery is gaining
prominence also in the main occasions such as marriage etc. Hence at present the demand
for costume jewellery seems positive in both domestic as well as international market.
The major exporting destination is India which is also foreseeing the positive demand
trends towards the growth of costume jewellery segment of India (IBEF, 2010)
4. Silver: In rural India the most preferred metal for jewellery is the silver. People
wear all sort of traditional jewellery made in Silver in rural parts of India. India sells
silver in Bulk in rural parts of India. This metal is also prominent among the youngsters
teenage who view silver as the affordable metal for fashion. The lower medium class
segment also prefers this metal in most of their jewellery collections especially the
ornaments for legs, armlets and for the toe rings.
5. Diamond: India is the world's largest diamond cutting and polishing centre in
the world. Surat is India's diamond processing hub, contributing over 80 per cent of the
country's diamond processing industry and generating the maximum possible revenues
from this centre in India. Diamond studded jewellery of India is much more in demand by
the western countries and comprise of lesser share of demand in India. India is the
world's largest diamond cutting and polishing centre in the world. It accounts for 60 per
cent value share, 82 per cent by carats and 95 per cent share of the world market by
number of pieces. It is the third largest consumer of polished diamonds after the US and
Japan (IBEF, 2010)
1.8 Advantage Bangalore
The estimated population of Bangalore is 8 millions as on 2010. It is
comparable to that of Paris in terms of fashion. People in the Bangalore city are moving
outgoing, more fashion conscious and Brand awareness is also high. This is due to the
high rate of literacy and the high employment rate in Bangalore. The growth rate of
Bangalore is at the drastic rate and it shows the highest growth rate after Delhi. It is an
vibrant city and is the major industrial hub. The city is known for the IT technology all
21
over the world and hence it is known as the silicon valley of India.
1. Economy: Bangalore is among the fastest growing metropolitan cities in
India. The main factors responsible for the growth in Bangalore are: Growth of private
enterprise especially the IT companies are by and large established at Bangalore and the
other new IT MNC‟s are expected to come in the near future. This city is also renowned
for having the highest number of academic centres in India thus these two main factors
are responsible for the high growth of economy in the Bangalore. With having high
inflation all across India, this city remains quite unaffected by the inflation because the
purchasing power of residents of this city is high. The city has fast moving consumer
goods market and since it is known as the IT hub of India, it is able to fetch lot of Foreign
Direct investments from outside India. The flow of foreign direct investment is increasing
continuously in Bangalore and so is the income trend (KIPDC, 2010)
One can see the upward income trend among the people of India as India has
gained a fame in the global IT market of the world and gaining lot of projects of IT all
across the world which is contributing to high income levels of the people. On per
capita income basis Bangalore is the fastest growing city and also compared to other
southern states of Karnataka it has high par capita income and the city is responsible for
33 percent of the export of IT products. The Business sector of Bangalore is craven by
the sector friendly user policies for both public as well as private sectors. Lot of small
and medium enterprises are also entering Bangalore to reap the opportunity from
vibrant Bangalore city and increase their productivity. The city contains large number
of skilled and talented workforce, most of the Bangalore people are degree holders in
some or other field (KIPDC, 2010)
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TABLE 3. The economic snapshots of Bangalore for the year 2009-2010.
Serial no. Economic snapshots
1 Area 741 sq. km
2 Population 5.8
3 Projected population 8.01
4 Literacy rate 83%
5 Per capita income 1087
6 Software exports 13.5
7 workforce 5.55 in lakhs
(Source: KIPDC, 2010 :http://www.idd.kar.nic.in/docs/21.Key_Yelahanka_ITH.pdf)
TABLE 4. The industry turnover and the employment base in various categories
Size Number Investment
Rs. In million Job opportunities
Small scale 55,162 16,820 578,000
Medium and large 546 47,250 224,287
Mega 17 38,080 33,830
(Source: KIPDC, 2010 : http://www.idd.kar.nic.in/docs/21.Key_Yelahanka_ITH.pdf)
Bangalore provide numerous advantages. The city is established before
colonization and is of significance in history. It has diverse set of activities from silk to
clothing and IT to Aeronautics. Besides known for IT technology, the city equally gives
importance to the public sector of Bangalore. The city is known to provide the highest
standards of technical training. The city opens various avenues to large number of
immigrant population, this is possibly the one of the reason for containing large number
of immigrant population. The large number of population is from the Southern part of
India which comprises of the larger share i.e. Tamil Nadu, Kerala, Karnataka etc. It
ensure a proper balance between the classes and the activities. The city provides the
quality life to its citizen due to the availability of the system of natural drainage, climatic
advantage, the availability of water in Cauvery Basin etc (KPIDC, 2010)
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Demographics of Bangalore: Bangalore is the third most populous city in
India and the 27th most populous city in the world. With a decadal growth rate of 38%,
Bangalore is the fastest-growing Indian metropolis after New Delhi. Residents of
Bangalore are referred to as Bangaloreans in English or Bengaloorinavaru in Kannada.
While Kannadigas are the majority of the population, the cosmopolitan nature of
the city has caused people from other states of India to migrate to Bangalore and settle
there. Scheduled Castes and Tribes account for 14.3% of the city's population. Kannada,
the official language of the state of Karnataka, is widely spoken in Bangalore. The
79.37% of Bangalore's population is Hindu, roughly the same as the national average.
Muslims comprise 13.37% of the population, which again is roughly the same as the
national average, while Christians and Jains account for 5.79% and 1.05% of the
population, respectively, double that of their national averages. Women make up 47.5%
of Bangalore's population. Bangalore has the second highest literacy rate (83%) for an
Indian metropolis, after Mumbai. Roughly 10% of Bangalore's population lives in slums
a relatively low proportion when compared to other cities in the developing world such as
Mumbai (42%) and Nairobi (60%) (Answers.com, n.d)
Saturation of current land availability is predicted in the future. The city is
forecasted to have drastic increase in the population even if the demand ceases. This is
due to the huge demand for the land and the entry of infrastructure projects. Estimates
for the future population growth is as 8.8 million by 2015, and 10 million by 2020
which shows an increase of 2.6 million and 3.8 million respectively as compared to that
of 2001. That concludes that within each year the additional 19,300 new persons will be
added (BDA, 2007)
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Table 5. Forecasted population growth of Bangalore
Population Growth in lakhs 1991 2001 2011 2021
BMP 3.302 4.303 5.143 5.559
Non- BMP 0.828 1.867 2.872 4.409
Total poplation-BMA 4.13 6.17 8.015 9.968
Average annual growth rate
BMP growth 2.68% 1.80% 0.78%
Non- BMP growth 8.47% 4.40% 4.38%
Total growth-BMA 4.10% 2.65% 2.20%
(Source: JNNURM CDP )
1.9 Competitive landscape of Jewellery Industry of India
There are many factors contributing towards the growth of Gem and Jewellery industry
such as manufacturing excellence, Government policies, International marketing network
and dominance in diamonds across the globe. Also, the pattern of the consumption of
gold and growing demand for the platinum in India also caters to the desire of the Gem
and Jewellery market.
1. Availability of Talented Manpower: Human resource of India is the greatest
key strength of Gem and Jewellery sector of India. India contains large pool of skilled
artisans who have expertise in the traditional as well as modern jewellery making. The
artisans are also technically sound and are well versed with the technology of 2-D as well
as 3-D designs. The availability of technically sound labor at cheap prices is the main add
on point for India to become competitive across the global gem and jewellery industry
(IBEF, 2006)
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2. Demand Factor: Number of socio-economic factors are responsible for
the increase in demand for the jewellery. The main driver of the demand is still the
perception of Indians to view Gold as an investment commodity which can be
converted into cash as and when required. Other factors such as rising income levels,
increasing consumer consciousness towards branded jewellery, change in perception of
the consumers are the other reasons which have contributed for the growth of Gem and
Jewellery industry. The demand factor for jewellery is quite positive and is expected to
remain positive for the coming years because jewellery is an asset and no other item
can replace it (IBEF, 2006)
3. Segmentation based on Occasion: Earlier, the segmentation of the
customers were done based upon the product categories of the jewellery. Divyash will
offer the range looking at the buying preferences and wearing habits of the customers and
will attribute the products accordingly to segregate the customers. For example people
buying the high priced items will be attributed as the crème class buying the high end
jewellery and the other attributes associated with it such as whether it can cater the need
of whole Indian market or only specific group of the population will prefer etc (IBEF,
2006)
High growth has contributed to greater incomes for Indian households, which in
turn has enabled Indian households to both save and spend more. We have in the past
few years observed that household sector savings have in fact grown by far more than
any of the other macro-indicators. This is of course a desirable outcome. Greater
incomes do imply greater expenditures in the short term, but greater savings (if translated
into good quality investments) ensure long term growth of the economy, employment
opportunities, and household incomes (Amit Sinha, 2009)
1.10 Consumer market trends of India
High income levels and high growth has enabled Indian households to both save
and spend more. House hold sector savings are grown as seen in the past years as
26
compared to other micro-economic indicators. Thus it shows that the greater savings
imply the greater expenditures and also the employment opportunities, household
incomes, economy growth are ensured by savings. Also the brands in India have started
gaining momentum because now Indians are developing tastes to buy western brands
and lot of international brands are coming to the market.
Indians consumer are becoming more conscious about their outlook these days
and also are more concerned about their status symbol thus this has given momentum to
the consumer market of India. Now India is engaging in lot of international trade
activities which causes Indians greatly to travel back and forth thus they travel a lot and
follow the fashion trends prevailing in every country and search and expect the same
from India. Thus know Indian market have started putting up with all kind of Brands
whether it is in jewellery or textiles or accessories etc. In case of accessories as well as
clothing Indians are aware of the brands and prefer to buy the same but in case of
jewellery Indian consumer prefers to buy back at home because they consider the
jewellery from International brands as unnecessary expense which usually have higher
labour and manufacturing charges. Their mindset is such that they can easily find the
similar design back at home (Amit Sinha, 2009)
Consumer market of India suffers main threat from the Chinese goods. Lot of
Chinese goods are entering into Indian market which almost copy the same attributes as
original products have and the only advantage is that it is available readily and at much
cheaper price. There were lot of issues earlier regarding the ban over the Chinese
goods. Due to the cheaper quality goods provided by china is causing lot of competition
with the Indian goods and even the Indian consumers are preferring to buy it as it saves
lot of many and give them the same pleasure or satisfaction and hence by having the
same budget, one can have different assorted products at the same time.
During the post liberalization decade, from 1993-94 to 2003-04 the average
annualized growth rate of India‟s Gross Domestic Product was a little above 6% and has
arguably since crossed the 7% mark on a long term basis. This has brought about a
27
considerable increase in India‟s personal disposable income. As a result, both saving
and consumption expenditure in the household sector has had considerable growth.
During 2003-04, India‟s total personal disposable income was Rs. 23,585 billion and
24.6% of this income was directed into savings by the household sector. By 2008-09,
our estimates show that India‟s total annual personal disposable income has grown to Rs
36,059 billion (about 52% being urban) and the annual savings have grown to Rs 9,239
billion , at present (Amit Sinha, 2009)
High growth has contributed to greater incomes for Indian households, which in
turn has enabled Indian households to both save and spend more. We have in the past
few years observed that household sector savings have in fact grown by far more than
any of the other macro-indicators. This is of course a desirable outcome. Greater
incomes do imply greater expenditures in the short term, but greater savings (if translated
into good quality investments) ensure long term growth of the economy, employment
opportunities, and household incomes (Amit Sinha, 2009)
1.11 Income Distribution
A study by Debroy and Bhandari supports the argument that inequality is in fact
increasing in India. The study looked at rural and urban inequality levels state-wise since
1983. The broad insight is that across almost all the states, inequality levels have
increased. This of course has many ramifications for consumer markets. Greater
inequality levels reflect that the higher economic segments are rising relatively faster than
the lower ones (Amit Sinha, 2009)
The poverty levels in India has been fallen drastically across all the states. The
starts like J&K, Punjab, Himachal Pradesh are the states having the lowest poverty levels.
The states like Bihar, UP and Orissa are the ones which records the highest level of
poverty. The income is increasing further in the Southern most part of India such as
Bangalore, Kerala, Coimbatore etc. Bangalore generally is comprised of the migrant
citizens from other states who are earning high and saving more and generally are
company sponsored individuals (Amit Sinha, 2009)
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Income levels of super rich individuals of Bangalore are at par to that of Americans and
they can afford to buy the luxuries of India. Since it is the IT hub of India so lot many
foreigners come for projects for minimum number of years and stay in India for
sometime. These individuals are also the high net worth individuals and would like to
buy back the souvenir or to other precious gift items to be given back in their country to
their fellow members (Amit Sinha, 2009)
1.12 Governments Initiatives for the Gem and Jewellery sector of India
In order to open a new avenue for the bullion trader community with improved
trading practices and increased delivery centers, the recent strategic tie-up between
Bombay Bullion Association (BBA) and Indian Commodity Exchange Ltd (ICEX) has
opened an avenue to harness the huge investment potential lying with the small and the
unorganized players. It provides the multiple delivery centers across the country to
enhance better communication between the markets, it does so by leveraging the BBA‟s
pan-India network and MMTC‟s also. Bombay Bullion Association will hold an
important position in managing the delivery infrastructure and providing the markets
with the customized contracts. New rules have been formulated for clearing the import
export consignments of specific goods including the jewellery and Gems (IBEF, 2010)
Government also provides the financial support of 2 percent to labor intensive
export sectors and duty drawback facilities. Government has also defined latest
procedures for FDI‟s in India which is causing lot many foreign players to enter the
Indian Market. Government along with other official bodies have made it mandatory
for the jewellers to have a hallmarked jewellery to assure the customers regarding the
quality. Thus Government of India is taking all positive steps to make this sector
vibrant and more appealing. Government is making the interference of National
Standard Bodies such as BIS etc as mandatory in this field to prevent adulteration
(IBEF, 2010)
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1.13 Changing Face of Jewellery Retail in India
Customer Mindset: The customer has certainly become more discerning in
carrying transactions. Quality and finish are the two major factors which the customers
considers while buying the jewellery. Quality generally to them is the craftsmanship,
finish not only includes the good looks of the jewellery but they also make sure that the
hidden part, back parts and invisible part display the equal finish unlike earlier days
where the main concern of the customers where just the design and the karatage in which
it is made. Nowadays consumers are much more aware about the purity and karatge
issues. They try to look for the jewellery product which could provide them with the
ultimate satisfaction. In jewellery they dont have a criteria for buying only the cheap
affordable products. If the design and finishing are sensual enough then customer is ready
to pay premium price also which is far above then the average price. The earlier trend
was just to make the purchase of Gold jewellery only. But now the consumer is ready to
try out other metals as well as well as other precious stones also (Roli Gupta, 2008)
Thus lot more innovations can be seen it terms of metal gemstone combination.
The customers are moving more towards buying the platinum jewellery or platinum
studded jewellery or preferring platinum with other precious stones as well. Budget,
reason and choice will always be the determining in decision regarding the purchase. The
customer will buy different kind of jewellery, she will buy the light weight, bold looking
jewellery for daily wear but she will buy heavy jewellery embedded with stones having
the fine craftsmanship when she is getting married (Roli Gupta, 2008)
The trendy patterns in jewellery is coming in demand as the customers want to try
out something new with different metals and plating which varies from white gold to
yellow gold plating. While continuing the trendy jewellery the customer always make
sure that the jewellery he gets is the purest of all and is meeting the quality standards.
Unlike other days where customers used to buy jewellery based upon trust and long term
relationships, now the customers are demanding the proof for the guaranty of jewellery
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purchased. They are generally asking for the certification in case of diamonds as well as
Gold. This has led to the increase of Hallmarked jewellery in India (Roli Gupta, 2008)
In India the signs of hallmarked jewellery is usually made at the back side and at
different places which make it easy for the customer to determine the amount of gold
content the ornament has. Hallmarking has to be done in all the metals i.e. Silver, Gold,
Platinum etc. It also will prevent the customer to become the victim of irregular practices
where a jeweller sells the low quality gold to the customers or mix the metal with some
other metals or alloys for the fine looking jewellery (Roli Gupta, 2008)
Earlier the diamond used to be considered as the luxurious item in the field of
jewellery and only the persons with high income could afford to wear it but now the
jewellery retailers have come up with the aggressive promotions and low range in
Diamonds also which is pretty much affordable so now anyone can afford to wear a
jewellery. DTC and WGC are the bodies which are promoting diamonds and it is no more
a product for the high classes existing in India but is a product which appeals to all the
classes of the Indian society (Roli Gupta, 2008)
1.14 Market Opportunity
Seeing the growing potential of Indian retail and the growing economy which is
fuelled up with the other factors like the increase in the per capita incomes, increased
urbanization, changing tastes and preferences and the growing young population, one
can forecast the positive growth prospects in Gem and Jewellery industry.
1. 3S (Showcasing Surrounding, Speaking): Besides providing the customers
with the unique and affordable collection, Divyash considers the importance of the
above mentioned 3 factors. Showcasing is the important factor i.e. visual
merchandising. Equal importance should be given to the importance of electronics,
wellness services and luxury items because the competition is not just within the same
category. Other important factor which Divyash will consider is the use of effective
sales force who can put forward their view points to convince the customers and
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increasing the profit of the company. Divyash plans to hire the effective , educated
sales force who can address the customers on various issues related to the purity,
karatage, hallmarking etc. These all factors together impact the mindset of the
customers strongly. Showcasing assumes the important role in jewellery because it is
finally the display which captures one‟s eye and attract them to enter a particular shop
(Art of Jewellery, 2008)
2. Celebrations Bonanza: Divyash gives the chance to its customers about
enhancing their experience. Divyash came up with the innovative idea of offering a
special scheme during the festivals or wedding occasions. It also plans to provide the
additional bonus offer to the loyal customers, the customers who will continue to buy
from Divyash will be offered the loyalty programmes wherein the customers cam buy
more jewellery for lesser amount. This will benefit the customer as they can by the
jewellery at any point of time and pay for it later in the future. Celebration Bonanza is
expected to enhance the sales of Divyash and fetch more suspected customers to
Divyash.
3. Affordable jewellery brand: Jewellery is often seen as the high
investment product in India thus Divyash will promote the jewellery as the product to be
worn on everyday occasion. The jewellery will be promoted as the life style product.
The lower range of jewellery will be introduced specifically in the category of ear rings,
pendents and rings etc.
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2. COMPANY DESCRIPTION
The Company
Divyash – the jeweller will start its operation in the heart of Karnataka in
Bangalore at Commercial street. The company will be jointly co-owned by Ms. Prerna
Sharma and by Mr. Chandan Kumar, the company will operate as the small and
medium enterprise. The genesis of Divyash‟s opportunity was Ms. Prerna Sharma‟s
decision after finishing her graduation degree to come up with the retail jewellery outlet
that could cater to the needs of the middle class as well as upper middle class segment.
Indians specially women has fascination towards jewellery, Indians have adorn
themselves in jewellery as its very tradition itself is the proof that Indians have always
been in love affair with the ornaments of the body. The country itself is among the
largest consumers of the Gold. The market is among the largest markets of the country
and is looking forward to the promising future with the avenues for the branded outlets.
Thus Ms. Prerna decided to grab this opportunity to serve the niche market by
providing them with the own brand products, associating them emotionally with the
customer mindset by providing them the quality products and add on services.
Divyash has vast collection of jewellery which allows every women to have
something that reflects her sense of style and personality. Divyash products includes
gold jewellery, gold enamelled, gold jewellery studded with precious stones etc such as
diamond, rubies, pearls, sapphires etc. and semi precious stones like cubic zirconium,
garnate etc. Its product portfolio includes- rings, pendants, bracelets, necklaces, chains,
earrings etc. Its products have presence across different price points to cater to
customers across mid market and a value market segment to manage its diverse
portfolio of design. Prerna Sharma plans to sells creative pieces through her own retail
store and simultaneously through secondary channels like selling through website, trade
shows etc. Divyash offers products that assures guarantee to the buyers. Every
jewellery piece at Divyash comes with the certificate of authentification.
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2.1 Values and Vision of Divyash
1. Innovation: Divyash promises to come up with the innovation in every facet
of its business. It will provide the unique designs, with the high quality standards and
will come with the user friendly policies. Besides this it will no way compromise on the
technology it will implement in Jewellery. Divyash will implement latest technology as
will keep exploring for the new ways of enhancing the technology used by it (Shrenuj,
2010)
2. Quality: Divyash will offer all quality products within the various categories
of the Jewellery. Divyash shall comply with all the industry standards to provide
continuous quality across al the fields at the affordable price for every segment of the
jewellery.
3. Honesty: Divyash will come up with such an arrangement that will impact
the mind of the customers strongly. It will address all the issues relating to the quality,
hallmarking as well as reliability to the customer.
4. Ethics: Divyash is committed to comply with the ethical standards to provide
the quality products. Working ethically is our aspiration to meet the company goals
through our set principles. This helps Divyash to project itself as a good corporate
citizen and will also helps in retaining the talented employees and attracting the new
one thus indirectly raising the investors trust on future.
Vision: “To be the India‟s leading retailer of branded jewellery known for
providing the quality products”.
Mission: “Divyash‟s mission is to deliver superior products with specialized
design jewellery thus positioning itself as the distinctive brand known for providing
elusive customer experience”.
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2.2 Business Objectives of Divyash
The objectives for the first four years of operation include:
• Its primary goal is to position itself as the affordable brand of jewellery.
• To create a jewellery manufacturing company whose primary goal is to exceed
customer's expectations.
• To increase the number of design offered by 6 percent per year
• To develop a profitable/sustainable jewellery company.
• To reap the untapped market through increasing reachability by increasing the
number of new stores.
• To come up with the sub brand of Divyash to cater to high end customers.
2.3 Product line of Divyash
Divyash Diamond: “These gems have life in them: their colors speak, say what
words fail of. “- (George Eliot, 2010)
Divyash is the perfect place to find your perfect diamond. Divyash ahs the
diamond range catering to all segments of the society. At Divyash Diamond is reachable
to every common person. Divyash always considers the 4C‟s of the diamond i.e. Cut,
Clarity, Color and Caratage. Cut of the diamond is responsible for the brilliance and
sparkle of the diamond so different diamonds will have different brilliance depending
upon the different cuts it exerts. Traces of minute impurities the diamond contains is the
measure for purity. The diamonds vary depending upon the different color grades. It is
done using the color grade scale to distinguish the color of diamonds. Carat measures the
weight of the diamond. With every diamond Divyash provides a certificate of
Authenticity to the customers which contain the necessary information regarding the
particular diamond and is helpful for the customers to make wise decision. Divyash
pampers the customers with wide assorted range of diamonds. It is the right place to
27
choose eternal gems and pamper yourself with the limitless choices offered by Divyash
(C.Krishniah Chetty and Sons, 2010)
Divyash Gold: “All that glisters are not gold, often have you heard that told”-
(William Shakespeare, 2010)
Ranging from traditional Mangalsutra, Haar, Kamarbandini to the contemporary
western decisions based upon themes, Divyash has something for every age group. The
product range Divyash offers in Gold comprise of Bangles, Ear rings, Pendents,
Necklaces as well as sets. Divyash provides the gold with purity and unique designs
with both ethnic as well as contemporary finish. It follows the ethical practices to
provide quality assurance to customers. It offers unique innovative designs in 18K,
22K, 24K of Gold. Gold jewellery is available for every occasion at Divyash. Gold
jewellery is provided in the form of plain gold as well as in the form of Gold embedded
with precious and semi precious stones in different gold colors depending upon the
alloy used with the Gold to soften it (Scribd.com, 2009)
Divyash Silver: We aspire to bring to our customers the finest silver available
at the low affordable prices. The product range offered in Silver is as- Silver rings,
Silver ear rings, Silver necklaces, Silver Pendents as well as Silver sets. It also offers
souvenir as well as gift items other then the jewellery. Silver items offered are usually
in the form of ethnic traditional styles. Divyash makes the use of 92.5 sterling silver to
make its silver ornaments. Besides this Divyash also provides a unique range of the
silver embedded wit the semi precious and precious stones with quality, purity and
brilliant craftsmanship etc.
2.4 Products Benefits
At Divyash it is not just the product that matters but the experience that creates
a difference. Divyash makes sure that it has something for everyone. Besides providing
sophisticated designs, Divyash also provides the after sales services as well as exchange
28
policies etc. Divyash also gives an opportunity to its customers to have a modification
or customization over the designs. All the jewellery provided at Divyash comes with
the certificate of authenticity. The products offered at Divyash comes up at affordable
prices in every category. For every product‟s wear and tear Divyash is responsible and
it services for general wear tear free of charge. Divyash also gives its customers the free
gifts and vouchers which one can redeem back at Divyash. Divyash‟s awareness
campaign is the other benefit offered to the customers. It gives free presentation and
consultation to the customers regarding the jewellery to be bought, purity issues etc. It
tries to impact the mind of the consumer emotionally that whenever consumer thinks of
buying the jewellery, the first name that should come in his mind should be of Divyash.
Divyash is located at the heart of the city thus it easily accessible from all parts
of Bangalore, thus the customer can reach the store with ease comfortably. Divyash will
also start a special offers over the wedding jewellery. Since this type of wedding is
something which customer has to buy in more quantities and lot of investment is
required thus it has cover policies after a certain minimum level of purchase which
gives relieve to the customers. The wedding jewellery is offered in both traditional as
well as contemporary styles unlike most of the other jewellers who offer it in just
traditional designs.
Exchange policies: Unlike most of the retailers who offer different rate of
selling and buying Gold, Divyash maintain the single gold rate for buying and selling
gold jewellery. Gold jewellery can be exchange for Gold as well as for the diamond
jewellery also. But diamond jewellery will only be exchanged with the diamond
jewellery. The manufacturing cost and the labor charges are deducted accordingly in
the case of both gold and diamond jewellery (Damas, 2010)
Applicable Conditions
For Gold Jewellery: Gold jewellery can be exchanged against Gold as well as
Diamond jewellery. Exchange is only permit when a customer presents the original
29
invoice. Jewellery can be exchange only twice within 60 days (Damas, 2010)
For Diamond Jewellery: Diamond jewellery can only be exchanged against
Diamond jewellery.
2.5 Management summary
The main goal of Divyash is to provide high quality jewellery with
differentiated designs and value added services. The management team of our company
is not only motivated by the money and business success but because of the firm
commitment they have in serving this industry. Thus Divyash is managed by group of
quality, young entrepreneurs from the related or within the field to serve this industry
who bring in the fresh ideas to serve this jeweller industry. Prerna Sharma, after
finishing her masters degree recognized the importance of human capital and gathered a
strong management team which could demonstrate leadership qualities. She picked up
the individuals who were sound in practical as well as theoretical knowledge regarding
the jewellery.
Ms. Prerna Sharma and Mr. Chandan Sharma both brings the complimentary
skills and young fresh thinking to the business with an add on from the experience they
have already earned. Both demonstrate the ideal skills for the management of this new
venture. Ms. Prerna Sharma will retain her present position as the hands on manager for
the day to day operations. Mr. Chandan kumar will operate as the marketing and sales
manager ad co-ordinate with the marketing and promotional events. Additional 2
customer service executives shall be hired who will be responsible in communicating
with the customers and addressing the issues of the customers as well as introducing the
products, its benefits and the value added services to the customers.
30
Management Team
Key personnel‟s:
The key management team of Divyash-The jeweller consists of
1. Ms. Prerna Sharma, aged 23 years, Managing director
Educational Background 2005-2008 Bachelor of Business administration from
Manipal University, Major in Jewellery Designing
2008- 2009 Diploma in Entrepreneurship awareness
2009-2011 Masters of Business Administration from Stamford International
University, Major in International Business
Professional Experience
2008-2009 Served as a Merchandiser and Assortment Planning Manager in Titan
Industries from the.
March 2010 – September 2010 –Served as a Manager for ECO‟s and ECN‟s.
2. Mr. Chandan Kumar, aged 24 years. Marketing and Project sales manager
Educational Background
2005-2008 Bachelors of Business Administration from Manipal University, Major in
Jewellery Designing 2008-2009
Certified course in Gemology From Gemological Institute of America
Professional Experience
2008-2010 Production Manager in Ganjam Jewellers.
3. Ms. Sangeetha D‟souza, aged 23 years, Floor Manager of the retail house
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Educational Background
2005-2008 Bachelors of Jewellery Designing and Management from Manipal
University, Karnataka, India.
Professional Experience
2009-2010 Assistant Public Relationship manager in HDFC Bank
Based on preliminary timetable it is anticipated that the Divyash will be operational
for business no later then Jan 01, 2011. The proposed schedule for the start up is as
below:
TABLE 5. The proposed schedule for the start up of Divyash
Activities Start date End date Duration
Renovation of leased property 1/7/2010 1/8/2010 30
Brainstorming for identifying the customer's need, 1/5/2010 1/6/2010 30
dealing with legal issues with new start- up
Raising capital, Securing Bank loan, submitting the 1/6/2010 1/7/2010 30
business plan and loan application for review
Received loan approval, allocating resources 1/8/2010 31/08/2010 30
Finding and training the employees 16/11/2010 15/12/2010 30
Inspecting the readiness of machinery 25/09/2010 15/10/2010 20
Purchasing the material 20/12/2010 28/12/2010 8
Grand opening preparation 15/12/2010 1/1/2010 15
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FIGURE 2. Organization chart for Divyash
Job Roles of Managing director, Prerna Sharma
The Principal shall carry on the following job functions:
• The main responsibility will include the development and implementation of the
strategies in most cost effective way.
• This principal shall carry on all the day to day functions as well as for crafting
long term and short term business plans.
• She shall demonstrate the motivational as well as leadership qualities for the
office based work.
• She is the main chairperson of all the meetings and is required to mentor all the
members of the management team and chair meetings accordingly.
Managing Director
Floor
Manager
Marketing
Manager
Floor
Manager
Customer sales
Executive
33
• She is the main person responsible to maintain the healthy organization culture in
the corporate and make sure that the employee continues to work with the healthy
inter-personal relationship and positive perception regarding the company.
• MD is main figurehead responsible for managing the staff, company‟s assets and
the customers and make sure that all the resources are utilized in most cost
effective way and adds on value to the offered services.
• MD is also responsible for all the legal affairs of the company and must ensure
that all the practices are carried forward within the ethical standards.
MD must train the deserved person to take over the responsibilities of the MD when the
current MD resigns (Experience Festival.com, 2010)
Job Role of Marketing and Sales Manager, Chandan Kumar Sharma
• The main role of marketing manager includes the communication of marketing
strategy and implanting the same wisely as and when required.
• He must ensure that the brand message reaches the customers rightly.
• He is the main person to the define the various segments in the markets and try to
create demand within those segments by promotions, advertising or by
campaigns.
• He is the main person in charge for handling all the web related activities.
• He is the main person in charge responsible for the merchandise and assortment
planning.
• He must carryout the market research at definite periods and try to analyse the
effectiveness of the campaigns or promotional programs.
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Job role of Floor Manager, Ms. Sangeetha D‟souza:
• Floor manager is the main person to co-ordinate with the guests ,customers and
the management of the company.
• Floor manager is the main person to co-ordinate with the guests ,customers and
the management of the company.
• She is the main person behind driving the sales and converting the suspects into
the prospects.
• She is the person incharge to ensure the proper working of the sales executives.
• She is the person incharge to ensure the proper working of the sales executives.
• She shall come up with the creative thinking to drive sales further.
• She shall carry on the activities of stock controlling and ensure that the required
stock is available as and when required.
• She shall make sure that customer penetration is maximum in the store and the
customer always think its worthwhile to visit the store.
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2.6 Shop Floor Layout Plan for Divyash – The jeweller
36
2.7 Critical Issues
• Divyash like any other business faces some unavoidable critical risks. Most
critical of all is the changing tastes and preferences of the customers. As
jewellery is not a seasonal business, it is difficult to keep pace with the changing
consumer trends. Another bottleneck is the economic effects, The purchase of
jewellery relies solely on the performance of the economy which in turns effect
the purchasing power of the consumers ass well as the hikes in the gold prices. If
the economy is in the dwindling state, the consumer tend to invest less in Gold
which is still seen as the investment asset in India.
• Other major hurdle is the labour charges which differs from season to season and
also vary according to the gold price fluctuation. Labour charges generally tend
to increase during the peak seasons and vice versa.
• Shortage of committed employees especially at the middle management level.
Today‟s youngsters tend to be less stable and are always searching for the better
avenues. Thus their retention rate is pretty low.
• As the with relative growth in Indian economy , the competition has increased
drastically therefore there is a huge pressure prevalent to increase the efficiency
of supply chain to serve customers better and increase the market share .Thus
this involves lost of investment.
• Increasing real estate prices and non availability of land has also caused towards
increasing the cost pressure on Divyash.
37
3. MARKETING AND STRATEGIC ANALYSIS
3.1 Market Summary
“With the availability of skilled labor and low production cost, gems and
jewellery market in India is expected to grow at a CAGR of 12% during 2009-2012”,
says RNCOS (PR log, 2009)
The Indian gems and jewellery market continues to be dominated by the
unorganized sector. There are over 2.5 million jewellery shops in India and most of them
are family run. However, with the Indian consumer becoming more aware and quality
conscious, branded jewellery is becoming very popular and the market for branded
jewellery is likely to be worth US$ 2.2 billion by 2010 (India Law offices , 2010)
With an increasing number of jewellery houses entering the branded jewellery
sector, retail of jewellery is becoming organized. Moreover, the government allows 51
percent foreign direct investment in single brand retail outlets, attracting both global and
domestic players to this sector (P. Vaidyanathan Iyer, 2009)
The Indian jewellery market is one of the largest in the world, with a market size
of $13 billion. It is second only to the US market of $ 40 billion and is followed by China
at $11 billion. The gold jewellery market is growing at 15 per cent per annum and the
diamond jewellery market at 27 per cent per annum. (India Law offices, n.d)
As per the reports of the Gems and Jewellery Export Promotion Council, The total
gems and jewellery exports from India stood at US $ 20.88 billion for 2007-2008.US and
Hong kong are the largest importers of gems and jewellery from India followed by UAE.
Demand by domestic and international market is the main factor for driving the market
size of Indian Gem and Jewellery Industry. The domestic demand of G&J sector is
comparatively smaller as compared to the Export based demand which forms the larger
38
share. The Export demand is of 80-90 percent as compared to the demand range of 10-20
percent for the domestic sector. The total consumption of India stands nearly at 800
tonnes of Gold (Scribd.com, 2010)
The present market share of domestic segment will show an increment from 9.55
percent to 10.81 percent and the slow movement of demdand in export segment will
cause demand for export to increase to 90.45 percent and the domestic segment will show
the demand of 9.55 percent increase. Surat the capital of Gujrat is known for the Indian
Diamond cutting centre in the world. The worth of which is 60 percent value share, 85
percent value share in world market (Nusrat Ahmad, April 2009)
1. Gold: Gold is in limelight in India, the total demand comprise of 85-90 percent
for both gold as well as gold jewellery as compared to 10-15 percent for export driven
demand. In 2007 standard gold price was Rs. 9,368 per 10 gram as compared to 2008
when it has a Gold price of Rs. 12,261 per 10 gram which shows an increase of 30.87
percent. It further increased to Rs. 15,000 per 10 gram in 2009.(Nusrat Ahmad, April
2009)
Inflation is an bottleneck towards the prices of Gold. Also the inflation has caused
the imports to soar down drastically due to high price due to that the total import of Gold
by India stood upto 61 tonnes in year 2008 as compared to 1.8 tonnes in 2009. Not only
imports are affected but the demand for the metal as fashion accessory during the
important occasions as well as marriage also suffers. Thus boosting the demand further
and pushing the metal further is impossible. That was the reason why a sharp dip of 97
percent was seen in the gold category in 2009 (Nusrat Ahmad, April 2009).
Gold has always been seen as the investment in India now due to current
prevailing market trend it is seen as the fashion jewellery and people love to adore
themselves in Gold jewellery in more trendy way. Earlier the people used to prefer only
the traditional heavy jewellery but now women are looking for light weight jewellery,
especially it is in more demand in between teenage and working women. (Scribd, 2010)
39
2. Diamond: Diamond industry in India is generally dependent upon the international
trade i.e. import as well as export of the diamonds. There is huge demand and high
prospects for the diamond jewellery of India by the western nations. The major importer
of Diamonds in the US. The diamond industry relies solely on the GDP growth and the
economy. But due to high financial pressures on nations like US and European nation,
buying diamonds is not really seen worthwhile thus it has affected the export driven
demand. (Nusrat Ahmad, April 2009).
The Indian Diamond industry known to produce world class diamond is still
progressing because of the strong Government initiatives taken such as setting up of
bonded ware houses. This industry began as the cottage industry and developed
drastically. This has facilitated the export of unsold diamond without paying any taxes.
Government has also created the Export Promotion Zones as well as the Special
economic zones to promote the exports of Gems and Jewellery (Indianetzone, 2010)
The overall financial depression has not even spared the Indian diamond market. The
diamond industry in China did see a rise in demand and together with the worldwide
growth in demand which in turn boosted the demand for the Indian‟s diamond. There is a
high exit growth witnessed in the industry. About 250,000 employees left the diamond
industry but now with the current policies the industry is again becoming the hot avenues
(Michael Montgomery, 2010)
The main advantage that India reaps is the location which provides the conducive for
it to be the central hub of diamond processing. The Indian economy is mainly driven by
the trade sector of which the diamond sector forms the significant part. The
competitiveness of this sector can further be enhanced involving foreign bodies and
banks which should provide assistance to those companies having solid cash flows. The
transparency in this sector has to lead to demonstrate the leadership world wide
(Diamond World, 2007)
40
As in the market the light weight collections have gained momentum and the
customers are preferring gold studded diamonds also. The trend for gold studded
diamonds is more prevalent in the northern side of the country where people love the
diamond most as compared to the plain gold collections. In the southern part especially in
the states of Tamil Nadu, Kerala, Coimbatore etc the trend is more towards the plain gold
jewellery.
TABLE 7. shows the Current versus old market trends
.
3.2 Competition in the Jewellery industry
As discussed earlier jewellery industry is quite a scattered industry across every
part of India. Every jewellery firm follows the different format of the operations. Some of
the jewellery firms operate as small and medium enterprise whose distribution network is
only limited to the local customers and others operate as large enterprises whose
distribution network is well established and they operate nationally. Some of the
S. No Old market trends Current market trends
1 Importance was given to the
traditional heavy weight jewellery Much focus on the light weight jewellery
which can be used on day to day basis.
2 Concentrated only on the traditional
floral and the paisley designs Focus on the westernized designs based on
themes such as Heart, leaves, key etc.
3 The necklaces generally having a fall
below the breast were prevelant
The necklaces whose fall is smaller than the
neckline trends
4 Jewellery was bought only from the
family jeweller Jewellery is preferred from the family
jeweller or from the branded retailers.
5 Issues related to purity and
hallmarking were not addressed Such issues are of much more importance
6 Earlier the jewellery was just seen as
an investment Now it is seen more as a accessory to
compliment the dress.
7 Handmade jewellery was the preferred
jewellery Machine made jewellery is gaining much
more prominence.
41
jewellery enterprises shows their cutting edge in designs which they outsource locally
from Karigars or other enterprises who can afford to run their own design studio have
well talented individuals who design the jewellery for them.
Competition can be of several different types
It is difficult to predict the competition in this field as there are several local as
well as national jewellers operating in India. Thus competition is of diverse nature in this
field. There are artists who just sell their designs to the jewellery enterprise and allow
them to use their own brand on the designs. While other procure the designs from the
third party wherein they can have all regional collections at one particular point with one
dealer and get them all at one shot. The consumption pattern of jewellery in India varies
from region to region. No jeweller can survive if he does not put effort to have region
specific jewellery at one stop. There are other jewellers who display the specific designs
at the display but they can get the demanded design for the customers.
There are other places also unlike jewellery store such as galleries or trade shows
where the required parties buy the jewellery from the jewellers and display them as their
own and hence generate the profits.
A new trend is of online selling is also prevalent where one can have consignment
with the jeweller having his own retail and procure the jewellery from them and sell them
online while considering some margin from himself. Such type if business form solely
depends upon the inter-personal relationship between two business persons.
Buying pattern for the jewellery is entirely different as compared to that of other
items. Customer will think several times before buying it because with the same amount
of money he actually can buy several different things which can be of more value to him.
Suppose the budget of the customer is 15,000 Rs so with the same amount he can care to
buy one Louis Vuitton bag or else he can go for buying light weight ear rings. There are
chances of impulse buying only in case of economical jewellery ornaments but when it
42
comes to buying expensive classic ornaments the budget is always pre-planned. Buying
pattern of one family can be raised above the level depending upon the convincing skills
of the person in charge of selling.
Also before making the specific purchase the place of purchase is also well
determined. Thus maintaining good inter personal relationships is always important in
case of such products. Customers usually prefers to buy from the place whom they
already know or else they go to the places who are stand alone places and stood uniquely
in providing the satisfaction and quality products to the customers. But the small
occasions where there in small purchases have to be made such as valentines day or
friendship‟s day customers usually carries on researches among the stores and select the
more affordable one who provides the most quality in less money.
Direct Competitors
Direct competitors will be those who compete with Divyash in Commercial Street
as well few other renowned competitors‟ i.e. CKC diamonds, C.Krishna Diamonds,
ORRA diamonds. This jewellery corporate exists in commercial jewellery streets from
last 50 or 100 years and has built in the Bangalore area.
• Orra Diamonds: Orra is one of the most exclusive and the oldest jeweller.It
offers unique designs in diamonds and it exists for more then 100 years. Its main
headquarter is in New York. Currently through the help of investors the company
it raising the fund of 75 crore and it will plan to explain its operations and spend
heavily on the advertising of the same also (Kanchan Lakhani, April 2010). It
deals with both polished, rough diamonds as well as the fine jewellery. It also has
tie-ups with the major jewellery organizations (Rosy Blue, 2010)
• CKC diamonds: This Company is operating from last 140 years and has the
history for providing the finest collection of the jewellery. This corporate is
43
family run organization and the designs offered are quite concrete. This company
has tie-up with the German jewel companies and the company is the main source
of the introduction of all German jewellery in India. The company offers variable
range in silver, gold diamonds along with other services such as corporate gift
vouchers, piercing, customized designs etc (C.Krishniah Chetty & Sons, 2010)
• Sri Krishna Diamonds Jewellery: This jewellery corporate stands at the
platinum plaza, Bangalore. The strength of this corporate lies in the fact that it has
tie ups with the major jewellery corporate and it is known for providing the
hallmarked products in case of gold jewellery and ceritified diamonds from the
De Beer Group. The designs offered by them are just traditional in nature (Sri
Krishna Diamond Jewellery, 2010)
Indirect Competitors: Besides facing the competition from directly, Divyash faces
competition from other brands also which provide them the same benefit but within
different category. The following are the indirect competitors of Divyash.
• P & S Group: was founded in 1987 with a coating of precious metal as a core
competency of it. Producing state of the art treatment facilities that are installed in
Peenya, Bangalore which is one of the biggest industrial centers in Asia. Beautiful
fashion jewellery is available at lower prices compared to the actual jewellery.
The items like Oxidised Metal, Wood, ceramic and shell are some of the other
stuff that is used to make these jewelleries.
• Luxury and prestige Brands: Premium brands have already revolutionized the
Indian Era, after the advent of lot of premium brands the competition has become
much more aggressive. Suppose lets consider one example: if a customer has a
specific budget of 20,000, he might spend the same in buying the two Louis
Vuitton Bags or he might buy the jewellery ornaments with the same budget
depending upon the option which gives him the sense of satisfaction. This is
44
called the indirect competition where brand faces the competition from different
product range also ( Uche Okonkwo, 2010)
3.3 Marketing Plan
The main marketing objective of Divyash is to analyse the segment to be targeted
and drawing the same to the newly located store at commercial street, Bangalore. Thus
building long term relationships with the customers and ensuring the quality products.
The company targets growth of 20 percent.
Therefore Divyash will successfully implement the strategies to reach its pre-
defined goals as mentioned below:
To serve the fast changing consumer tastes and preferences and keeping pace with
the marketing trends.
To provide contemporary feel to the customers with the blend of traditional motifs
in the store.
To carry on more number of in-house events as well as advertising so that more
number of customers experience the brand.
To provide the unique design collection to the customers.
To use the concept of Branding and Affordability to promote the jewellery
products of the company.
To position Divyash as the mid segment brand.
3.4 Marketing Mix
1.Marketing Mix – Product
Divyash products are categorized based upon the various characteristics such has
• Based upon substantiality.
• Based upon occasion.
• Based upon design.
45
• Based upon the age segment
• Based on substantiality: Divyash, the products it offers are Divyash Gold,
Divyash Diamonds, Divyash silver etc. It sells the 22 Karat as well as 24 Karat
Gold Jewellery customized with innovative designs. The diamonds Divyash sells
are at par to that of the best available in the industry. Silver is the metal offered at
the most affordable price at Divyash. All silver products are made with 92.5
sterling silver. Divyash procure the diamonds from the authentic source and
guarantee the same to the customer.
• Based upon occasion: It has product range ranging from small family ceremony to
the traditional wedding thus catering to the needs of Pan India Segment. It gives
customers the options of designing the jewellery themselves and creates those
designs into actual ones.
• Based upon the age segment: Divyash provides the jewellery ranging for the
newly born baby to the women in late 70‟s.It considers the importance of the
offerings that has to be made in particular age and is quite considerable about the
designs which the young vs older generation prefers.
2. Marketing Mix- Price
For mass market: Divyash provides an accessible low range of products to
start from INR 3,000 for the product range of lightweight ear rings, solo pendants
etc which could be used on day to day purpose. In case of finger rings the low
pricing range is from INR 6,000. Rings are generally machine made and are
provided with the complete contemporary collection. The lower price band in
diamonds also starts from INR 7,000.Divyash has different price range for both
medium class as well as for high end customers. In case of silver ornaments the
lower price range starts from INR 3,000. Divyash sees a huge opportunity lying
in the mass market thus it plans to come up with the “5 percent off” offer to
46
provide the customers with the best buying price and encourage them to buy
frequently.
For high end segment: For the cream segment, the product range is
provided within Gold as well as Gold studded jewellery. The most preferred one
depends upon the occasion, for example: In traditional Hindu wedding under the
high end segment , the most preferred kind is the plain gold jewellery but for
anniversary celebration the preferred one would be diamond studded jewellery.
Now the high end customers are also preferring Gold with the combinations of
other precious and semi precious stones with different finishing. The most
widely preferred precious stones by high class jewellery is Emerald, Ruby,
sapphire and Aquamarine etc.
3. Marketing Mix- Place
Divyash is located in Commercial Street in Bangalore is one of the main
shopping complexes in India. The Commercial Street is one of the busiest areas
in Bangalore having location between Shivaji Nagar and Kamaraj Road.
Garments, hosiery and textile stores form the major part of the shops. It is an
ideal place for any business to start because this area is one among the main
sub- urbs area of Bangalore and it draws the highest number of population
(Localyte, 2010).
4. Marketing Mix- Promotion
To create awareness about Divyash and to let customers know what we
have to offer to them Divyash carries and it makes sure that all its promotional
activities are integrated. Divyash attempts to be with the Indian women in all the
occasions it has in her life. Thus to keep her passion alive, Divyash has tried to
come up with the boutique store concept based on specific theme. The theme is
47
designed in such a way that it adds fashionable touch to the jewellery keeping
the traditional touch still alive.
• Brand name: Divyash
• Tagline: your wish is more than a wish.
Main promotional activities carried in Divyash are
1. Specialty items: To affirm the company‟s image in a positive way, Divyash
offers a key chain embedded with Divyash‟s logo with every small or large purchase
made by its customers. This program will be beneficial in reminding the prospects and
put forward in front of them the name of Divyash. Thus this kind of promotional items
offered to the customers is an easy way to remind them of Divyash.
2. Initiated loyalty program: To encourage the loyal buying behavior of the
consumer, To encourage the customer to buy more, Divyash issues them a loyalty card
which they have to show at the retail outlet. Divyash has a scheme to offer discounts to
the loyal customers who hold this card. This is advantageous for both Divyash and the
consumer because customer buys more and gets the easy discounts on every purchase.
3. Exchange offer: Exchange policy is for both gold as well as diamond items.
Exchange of items is allowed twice within 60 days and the invoice slip has to be
produced before exchanging the jewellery. Divyash only exchange certified diamonds.
The main advantage is that the Divyash doesn‟t take in effect of the changing gold price.
It makes all transactions at fixed Gold rate. The item is exchanged after deducting the
labor and manufacturing charges (Damas, 2010)
• Brand Logo:
48
4. Frequent buyer plan: It is another kind of loyalty program to reward the customer.
This program gives a long term commitment to the customer from Divyash that in future
every purchase will be rewarded. Specific interval has been planned by Divyash to run
this frequent buyer plan and also this is an easy way for Divyash to move the old stock
fast and save the inventory holding costs. Thus Divyash offers the program to “buy 3
Gold items and get the 4rth item at 50% off”.
3.5 Product life Cycle of Divyash
It defines the life of a product and the different strategies that has to be applied in
different stages of the life of product (Wikipedia, 2010).The various stages through which
Divyash‟s product will go are as follows:
1. Introduction stage: In this stage the Divyash will launch its newly born
product into the market. During this stage the revenue generation and sales growth will
be low because of the no awareness of the product in the market and the demand has to
be created (NetMBA, n.d.)
2. Growth stage: Divyash is expected to have increased revenue, the product
will show the signs of positive growth along with the rise in the competition. Due to
efficient marketing efforts by Divyash the product awareness will be created and more
and more customers will try out the product. This is expected especially in the festival as
well as wedding season as the demand is generally more in this peak season (NetMBA,
n.d.)
3. Maturity: At this very stage customer would already have tried out our
jewellery product therefore the market becomes saturated. In order to remain competitive
in this stage, Divyash will introduce its new collection to entice to the market (NetMBA,
n.d.)
49
4. Decline: At this very stage , Divyash will have a tough time in earning
revenues and the cost of operations will increase so to be at par in this stage Divyash will
reduce it marketing efforts and would carry on the market research and forecast the
needs and preferences of the target segment again (NetMBA, n.d.)
3.6 Market strategy: Segmentation, Targeting, and Positioning
1. Segmentation: Divyash identifies the segment of the market which it wants to
serve and to try to analyze their value and attitudes regarding the jewellery products.
Psychographic Segmentation: According to Net MBA“Psychographic
segmentation groups customers according to their lifestyle. Activities, interests, and
opinions (AIO) surveys are one tool for measuring lifestyle. Some psychographic
variables include: Activities, Interests, Opinion, Attitudes, Values (NetMBA, n.d.)
India comprises of the largest population of working class and qualified women
which has caused the changed opinions and interest among the women.Based on this
lifestyle segmentation, it can be categorised into various sub-segments:
Working women of Commercial Street Area: According to San “Bangalore has
quite high spending population with enough disposable income. This has given the retail
segment an opportunity to flourish. The areas that are the all time centre of commercial
activities like Commercial Street, Brigade Road, MG Road, still happen to be the
favorites. There is not enough capital values supply in these areas. However, rental
values market shows and accord between supply and demand. Cunningham Road,
Commercial Street, Infantry Road, Kormangala etc are the most sought after localities
with the highest rents for retail space. Areas like Whitefield, Electronic City, and
Bannerghatta Road etc are the new retail space destinations offering comparatively
cheaper rents”(San, 2010).The women of this particular is more outgoing and has active
social life as the household as well as the businesses located in this area are the
premium ones.
50
Working women of Non- Commercial area: Besides focussing the women of
commercial area. The company comes up with the offerings that could cater to the
working women of other areas. This is the class of modern women in India who try to
project themselves with the distinct identity and prefer the fashionable westernized
jewellery. Thus it caters to this segment by providing light weight studded as well as
plain gold jewellery.
Geographical Segmentation: India is a diverse country with different ethnicities at
the same area. Thus it is difficult to survive in India with just the collection of
westernized and ethnic designs. One needs to keep the variable variety of region-specific
jewellery also. As the jewellery varies from region to region in India. For example: In
North India, “Nathni” which is a nose ornament generally worn in the occasions is must
to be kept to serve the north Indian women segment. Same is with the other states i.e.
Gujrat, Punjab, Maharashtra; Tamil Nadu etc all have their region specific jewellery. But
since it is not possible to stock the jewellery of all states, Divyash will stock the jewellery
of only those states that comprises the highest immigrant population of Bangalore i.e.
Tamil Nadu, Delhi, Kerala.
• Targeting strategy
Divyash is targeting at the mass market not on the classes. This very concept is the
foundation of Divyash. Initially it is difficult for Divyash to target specific group and
provide them the customized product with value added services. Thus it will target the
specific groups in the nearby future but now it is concentrating on the mass market of
India. The mass market includes all the age group of the women right from the birth to
very late age. The customer can place their order with Divyash easily based upon their
tastes as Divyash keeps few items in the display and since it is catering to the mass
market, it is difficult for Divyash to keep all the assortments at one store at the same
time.
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TABLE 8. Consumer Profile and Preferences
(Source:Tanishq final ppt,scribd,n.d)
• Differentiation strategy for Target class: When a synergy is created by
addition of product having a unique attributes or characteristics which offer
benefits to the customers and in some way add value to their lives in contest to
that of competitor‟s product. Customers value the product so much that he agrees
to pay above the par price which adds premium to seller (Quick MBA, n.d.)
Divyash offers its costumers a unique feature of differentiation. Divyash offers
consumers a unique value proposition, which combines three relevant and
compelling values:
• Trust: Divyash procurs all its ornaments from the trustworthy sources and sell it
to customers. Every ornament in Divyash comes with the authenticity.
Design Differentiation: It offers the customers the unique designs with superior
craftsmanship. In each category minimum of 22 designs are provided ,also the designs
can be made on choice also. This is Divyash‟s strategy to draws more women and make
sure that they like the ambience provided by Divyash. To provide differentiated designs
Divyash has contact with the well known designers who learnt this art from the National
institutes of India and have gathered years of experience too. Thus by doing so Divyash
tries to make its customers comfortable in carrying out the transactions with Divyash.
The biggest issue faced in jewellery today is that of the trust and reliability, every
retailer is trying to come up with the innovative designs in jewellery but only some
Class Consumer profile Company preference
High Inherited income
Branded, Designer
jewellery
Upper middle Income
salaried/Professional Branded Jewellery
52
numbers of the jewellers have given a solution to the problem arousing from the trust
and reliability.
3. P- Positioning strategy
According to Philip Kotler “Positioning is the result of differentiation decisions. It
is the act of designing the company's offering and identity (that will create a planned
image) so that they occupy a meaningful and distinct competitive position in the target
customer's minds.”(Docstoc, 2009)
Divyash wants to start up as a affordable brand which has something to offer to
persons of every age group and later it would emerge as the National brands competing
on the quality and targeting high segment. Divyash is determined to reach the success
because of the ethical principles it follows in carrying the business. In order to project
itself as the affordable jeweller, Divyash has to compete with the local jewellers
offering region specific designs and more superior services which is difficult for the
rivals to copy. Divyash would effect the emotional feeling that a customer attach with
the products. With its marketing efforts Divyash will position itself in the mind of
customers in a such a way that the customer thinks of Divyash whenever he will plan to
buy the jewellery next.
In the nearby future Divyash would like to re-position itself as the brand targeting
towards specific segment of the population.
Behavior Factors
Based upon behavior high end segment is the one who is always willing to try out
something new in jewellery and usually they buy expensive items to project the sense of
status symbol they have. The mass market on an average buys the mix of both traditional
and contemporary with the affordable price ranges.
53
Figure 3. shows Perceptual Mapping of Divyash compared to competitors:
.
Here is the mapping of Divyash with its few direct competitors. Divyash is
mapped under affordable brand and high value jewellery. The source of reference is the
secondary data thus Divyash happens to fall after C.K.C. So in order to be at par level to
that of C.K.C Divyash has to add more value to its products and should take initiatives to
control the cost of operations so that it could invest more in distribution and marketing
channel and be ahead of its competitors. Therefore to be projected as the affordable
priced high value customer Divyash needs to capture both the heart as well as the mind of
consumer.
3.7 Factors driving the market demand for Divyash
Jewellery demand is effected by many factors some which are as below:
• Price of Gold: According to Julian DW Philips “Higher gold prices to customers
did mean that less gold was bought. These buyers are still there, but buying lower
High Value
jewellery
Affordable
Brand
High Priced
Brand
Low value
jewellery
ORRA C.K.C
P&S
Galvasoles
Shri Krishna Divyash
54
volumes of gold, with the new Indian middle-class buyers coming into the market
as non-seasonal but strong buyers!” (Julian DW Philips,2010). But still seeing the
unstability in the financial sector of India, lot many investors are shifting to the
Gold market to avoid risks.
• Others: Other factors include the growth in the population, rising per capita
incomes, changing tastes and preferences, growing influence of westernized
trends, rapid growing middle class segment are the factors which will keep on
increasing the demand for the jewellery in India.( Julian DW Philips,2010).
Other Marketing Strategies
• Below the line support: This kind of marketing strategy allows Divyash to
target specific group of consumers and serve them in a better ways. Divyash
makes use of this strategy because it is more effective and it requires no media
communication. Divyash employees sales promotions ,provide assorted
merchandising and plans to participate in trade shows to increase its visibility
(Wikipedia, 2010).
• Pull factor: Divyash successfully relies on the pull factor strategy. It will try to
draw the attention of more and more customers by providing gifts to the
customers, by various promotional schemes and quality assurance. It plans to
conduct promotional as well as other in-house events. Other factors which
attracts the customers will be the trust it carries with itself. Aggressive
campaigns will be launched in the growing stage of Divyash to maintain
competitive place in the market.
• Online marketing: As with the changing living trend, the customer has started
developing the taste towards online marketing as the growth of economy is fast
and India contains the highest number of English speaking
55
population. The website of Divyash will far more be a source to create
awareness about Divyash and later will used as the site for processing the
orders. As growing fame of Indian Jewellery across the world, westerners have
also developed the taste for Indian jewellery and paying for the Indian jewellery
to them is just like paying peanuts. So they prefer this kind of shopping very
frequently.
3.8 Expense forecast for Divyash
Divyash forecasts the cost of operations so that it can recover the same by selling at the
best price. Marketing expenses are to be budgeted accordingly:
• Hosting various shows: These expenses will contain the expenses of
carrying various in-house events, participating in trade shows etc.
• Website: These expenses will be one time expense and will be paid once a year
for the maintenance of website.
• Corporate meetings with the women: These expenses will include travelling to
the corporate offices across the Bangalore and conducting demonstrations and
distributing pamphlets there to increase visibility. This will include travelling
expenses as well as the cost of printing pamplets also.
The more details regarding the marketing budget and expenses can be referred in Chapter
5.
3.9 Evaluation and control
The following areas will be monitored to gauge performance-
• Marketing expense to sales analysis.
• Efficiency control
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• Customer satisfaction
• Market expense to sales analysis: This is an easy way to know how effective is
the company‟s marketing measures are. This will help us to analyse how budget
has to employed to boost sales and determine whether there was any
overspending to boost sales or not. Divyash considers various attributes to
analyse this such as any fluctuation in the marketing share, any changes in the
segment share etc.(Wikipedia, 2010).
• Financial Analysis: Divyash seeks the performance figure such as net profit,
Return on investment and net contribution as other factors to see the marketing
performance of Divyash.(Wikipedia, 2010).
3.10 SWOT analysis for Divyash:
Strengths
1. Customized boutique set up in order to maximize the customers experience while
shopping.
2. Skilled and Committed management team.
3. Availability of abundance of cheap labor force in the industry.
4. Standard buy backs and the easy provision of Gift vouchers
5. Value added service provided.
Weaknesses
1. Inventory holding costs rise up if Divyash is not successful to sell the products
especially at wedding season.
2. Attracting and retaining consumers is difficult as the main factor in this industry
is reliability.
3. Demand is driven by the price volatility of Gold and also by occasion.
57
4. Tie-ups with international agencies needed to be developed to be increase the
span of reach.
5. Specific collections will be launched lately once Divyash starts earning above its
expenses as compared to competitors who are existing in the jewellery industry
from long time and have numerous collections.
Opportunities
1. Government initiatives to boost the industry.
2. Branded segment to grow rapidly as Indian buyers become more mobile and
westernized.
3. Tapping the wedding market segment
4. Growing demand of light weight jewellery by working class.
5. Investor‟s shift towards gold market.
Threats
Unorganized family jewellers dominate the sector thus they might end up offering
lower price for the item considered to be of greater value by providing the same item with
lesser value.
1. Shift of Consumer psychographic towards luxury brands.
2. Entrance of International jewellery brands coming up in Bangalore city.
3. Existing contacts of competitors with International organizations.
4. Fast technology adaptability by competitors.
3.11 Competitive Environment Analysis
Competitive environment analysis involves the Divyash completely understand
the importance of macro-environmental factors and to understand what kind of
environment the company will compete in the nearby future, It needs porters model.
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Porters five forces model analysis
The implication of Porter's analysis to Divyash is that a business should examine
these five factors before choosing an industry to move into. They should also consider
ways of changing the five factors to make them more favourable.
• Bargaining power of Suppliers: Medium
In the beginning Divyash will enjoy far smaller market share. Also when the
suppliers provide the differentiated products they pass on the price to customers. As a
company Divyash can bend in from of suppliers only to some extent.
• Bargaining power of Customers: Medium
The International prices are prevalent in the market according to which Divyash
carries out its transactions with the customers. Divyash also makes sure that it adds its
manufacturing as well as labor charges into it. While bargaining with customers,
Divyash can comprise on labor charges but it can sell below the prevailing rates in the
market.
• Threat of substitutes: Low
Jewellery is in the Indian market since decades and has formed the integral part
in all the occasions of Indian women. Therefore one cannot substitute it with any other
product.
• Rivalry among existing Competitors: High
Divyash faces high competition from both organized as well unorganized retail.
As the segment is getting populated with lot of International companies stepping in the
jewellery industry of India due to Government incentives to enter the industry.
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• Barriers to Entry: Medium
Jewellery market already is an competitive market and grabbing share requires
huge capital investment, clever strategies and lot many marketing efforts. Jewellery
business solely relies on the kind of relationships and trust you built with the
customers.
3.12 Key success factors:
1. Exchange Policy: Customer friendly policy of exchanging both Gold as well as
diamonds has been made. Customers can exchange their existing Gold jewellery
with that of Divyash‟ Gold or against certified diamonds. Same is applicable
with the Diamond jewellery but it can only be exchanged against diamond
jeweller with the proof of authentication. Exchange can be made twice within
the time period of 60 days (Damas, 2010)
2. Retaining the customers: Divyash will serve the needs of its targeted segment
with all this heart and soul and would make sure that the product it provides to the
segment fulfills its needs and requirements. Divyash will implement the rule of 80- 20
according to which 80 percent of the business comes from 20 percent of the customers
(Steve Ma. Reyna, 2010)
3. Cutting the overhead costs: Divyash excels in cost cutting measures. It will cut
down the unwanted expenses and moves the inventory fast. And all efforts will be
made to minimize the cost of operations.
4. Shop Location: Divyash is located in Commercial Street in Bangalore is one of
the main shopping complexes in India. The Commercial Street is one of the busiest
areas in Bangalore. It is placed between Shivaji Nagar and Kamaraj Road. Garments,
hosiery and draws the maximum crowd of Bangalore (Localyte, 2009)
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3.13 Current prospects and constraints of the industry
Current prospects are seen bright as the FDI regulations are favourable. Lot of
investments are expected to made in this sector by International players. This has
reduced the barriers to entry in the market. Also the trend of joint alliances has already
started in the jewellery industry will boom more. This will also affect our exports to
other Nations positively. Transfer of technology will also take place, India will be more
technologically sound and driven in the coming future. The other factors such as
available human force, increasing purchasing power also projects the positive signs to
the industry.
Constraints
• Lack of investment: The main drawback of the industry is that lack of
financial sources. China is investing heavily in the energy as well as mining
sector of African continent to occupy the African mines. Thus China emerges
to be the largest partner of Africa and is doing so by providing cash and
cheaply produced goods in return (Melvyn Thomas, 2010)
• Rising prices: The price of Gold is increasing drastically which will have a direct
effect on the imports and exports of the jewellery. The raw material for
manufacturing is imported from other nations thus the demand will increase as a
result of rising gold prices. High inflation is forcing the individuals to shift the
concern to the other imitation jewellery which have almost the same look as that
of Gold but is far more cheaper. Imitation jewellery looks equally goddy and at
the same time it fulfills th desires of customers at budgeted price (Slideshare,
2010)
Current prospects are seen bright as the FDI regulations are favourable. Lot of
investments are expected to made in this sector by International players. This has reduced
the barriers to entry in the market. Also the trend of joint alliances has already started in
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the jewellery industry will boom more. This will also affect our exports to other Nations
positively. Transfer of technology will also take place, India will be more technologically
sound and driven in the coming future. The other factors such as available human force,
increasing purchasing power also projects the positive signs to the industry.
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4. ACTION PLANS FOR DIVYASH
The nature of jewellery sector of India is quite unique, it operates in a more
complex way. As jewellery is the dearer product among every sect of Indian society
hence this market is diverse in nature and has spread all across India. But the market is
subdivided into unorganized retail which forms the major portion of this sector and the
organized retail which is an upcoming sector but is still in majority portion. Hence the
same strategies is not applicable to both the segments and doing business is hard in this
sector. (Marketing Practise, 2009)
Any newly born business venture is more prone to failures especially in the age of
2 or 3 years of operations which is the nascent age of any business. If the business cross
this stage successfully then generally it becomes risk free. Generally if a business fails it
fails to recognize the weaknesses it had as an insider but as a stackholders people can
realize it which can might prove dangerous for any business. Hence crafting a desirable
strategies and implementing it at the right time is must by the percpective of outsider‟s
which the insiders fails to look because of fortitude (Planware, 2010)
Divyash lays done the complete set of strategies that it shall use in operating the
business. The strategies are defined for both long tern as well as short term course
actions.
4.1 Functional level strategies
Divyash formulates the strategies required in the appropriate functioning in each
business area such as Marketing strategies, Human resource strategies, Operational
strategies, financial strategies etc which briefly outlines the course of actions to be
followed in the mentioned areas.
1. Marketing Strategy: As per marketing objectives defined by Divyash in Chapter
3, Divyash uses the strategies accordingly to implement the same. Divyash main
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aim is to offer the jewellery for the medium class and as well as high premium
segment. The main objective of Divyash is to create awareness in the market
regarding its product offerings and would change the customer‟s perception of
viewing jewellery as high investment product. Divyash has various strategies
including the promotional strategies, differentiation strategies, segmentation,
positioning and targeting strategies and other marketing strategies which are
explained in detailed in Chapter- 3.
It will introduce a range of light weight jewellery at affordable prices
making sure that the same get promoted by conducting various measures such as
in-house events and advertisement etc.
Divyash has planned to announce in-house events on occasions like
Valentine‟s Day, Friendship Day, Mothers day etc. As during these seasons
customers generally tend to seek economical jewellery. Wedding Jewellery and
other high end Jewellery meant for occasions are promoted during the Festival or
marriage seasons and are promoted time to time.
.
• Direct presentation: The other way to appeal the customers would be to
conduct direct presentations at the place of working women. We have
planned to conduct direct presentations to corporate offices during lunch hours
so that more and more women will come to know about our jewellery
products which influence the women emotionally to make decision about
trying Divyash. The presentation will be a general overview of what Divyash
offers, product benefits of Divyash and what extra premium one gets if he
makes purchases from Divyash. This also another away to do direct
networking with the customers and address their issues first hand without any
bias.
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The talented workforce will demonstrate the presentations at regular intervals and the
intensity will be increased during the upcoming of any occasion. Issues related to that of
impurity, reliability will also be addressed in the presentation.
• Print media advertisement: Divyash makes use of the outdoor advertisement
using posters with clear messages to the customers. Based on the
segmentation and occasions Divyash makes the use of these posters to target
working class women where it targets the working women by providing them
more contemporary designs in both gold and gold studded jewellery. Other
poster is developed for the women based upon occasion where the Divyash
features its offerings for Festivals, weddings and Divyash‟s anniversary etc.
with region specific designs as well as more traditional designs whereas in
Divyash‟s anniversary, the company will promote both western as well ethnic
designs. Such effort helps in generating more traffic in Divyash. Divyash‟s
tagline “Your wish is more then a wish” is the message defined by Divyash in
simple words that it would like to convey to its customers emphasizing on the
importance of fulfilling the wish of its customers precisely and specifically.
• Localized Promotional strategy: To encourage more sales volume, Divyash
will keep promoting itself locally by conducting numerous in- house events as
well as giving complimentary gifts as a part of promotion to the customers
which help them to recognize Divyash when they plan their next buying.
Presently Divyash has plans to offer the Key chain embedded with Divyash‟s
image but the complimentary gift shall change accordingly. For example: It
will distribute the “Kalash” with the engraved Laxmi- the Goddess‟s image in
it. Already existing jewellery stores might not do that as they already are
established firmly in the jewellery business but initially Divyash has to invest
to create awareness and let people what we have for them. The other offer is
to make timely discounts available to customers at times where they buy the
ornament with the same purity level but with lesser price. This is of mutually
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benefit to both customers and Divyash because Divyash can reduce its
inventory holding costs by selling the slow moving products. Divyash has
certain set of principles which it will follow while pricing the products during
the promotions to keep the ethical practices alive and high at Divyash.
• Inter- personal relationship: Divyash not only sees the customers just as an
entity to make money but as a part of Divyash‟s Family. Divyash takes note of
all the important occasion that comes in one‟s life, Anniversaries, Birthday‟s
are kept noted in advance. The complimentary gift is sent to customer on the
behalf of the team of Divyash. This helps in developing the personal as well
as emotional bond with the customers.
2. Human resource strategy: Divyash has following two main objectives to plan
human resource strategies:
• To manage the workforce effectively making sure that the same is retained back
in the business.
• To make sure that Divyash has employed right person at the right place.
Divyash believes that its people are the biggest assets of its business and
their skills have to be developed and shaped in the right way. Divyash has
planned to employ two additional sales executives who will be trained specifically
in Jewellery field so that less effort will be required to train them and more
efficiently work can be drawn out of them. India currently has started providing
degrees and various diplomas in Jewellery Industry management. So Divyash has
planned to recruit its sales force from Karnataka Institute of jewellery design so
that they are well versed with the regional languages and know the culture of the
southern India. To provide right ambience to the customers, much emphasis will
be given on their personal grooming and well being. They will be provided with
a certain dress code and they have to communicate directly with the customers.
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In additional to that they will be provided with the manuals or written notes to
enlighten them more on various issues of jewellery.
Compensation and rewards: In order to keep the sales force motivated, Divyash
makes sure that the salary it provides is the best one prevailing in the industry. In addition
to salary an extra commission will be paid if one reaches the defined sales targets. Also
an employee can take one week of annual leave as well as one week of unpaid sick leave
at the time of illness. The insurance coverage will not be paid by the company initially.
Divyash is a performance based company and it does not follow the concept of seniority
rather then it focuses on the concept of performance. The performance review is done
monthly based upon the average conversion of number of suspects into the prospects and
the amount of revenue driven within the each category. In order to keep the sales force
motivated
Divyash will conduct in-house competition which will give them the chance to
display their leadership. Besides this Divyash will employ few people from renowned
institutes to work as a free lancer with us to have more varieties of designs based on
current trends.
• Special training Sessions: Divyash understand the needs of training completely.
Besides giving initial training to the newly joined employee, it plans to have a
formal knowledge sharing session where a presenter has to speak on any progress
made in the field of jewellery and its relevance to Divyash.
• Morning boosters: This is a strategy developed for the stress management of the
employees. In this session, Employees are reviewed regarding the progress in goal
achievement, the challenges they suffer from and discuss the possible solutions.
Before discussing the agenda, the Stress management motivational lecture is
delivered to boost up the morale of the employee. The problems are addressed
politely and if the training needs exist for the problem, the same is fulfilled.
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3. Operational strategy: Divyash has following objectives to plan operational
strategies:
• To reach economies of scale in operations.
• To provide quality products
- Value supply chain redefined: Unlike Traditional jewellers who only had a
single owner manager structure, Divyash has come up with separate specialized
stream. At Divyash Products pass through all activities of the chain in order, and
at each activity the product gains some value which is much higher without
passing through those levels earlier (Wikipedia, n.d)
Figure 4. Value addition at Divyash
Divyash is the newly born product so it started to operate a retail store in the
initial stages of business. Due to capital barrier and huge investments required in
manufacturing facilities, Divyash plan the manufacturing unit later thus for the
time being Divyash will operate as a trading firm only. Due to high investment
required in Jewellery business Divyash will procure the jewellery from the
reliable suppliers.
Because Jewellery business works in a different way then other business
and one really need to put very high investments into it. Thus Divyash planned to
outsource its jewellery from its various suppliers. They buy the designs from the
jewellery makers and then display them and sell them on a mark-up. Thus in
order to lure the customers, Divyash has to spend heavily on advertisement and be
Supplier Purchase Distribution Customer
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dependent on its sales force too. This will increase the visibility of Divyash
among other stores.
The jewellery will be procured directly from suppliers or Karigar parks
and then will be stored in the store room with utmost care at a place free from
moisture at a normal temperature in the warehouse storage boxes with the written
description over it. The storage boxes are made up of anti- oxidant steel to prevent
rusting and to provide the safe storage to jewellery. The stock out needs is
analyzed before hand and then the jewellery is drawn and encased in the display
area. For safety reasons and preventive actions, only authorized persons have an
access to wear house and CC cameras are enclosed to monitor it continuously.
Two people two key rules is applied in the operations of Divyash, only two
persons can have a access directly to the warehouse i.e separate keys are assigned
to floor manager as well as MD. Selling is done based upon the target market
needs and persuasive selling is carried out at Divyash.
4. Suppliers‟ side strategy: On suppliers side Divyash has signed a contract of
three years to acquire its Gold studded and gold jewellery with GTM Jewellery Mart.
Also it has signed contract with Su-raj diamonds for a period of three years. Su-raj has
got its in house facilities of producing traditional and contemporary jewellery. The other
advantage of Su-raj is the proximity to Divyash so that the goods are delivered at time.
“Karigar parks are the self help jewellery units set up by Government of India” (The
Financial Express, 2002). The artisans working in the Karigar parks are the easy and
economical source of labour and are the best sources to provide with the region specific
jewellery. Thus Divyash has planned to procure the Jewellery from Karigar Parks.
5. Locational Strategy: Bangalore is considered to be the growing regional hub and
the fastest growing metropolis in India. Also the cosmopolitan nature of the state has
made it possible to have large number of immigrant population from all across
India.(Wikipedia, n.d).Commercial Street which is chosen as the destination for setting
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Divyash contains high number of rich individuals thus the spending power of people is
high.
Psychographics- adding psychology, behavior, and lifestyles to demographic data are
the other factors which Divyash considered to chose the location for itself. Also the
other locational advantage of Divyash is its nearness to the supplier also it is
convenient to both supplier and Divyash to have a look at the stock requirement any
time and discuss the demand trend in the market.
Lot of MNC‟s are starting their operations in the surrounding areas like
Koramangala, Hosur etc which are located at the nearby areas from Divyash. Divyash
has also planned for its online presence besides having physical visibility. Divyash
has planned to come up with the online selling method also where it will operate
separately under a website showcasing various products, the testimonial of those who
have already tried out the product as well as information regarding Divyash‟s
business.
6. Financial Strategy: Divyash uses two types of financial strategies as follows
• Investment strategy: As the economic uncertainty is on rise, investing in the
jewellery seems to be the more safer option to Divyash. More and more people are
showing interest in investing Indian market because Indian jewellery is considered
as the high grade value unlike western countries whose ornaments are generally
made in 8K or 18K Gold.(Garam Chai.com, n.d.) There is huge market opportunity
lying in the jewellery market and hence Divyash plans to capture this opportunity
by investing INR 48,00000 in this business and by providing differentiated and
quality products to the customers.
• Financing strategy of Divyash: The technology driven jewellery industry has
many large players who are very motivated towards the growth and liquidity,
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changing technology makes it difficult to keep pace with the industry. Other big
players use capital as their competitive edge and hence then to keep in pace with
them all companies are compelled to do so (More business.com, 1998).
Divyash clearly understands the cost of underfunding which is far greater than the cost
of over funding. Hence it plans to raise INR 800000 Bank loan and INR 4000000 will be
the through the personal investment.
• Cost control measures taken by Divyash: Divyash makes the prudent use of its
money. It tries to eliminate the third party concept wherever possible and thus try to
procure materials only from the suppliers with whom it has built long term
materials. Also Karigar Parks is a cheap source to outsource the jewellery. These
economies in the operations of Divyash will also help in maintaining the
maintaining the solid cash flow system and will keep the risk profile of company
low.
Divyash intends to keep a constant revenue growth of 12 % p.a. over the next 4 years.
Its expects to do so by managing a healthy cash flow over the next 4 years with no new
investment required.
ROI is what Divyash plan to keep above the industry standards for the coming years
with a payback period of an average of 0.30 years in order to meet its long term
obligations.
Divyash being a new entrant in the market plans to maintain a higher quick test
ratio to meet its short term obligations and would intend to keep its inventory level at low
level on a average basis of minimally around 8 percent to 12 percent annually, in order to
have a better flow of cash and potential investors to expand its business in future.
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4.2 Business level strategies
Jewellery market operate in highly complex way. The consumer behavior is also
different compared to what we see in other products and categories. Divyash implement
these strategies to add more value to its products and gain competitive edge in the market
by exploring its core competencies.
• Differentiated designs: More emphasis laid on formal design training in jewellery
category especially by the organized players . Divyash provided the customers with
differentiated design suitable for every occasion, In each category minimum of 22
differentiated design are provided, there is lot more to choose at Divyash. Divyash
provided the customers with differentiated design suitable for every occasion,
Divyash will provide these design in both 18 karat 22 karat as well as 24 Karat.
Divyash also provides the options to customers to meet the team of our designers
and ask them to make customized designs for the customers. Divyash has planned
later to come up with its own sub brand for a particular collection which will help it
to target specific women with specific collection and also will make investment in
future to have its own designing team. Through Divyash‟s design it tries to come
up with a blend of traditional along with contemporary designs for modern women.
To keep differentiated designs at store, Divyash outsource it from different
suppliers. Also as more and more competition is increasing in design, Divyash has
planned to make more people work as a free lance from Designing institute.
4.3 Future plan of Divyash
• Increasing the span of Divyash: Once the operations of Divyash starts up
successfully and it start making good profit margins, the company would like to
expand itself in the area of higher visibility i.e. Departmental stores and Malls
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surrounding the commercial area as well as the area that can be a potential market
for Divyash‟s growth.
Divyash also plans to make international investment as Divyash sees it as a huge
opportunity to introduce the product of International brand under its name. Also this
will give access to their technology and the exchange of knowledge will take place.
Thus Divyash plans to go International and introduce its collections while tieing-up
with the known Jewellery player.
• International Investment: Expanding Divyash retail outlet into Departmental
stores and malls surrounding the M.G Road and Commercial Street and also to
other places that can be potential market for the company‟s grow.
• Plans to extend its marketing channel in exporting to South East Asian countries
and Europe where there is a huge demand for Indian Jewellery.
• Plans to come up with its own in-house collection with a sub brand targeted to niche
market.
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5. FINANCIAL PLAN
Goals
• To gain a 4 years Bank loan of INR 800,000
• To maintain healthy financial records according to GAAP.
This section will offer a financial overview of Divyash as it related to the marketing
activities. Divyash will address break-even analysis, sales forecasts, expense forecasts,
and how those link to the marketing strategy.
Objectives
• To minimize any inefficiency in the supply chain to minimize the cost of
operations.
• To prevent any extra cost.
• To lay down the marketing, payroll budget carefully.
The financial description of the business plan will give a fiscal picture of the Divyash‟s
marketing as well as operational expenses. The expenses related to any course of
Divyash‟s plan are mentioned here. It considers all the calculations based upon the
assumptions it made. The plan will also outline the income as well as cash flow
statement.
5.1 Start up expenses
Divyash‟s start up costs are as follows:
1. Capital items
• Machinery and Equipment, Furniture and Fixture, Leasehold changes, Inventory
2. Other items including
• Advertising / Marketing, Licenses, Renovation, Operating capital line etc.
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TABLE 9. Start up Expenses
Capital items Rupees(INR)
Machinery and Equipment 85,000
Furniture and Fixture 60,000
Leasehold changes 80,000
Inventory 3,200,000
Other Cash Advertising / Marketing 115,000
Licenses 20,000
Renovation 15,000
Accounting and Book keeping fee 0
Operating Capital line 400,000
Total use of Funds 4,075,000
Total sources Sources of funds 4,800,000
Starting Cash Balance for 1 month 725,000
TABLE 10. Sources of funds
S. No Debt/ equity structure Rupees(INR)
1 Bank loan 800,000
2 Personal investment 4,000,000
3 Total sources of funds 4,800,000
4 Less: Total use of funds 4,075,000
5 Starting cash balance for 1 month 725,000
TABLE 11. Initial Financing Plan
Debt/equity structure Rupees(INR) Percentage
Initial capital -owners part 4,000,000 83.33%
Investor's part Loan domestic 800,000 16.67%
Total capiltal structure 48,000,000 100%
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The total capital needed for the start up of Divyash is INR 48,000,000. Out of which the
owner‟s contribution is INR 4,000,000. Divyash has taken bank loan worth INR 800,000
with a period of 4 years.
5.2 Important Assumptions and Key Financial Indicators
The financial plan depends upon the important assumptions, most of which are
shown in the table and the key underlying assumptions are as follows:
• Assume a slow growth economy with high inflation rate.
• No technological advancements are taking place. Thus equipments will never
become obsolete.
• Assume that equity is enough to fund the business and will maintain the healthy
balance records.
Underlying Assumptions
Divyash- the jeweller will have an annual revenue growth rate of 12% per year.
The Owner will acquire INR 800,000 of debt funds to develop the business.
The loan will have a 4 year term with a 10 interest rate.
The company plans to use its own sources of funds as the main source of funds.
The secondary source of funds will be the financing through bank loans. This might be
able to cause Divyash to move slowly in terms of growth. Divyash considers the
importance of inventory turn over also according to which Divyash shall move its
inventory fast to reduce inventory holding costs. Every new inventory order has to be
placed prior to three months. The average collection period for Divyash will not exceed
40 days under any circumstances. This might lead to serious cash flow trouble since the
working capital situation of Divyash is tight. Marketing cost of Divyash shall never
exceed three times of sales revenue.
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5.3 Break Even Analysis:
The break even analysis includes costs of Production. These are fairly low since
Divyash procures all the products from outside. Here are the items included in Break
even analysis-
1. Marketing expenses
2. Payroll expenses
3. Personal monthly expenses
4. Periodic expenses
TABLE 12. Break Even Analysis
Rupees(INR)
Monthly Revenues Break even 620,333
Assumptions
Average percent variable cost 15%
Estimated monthly fixed cost 355,333
Note: The monthly revenue breakdown is drawn from Marketing plan, Payroll plan,
Personal monthly expenses, Periodic expenses. The working of these plan are shown
below-
TABLE 13. Marketing Budget
Milestone Start date End date Budget
Rupees(INR)
Creative Development 12/2/2010 15/03/10 60,000
First advertisement poster campaign 4/1/2010 7/1/2010 50,000
Website charges 1/6/2010 1/9/2010 5,000
\
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TABLE 14. Salary expenses
S. No Occupation Salary in
Rupees(INR) No. of employees
hired
1 Managing director 50,000 1
2 Manager Marketing and sales 50,000 1
3 Floor manager 15,000 1
TABLE 15. Personnel Plan
Year 2011 2012 2013 2014
Owners and Managers 115,000 115,000 130,000 150,000
Cleaning 20,000 20,000 20,000 20,000
Sales representative 10,000 15,000 15,000 15,000
Total persons 6 6 7 8
Total payroll/ month 145,000 150,000 165,000 185,000
Total payroll/year 1,740,000 1,800,000 1,980,000 2,220,000
5.4 Capital Equipment needed
Various equipments needed in the course of Divyash‟s working are listed below.
Manufacturing equipments are not included as Divyash sources all its jewellery from
outside suppliers. It includes display equipments required for displaying the attractive
jewellery designs and other capital expenses will include the expenses related to the
storage, safety of the jewellery and the equipments needed in carrying the same.
TABLE 16. Miscellaneous and Capital Equipment needed
S. No Miscellaneous Rupees(INR)
1 File Cabinet 7,500
2 5 persons locker 4,500
3 vacuum cleaner 8,000
4 Air conditioner 25,000
5 logo LED (Incl. Freight) 25,000
Total 70,000
Sales and Display equipment
1 Display board 19,000
Total 34,000
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TABLE 17. Depreciation Expenses
Cost (INR) 276,540
Expected Salvage value (INR) 165,924
Estimated savage value(in years) 5
Computation End of the
Year
Year Depreciation cost
x Depreciation
rate = Accumulated
Depreciation Book
value
2011 110,616 20% 22,123.20 22,123 254,417
2012 110,616 20% 22,123.20 442,426 232,299
2013 110,616 20% 22,123.20 66,370 210,170
2014 110,616 20% 22,123.20 88,493 188,047
2015 110,616 20% 22,123.20 110,616 165,929
110,616
Note: The depreciation is calculated on miscellaneous equipment and sales and display
equipment, Capital items.
5.5 Financial Projections of Divyash
Divyash has projected the sales growth separately for each jewellery category i.e.
Gold, Gold Studded and Silver for the four consecutive years starting from 2011 to 2014.
For Gold category the sales is expected to increase from INR 1.47 million to INR 1.64 in
2012 and similarly for 2013 and 2014 the estimated sales projections are 1.84 million and
2.12 million.
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TABLE 18. Sales Projections
Gold Gold studded Silver Total
Unit price 17,500 75,000 10,500 103,000
No of units/month 7 4 10 21
Income/month 122,500 300,000 105,000 527,500
Sales FY 2011 FY 2012 FY 2013 FY 2014
Gold jewellery 1,470,000 1,646,400 1,843,968 2,120,563
Gold studded jewellery 3,600,000 4,032,000 4,515,840 5,193,216
Silver jewellery 1,260,000 1,411,200 1,580,544 1,817,626
Total costs of Goods 633,000 708,860 794,035 913,141
Financial Statements summary
Divyash expects to manage cash flow over the next 4 years with no new
investment required over the first 4 years. It is an expectation that sales revenue beyond
sales will be invested in retiring long term debt early.
TABLE 19. Cash flow projections
F/Y 2011 F/Y 2012 F/Y 2013 F/Y 2014 Net income 1,843,277 2,246,965 2,593,876 3,098,152 Depreciation 22,123 22,123 22,123 22,123 Investments (48,00000)
Repayment 200,000 200,000 200,000 200,000 Net Cash Flow 1,621,154 2,469,088 2,371,753 2,876,029
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TABLE 20. Pro-Forma Balance Sheet
F/Y 2011 F/Y 2012 F/Y 2013 F/Y 2014
Assets Cash 1,621,154 2,469,088 2,371,753 2,876,029
Inventory 249,810 316,363 2,393,876 2,920,275
Other Current assets 166,540 227,500 263,326 32,230
Total current assets 2081750 260,901 301,623 3,679,340
Machinery Equipement 172,540 172,540 172,540 172,540
( Sales and Display equipement ) 104,000 104,000 104,000 104,000
Miscellaneous Equipement Less: Acc. Depreciation 22,123 22,123 22,123 22,123
Leasehold Payment and deposit 80,000 80,000 80,000 80,000
Property 2,500,000 2,500,000 2,500,000 2,500,000
Total Assets 4,416,167 5,419,345 5,806,453 6,447,593 Liabilites and Stockholders
Equity Accounts payable 74,943 68,280 65,832 64,246
Salaries payable 1,740,000 1,800,000 1,980,000 2,220,000
Interest payable 80,000 80,000 80,000 80,000
Other Current liabilities
17,000 12,000 10,500
Total current liabilities 1,894,943 1,965,280 2,137,832 2,374,746
Long term debts 1,125,000 1,050,000 1,100,000 950,000
Total liabilities 3,019,943 3,015,280 3,237,832 3,324,746
Net worth 1,896,224 2,904,065 2,568,621 3,122,847
Total liabilties and equity 4,416,167 5,419,345 5,806,453 6,447,593
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TABLE 21. Pro-Forma Profit and Loss
Yearly FY 2011 FY 2012 FY 2013 FY 2014
Sales Revenue 6,330,000 7,089,600 7,940,352 9,131,405
Cost of Goods 633,000 708,960 794,035 913,141
Gross Margin 5,697,000 6,380,640 7,146,317 8,218,264
Gross Margin % 90 90 90 90
Expenses Payroll 1,740,000 1,900,000 1,980,000 2,220,000
Marketing expense 115,000 126,500 139,150 153,065
Professional fees 20,000 Insurance costs 104,000 104,000 104,000 104,000
Travel and Vehicle costs 5,000 5,500 6,050 6,655
Utilities 36,000 36,000 36,000 36,000
Lease rent 420,000 441,000 463,050 486,203
Misc. Expenses 36,000 39,240 42,772 46,622
Payroll expenses 261,000 270,000 297,000 333,000
Total operating costs 2,737,000 2,822,240 3,068,022 3,385,545
EBITDA 2,960,000 3,558,400 4,078,295 4,832,719
Interest expenses 80,000 80,000 80,000 80,000
Tax 126,600 141,792 158,807 182,628
Federal Income Tax 888,000 1,067,520 1,223,489 1,449,816
Depreciation Expenses 22,123 22,123 22,123 22,123
Net Profit 1,843,277 2,246,965 2,593,876 3,098,152
Profit Margin 29.10% 31.69% 32.66% 33.93%
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Table 22. Pro forma Income Statement
FY 2011 Jan Feb Mar Apr May Jun
Cost of Goods sold 527,500 527,500 527,500 527,500 527,500 527,500
Gross Profit 527,500 527,500 527,500 527,500 527,500 527,500
Operating Expenses 228,803 228,803 228,803 228,803 228,803 228,803
EBITDA 246,667 246,667 246,667 246,667 246,667 246,667
Interest Expenses 6,667 6,667 6,667 6,667 6,667 6,667
Sales Tax 10,550 10,550 10,550 10,550 10,550 10,550
Income Tax 74,000 74,000 74,000 74,000 74,000 74,000
Depreciation Expenses 1,893.40 1,893.40 1,893.40 1,893.40 1,893.40 1,893.40
Net Profit 153,606 153,606 153,606 153,606 153,606 153,606
Profit Margin 2.43% 2.43% 2.43% 2.43% 2.43% 2.43%
FY 2011 Jul Aug Sep Oct Nov Dec
Cost of Goods Sold 527,500 527,500 527,500 527,500 527,500 527,500
Gross Profit 52,750 52,750 52,750 52,750 52,750 52,750
Operating expenses 228,803 228,803 228,803 228,803 228,803 228,803
EBITDA 246,667 246,667 246,667 246,667 246,667 246,667
Interest Expense 6,667 6,667 6,667 6,667 6,667 6,667
Sales Tax 10,550 10,550 10,550 10,550 10,550 10,550
Income Tax 74,000 74,000 74,000 74,000 74,000 74,000
Depreciation Expese 1,893.40 1,893.40 1,893.40 1,893.40 1,893.40 1,893.40
Net Profit 153,606 153,606 153,606 153,606 153,606 153,606
Profit Margin 2.43% 2.43% 2.43% 2.43% 2.43% 2.43%
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TABLE 23. Business Ratio Analysis
Sales Growth 2011 2012 2013 2014
Gross Margin 90% 90% 90% 90%
Net Profit Margin 29.12% 31.69% 32.66% 33.93%
Quick Ratio 0.97% 1.17% 1.24% 1.37%
ROI 37.49% 41.46% 44.67% 48.05%
TABLE 24. Calculation of Quick Ratio / Acid Test Ratio
TABLE 25. Calculation of Return on Investment
Return on investment = Net profit after taxes/ Total Assets
Year
For 2011 1,843,277 * 100 / 491,616.7 37.49%
For 2012 2,246,965 * 100 / 5,419,345 41.46%
For 2013 2,593,876 * 100 / 5,806, 453 44.67
For 2014 3,098,152 * 100 / 6,447,593 48.05%
Quick Ratios/ Acid Test ratios = Current Assets / Current Liabilities
Year
FOR 2011 1,831,940 /189,494 0.967 times
For 2012 2,296,688 / 1,965,280 1.168 times
For 2013 2,657,202 / 2,137,832 1.24 times
For 2014 3,241,505/ 2,374,746 1.243 times
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TABLE 26. Calculation of Working Capital Turnover
Working Capital Turnover = Sales / Current Assets - Current Liabilites
Year
For 2011 63, 300, 000 / 186,807 33.9
For 2012 7,089,600 / 641,771 11.05
For 2013 7,940,352 / 878,451 9.03
For 2014 9,131, 405 / 1,304,800 7
5.6 Payback Period Review
TABLE 27. Calculation for Payback Period
(48,00,000 – 40,90,242) = 709,758 = 0.30
23, 71, 753 23,71,753
To obtain the Payback period in years, we take the figure from the last step and add it to
the year from step 2 i.e. 2011.
Thus, our payback period is 2.30 years.
Year Cash Flow Cumulative Cash
Inflows
For 0 -48,00,000 For 2011 1,621,154 1,621,154
For 2012 2,469,088 4,090,242
For 2013 2,371,753 6,461,995
For 2014 2,876,029 9,338,024
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6. RISK ANALYSIS AND CONTINGENCY PLANNING
6.1 Risk Analysis
“Poor Risk Assessment can doom new ventures” (BNet, 2010)
Risk Assessment plays a major role in decision making for a business enterprise.
Divyash assesses its risk so that the investors-own risk taking abilities match to that of
Divyash. This risk assessment will also help Divyash in knowing the degree to which its
product will be accepted.
1. Industry Risks
As the FDI Policies have become less tighten and Governmental
procedures to procure bank loan has become easy, lot of new entrants are entering
the market and young entrepreneurs are looking forward to grab this opportunity.
Lot of International as well as National players are seeking this opportunity to
enter into this wholly new segment of jewellery. Jewellery industry is highly
fragmented as it comprises organized as well as un-organized retail, so the degree
of competition has increased. Even in case of raw materials, the companies
procuring raw materials from third world countries can offer the jewellery with
cheaper rates unlike Divyash, who outsources the jewellery from different
suppliers and regions.
Also the changing industrial trends i.e. demand for westernized concepts
are in increase which demands the use of technology to make them fully feasible.
Thus keeping in pace with the technology, requires a huge investment. Also as
Divyash has planned to come up with its own brand of jewellery, it has to make.
The aggressive advertising efforts and the retails existing from decades are able to
grab large number of customers. Competition is not only limited to the jewellery
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but is for wide spread across over luxury items which can be bought with the same pre-
defined budget for the jewellery.
There is a drastic market growth in the field of jewellery as the demand by both
the international as well as domestic market. But the market sizes owned by the branded
retailers are quite less as compared to unbranded retail.
Also the jewelers in the organized branded sector are quite visible and offer the best
of products, the best of services and the best of collections in the industry. Therefore
Divyash has to make sure that the niche market it is focusing on is served well with the
demands and the jewellery it provides fulfills the basic core function of obtaining the
same.
2. Operational Risks
Divyash considers that any risk arising from functions, systems, process
areas important and will have an effect in reaching the business objectives of
Divyash (Wikipedia, 2010) Divyash sees the potential risk which might arise from
high transportation cost. As Divyash completely outsources its jewellery from
both nearby as well as distant suppliers. Therefore the cost of procurement can go
high, thus with the growing trend of inflation, the cost of operations will go high.
Also the drawback will be the design issue. As Divyash outsources the
jewellery many a times it might have to take the available designs from the
karigar parks which is not customized accordingly. When Divyash is asked to
provide customized designs which have to be procured from karigar parks, it
might increase the lead time which again will be an efficiency issue.
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It might also result in the loss of the market segment. Another major risk involved is the
supplier dependency completely. Divyash‟s 100% of product offering is procured from
the supplier‟s side. So thus to preview any defaults from the supplier‟s side, Divyash has
to work closely with the suppliers. But the supplier risk is assessed to be low in the case
of Divyash, as Divyash has chosen the suppliers with whom it has existing relationships.
3. Inventory Risks
Divyash generally places its order prior to 3 months before the delivery.
Thus Divyash faces the risk of misjudgment of the consumer demand. There
might be a sudden decrease in the demand in the consumer segment which can
cause the high level of inventories at Divyash involving high inventory holding
costs (Adidas Group, 2010)
Other possible risks could be the sudden increase in the demand of
jewellery which could lead to missed sales opportunities and in turn leading to the
reduction of the brand image (Adidas Group, 2010)
4. Financial Risks
When the company does not have a sound liquidity system to repay back the debts
and the debts generally exceed the assets and goods hold by the company
(beginnermoneyinvesting.com, 2010)
A company that has a great proportion of debt in relation to their assets will denote an
increase that indicates that in a certain point it will not be able to pay the capital nor the
interests. While larger the amount in debt in relation to goods higher will be the financial
risk because the company will have to get enough resources to pay off at least the fixed
interest and the loan of capital ( beginnermoneyinvesting.com, 2010)
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Diverse financial developments in the ever changing complex business
environment sewed up with various business regulations and norms and policies do affect
a Company's financial condition, results of operations, business approach and financial
requirements. By the meaning of an uncertainty or a risk for a jewellery firm like Divyash
it means to get hold of new customers there is an involvement in the rise in the costs; an
undesirable macroeconomic state of affairs, increase in the original cost price, the
capability of the jewellery firms like Divyash, to attract customers with attractive deals
within its store and offer attractive products; the capacity to uphold the levels of profit
while expanding regional sales; the talent to detect fraud through an efficient arrangement
of internal controls; the capability to sustain electronic data handing out systems, and
required structural hardware; the aptitude to forecast exactly the net revenue and the
linked plan for the required expenses mandatory to operate; not taking in a definite
supply of jewellery products and having a stockpile of various inventory items through its
suppliers; the ability to protect its intellectual property human rights.
In terms of a crisis breakout we can face not only the aggressive influence of
macroeconomic market environment on jewelry consumers‟ behavior but also growing
operating costs, essential hikes and slumps in prices for precious metals, stiffer
competition in standardized jewelry segments and other factors which can continue to
generate difficulties in the ever growing jewellery industry (Business Link, 2010)
5. Systematic and non –Systematic Risk
Divyash‟s Financial Risk is a mixture of both the methodical Risk as well as a Non –
methodical Risk. From the methodical risk view point it would involve matters such as
market risk of the customers and its short and long term traders; interest rate risks would
revolve around the loan books that has been maintained by Divyash, in a short
proportion. From the Non –methodical point of view Divyash faces the risk it has to do
especially with the operation or the finances of the company, known as the risk operation.
The liquidity risk of Divyash would enable it to acquire the required amount of raw and
finished jewellery in proportionate to the needed demand in relation with the buying
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capacity risks of each of its individual customers that Divyash targets (Business Link,
2010)
In other words the buying capacity risks is directly involved with the purchasing
power of its customers, which if it doesn‟t fructify into a new sales within its store would
thus lead to a shortage in its books of cash flow , resulting thus into a shortfall of its
liquidity in hand, which would not allow Divyash to increase its order book of its clients
and thus leading into a lower targeted sales revenue; associated with a higher margin of
operating profit with a lesser margin of Net Profit.
6. Credit Risk
In order to expand one‟s business we need capital and if the business does
not provide necessary amount of cash inflow, but just only to that level, which can
be used to meet the debts and all other overhead expenses and obligations, then
there lies very less opportunity to compete in the market segment with players
like Orra and Shri Krishna Chetty, who have a huge store retail outlet in display.
From that angle the only opportunity that would lie in the hands, for Divyash
would be to increase the store expansion, through structuring up a loan from a
private equity investor or more simply through a public lender like a bank.
Thus, by using up the loan amount to expand the business through the
opening up a new retail outlet or acquiring an already existing old business,
running in losses by going through an acquisition route, can make a fair chance
for not only increasing the burden in the already existing debt, in the books of the
Divyash , but also would lend a hand in increasing the working capital
requirements of the business .
This can also lead to a position where Divyash might face a crunch within its own
Trade creditors, with whom it is engaged in short term supplies. But Companies
like Divyash as of now have few debts in their books, which relates to few
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financial risks. By looking at Divyash‟s Balance Sheet we will be able to compare
the total amount of the accumulated debt with their assets.
7. Economic Risk
Divyash faces a high potential risk of rupee volatility. With the rise in the
current foreign inflows the rupee has tended to appreciate leading to a fall in the
rate of imports and thus enabling large market players like Shri Krishna, Shri
Krishna Chetty and Orra Diamonds to attain the scale of economies.
This in turn lowers their manufacturing and production costs due to higher
bulk imports leading to a lowering in their purchase cost, thus affecting the
overall pricing mechanisms at times of higher inflationary environment. These
players can come up with promotional sales and thus lead to a higher sales growth
and maintain its profit margin level through a higher sales volume. But , this can
adversely impact the Sales revenue of Divyash, with a higher level of Operating
cost as the comparative remuneration of its employees need to be met as per the
rise in inflation costs.
This would eventually also raise the overhead expenses of transport and
delivery costs, due to a rise in the price of oil due to a higher inflationary scenario.
This would eat up into the gross margin profit of Divyash and thus leading to a
higher Operating cost scenario with a lower margin of profit.
8. Other Economic Risks
The Higher inflationary scenario in the global economy would tend to
shift the money chasing various asset classes, from the equities environment into
investment of various asset classes, such as the commodity; where it would tend
to flow into classes like gold and silver. This would lead to a rise in the prices of
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gold and silver and alternatively would also lead to a change in the taste of
customer preferences. Here certain customers would prefer to indulge into luxury
brands like a Louis Vuitton or a Gucci instead of the expensive gold with precious
gems. As each customer would then look to get the best value for their money.
6.2 Contingency Planning
Unforeseen events might occur in the course of Divyash‟s business and
interfere with the day to day operations. It will comprise of the backup plan which
will be implemented if anything wrong happens from the normal routine actions.
Objectives of Divyash‟s Contingency Planning
a. To set up an alternative plan when the things deviate from normal course of
actions.
b. Assign responsibilities to authorized persons to carry on operations and
resume them.
1. Insurance Plan
Being small in terms of production and stakeholders, Divyash sees
insurance as the safest option to guard itself against any mishappening.
Divyash‟s contingency plan is covered under Tata AIG General Insurance
Company which is India‟s leading insurance coverage company. It provides
coverage for Business property, coverage for excess liabilities, life insurance
as well as worker‟s compensation to the tune of 100 percent coverage based
on certain specified conditions (Economy Watch, 2010)
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2. Contingency Team formulation
Besides providing adequate coverage of Insurance against any mishap,
Divyash also tends to form the team of people who have to lead incase of any
contingency arises. This team will comprise of Contingency team co-
coordinator who will be held responsible to safely and quickly handle all
emergency situations. Ms. Prerna Sharma will assume the role of co-
coordinator if any emergency situation like theft, fire or any other situation
which could result in the damage to business can take place. In case of her
absence Mr. Chandan Kumar would act as a 2nd
Coordinator responsible for
resuming the actions back to normal again. Ms. Sangeetha will be an active
team member and will assist the co-coordinator in resuming the operations.
• Persons to be contacted in case of emergency
Business Home
1. Ms. Prerna Sharma (Co-coordinator) 316(Ext) 91-9418097244
2. Mr. Chandan Kumar (2nd
Co-ordinator) 312(Ext) 91-9845600781
3. Ms. Sangeetha D‟souza 91-9845672122
3. Other Continuity Strategies of Divyash include
Sale of Divyash jewellery retail store to the other upcoming jewellery retailers within
and outside Bangalore who are interested in Product line diversification.
• Merging options: Divyash would look for the options of going for the mergers
with the high cash inflow jewellery retailer in order to gain positive synergies
from the deal and expand its foot hold to gain prominence in the upcoming
jewellery retail market in whole of south India and thus reduce the chances of
facing stiff competition from the major market players like Orra, Tanishq etc and
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thus in order garner a larger market share in the existing tough jewellery retail
business.
• Management at Divyash would prefer to go worth the option of leveraged buyout
as this would entitle them to even purchase the controlling rights of Orra or
C.Krishna Chetty, only if the central regulation policies regarding the buyout
purchase act favours Divyash together with the credibility of acquiring a larger
portion of financing deals to acquire the name branded company. At this point
Divyash needs to take a look at the amount of credit score it can gain over the
period of time it stays in business profitably.
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7. CONCLUSION AND RECOMMENDATIONS
The market research carried out by Divyash shows that Divyash is an viable
option as the organized sector of jewellery is predicted to go positively during the coming
years. The management of Divyash has been working for an year to come up with the
quality jewellery products to cater to the market needs. With the women developing the
greater sense of individuality, style and fashion, the view point toward the jewellery is
changed from the being the investment option to fashion accessory. Earlier times the
jewellery was perceived as the investment option and investor used to keep jewellery as
one of the options in the portfolio but now the perception is totally changed.
The direct competitors of Divyash include C.K.C, Shri Krishna diamonds, Orra
Diamonds and within the different product range it includes the other luxuries brand
where customer could spread has budget across. In such a climate, the best investment
opportunities will be presented to the companies which provides the value added
customized products tailored to specific needs of the customers driven by the changing
consumer trends, preferences, urbanization and income trends etc. The industry has
totally moved from the phase of consolidation to the more outwardly industry.
The company‟s management is quite confident on Divyash‟s sales forecast which
it perceived at the growth rate of 12 percent amounting to be INR 1.47 million for FY
2011 and simultaneously as INR 1.64 million, INR 1.84 million and INR 2.12 million
respectively for the year 2012, 2013, 2014.Furthermore, Divyash has considered the
current market as well as demographic trends which projects Divyash‟s ability to grow its
sales average to capture the branded jewellery segment.
Divyash has vast potential to become the highly valued business in national as
well as international market. Due to the committed management team specializing in
jewellery field brings the complete entrepreneurial spirit to the business as most of the
jewellers who run jewellery business are not knowledge holders in this field but learn it
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just by experience. Also due to high quality products offered as well as due to the
company‟s aggressive marketing tactics to promote Divyash as a brand for masses in its
industry and the Divyash‟s profitable revenue model will fetch the investors interest to
invest in the profitable business of Divyash.
For Divyash to become industrial leader, Divyash should invest more capital in
the business to upgrade the infrastructure of Divyash, internal systems of Divyash, the
product improvements, to carry aggressive marketing tactics and to increase the
geographical span of Divaysh in other surrounding areas. Without having own
manufacturing plant, Divyash can do effective cost reduction measures as there is nil
investment needed in infrastructure setup for manufacturing.
Future vision of Divyash: Besides considered to be the company with continuous
increasing ROI‟s for consecutive years as well as positive sales projections, Divyash will
position itself as a national brand. The customers will be greatly satisfied to find a
complete set of attributes at one stop Divyash i.e. Quality, Affordability, Reliability,
Trust etc.
The company will also come- up with its own brand collection based upon
specific themes which will retain the existing customers and will help in developing the
new customer‟s base for Divyash. Collection theme will be contemporary one as today‟s
women is seeking for the mix of traditional as well as western concepts to exhibit her
personality. Thus Divyash seems to be an attractive opportunity for investors as Divyash
has the ability to impact the customers and project positive growing revenues.
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EXECUTIVE SUMMARY
This business plan lays down the structure for starting the operations of newly
born enterprise, Divyash-the jeweller located at Commercial Street in the city of
Bangalore, in India. Divyash is a retail house with a wide range of product offering in
different product categories such as Gold jewellery, Gold studded jewellery and Silver
jewellery, including different product categories. With positive economic growth in
India, jewellery seems to gain its prominence again in the Indian market and will be be
the most trusted one in every investors portfolio.
India is crowned as the largest industrial hub in the Global Gem & Jewellery
Industry. India has gained the reputation as the processing hubs for the diamonds as the
major portion of the world‟s diamond are polished and processed in India..The demand is
expected to increase more as more and more investors will be seeking Gold market as the
positive option for their portfolio. The Bangalore city of India is one of the vibrant city
among all cosmopolitan cities in India and it contains the highest number of rich, super
rich as well as Billionaires of India. The city is renowned to be the IT hub of India and
thus have drawn lot of Foreign Direct Investment around the world. Lot many private
companies are seeking the opportunity to enter Bangalore. Not only this but when one
can also find lot many jewellery houses both family owned as well as professional
corporate who have established themselves in Bangalore. Thus Divyash sees the market
opportunity and plans to come up with the Jewellery Business in India.
The Indian jewellery market is a diverse widespread market and contains both
unorganized as well as organized jewellery retail outlets. Unlike the other brands, the
customers buying various patterns, varies according to the trust factor as well as the
visibility factor, whereas the branded segment still forms the small market share in
jewellery industry. Divyash competes within the same product category as well as with
different product category also. Divyash also has planned to come up with its own market
strategy which could cater to the needs of the selected segments. The main market
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strategy of Divyash is to target the mass market and project itself as an affordable brand
in the jewellery segment. After carrying out the extensive market research Divyash has
planned to come up with the market strategies which will create successful product
awareness among the customers. Divyash has pre-planned budget to carry on these
marketing efforts which will be increased steadily once the Divyash comes into its full
swing and operates while making some profits. Divyash will make sure that the
marketing efforts it is carrying in the market are fruitful so for the evaluation Divyash has
also planned the Evaluation and Control program for Divyash.
Divyash tends to implement sophisticated long term as well as short term
strategies which will benefit Divyash to be a leading jeweller in Bangalore, India.
Divyash has drawn clearly defined strategies to be implemented in every area of its
operations i.e. Human Resource, Marketing, Operations, finance etc. These action
strategies have to implemented within each stage of Divyash‟s product cycle. These
strategies have been laid down keeping in view the objectives of Divyash both at long
term as well as short term. Divyash also has an image of its future market position and
have planned the future strategies accordingly which it would like to implement.
This plan outlines the invested Divyash‟s capital, the structure of capital invested
in the business and lays down the expenses and the investment it makes in each field to
carry on the business smoothly. It gives the estimated forecasts for the ROI‟s, Sales
Projections and the estimated ratios and the future incomes. This pan is calculated based
on hypothetical financial assumption and considerations.
While every business operates to make profit but it also does carry the risk along
with itself. It can be a risk of loosing the market share, risk of technology, Economic
risks etc. Divyash foresees the various internal as well as external risks which it might
can occur in the nearby future and might tend to deviate Divyash from its normal course
of action and also the contingency efforts Divyash will implement to resume back the
operations to its normal routine.
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Recommendations
1. The strategically selected location is the major advantage of any business to succeed.
Thus any business location such be such that it have a approximity to all the resources
needed by business.
2. Product benefits should be underlined clearly and must be presented to customers by
clear messages either by promotional activities or by personal interviews.
3. Market Research has helped Divyash while deciding its product offerings, Product
range, Price band etc. Therefore it is must for every business to conduct the market
research. It serves as a back bone for all businesses.
4. Analyzing the indirect competition has given Divyash the intensity and degree of
competition it probably could face from different categories also. Thus while crafting
strategies for the business, one must consider indirect competition.
5. One need to have a clear set of present as well as future actions which ha particular
business will implement during the course of its operations. Thus deciding the long term
strategies and future actions are of equal importance as are short term strategies.
6. Finance is a backbone for all businesses therefore a sound financing strategies are
must for any business. The over financed business can be resumed and bring back to its
normal course but the cost of under financed business is far more higher.
7. Exposure of business to possible risks should also be analyzed before starting a
business.
99
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