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helpdesk.NWFP@smeda.org.pk
August, 2012
Pre-feasibility Study
EXECUTIVE SUMMARY................................................................................................................. 4
Pre-feasibility Study
6.1.7
Finishing ................................................................................................................................25
6.1.8
Polishing and Buffing ............................................................................................................25
6.1.9
Beading and Stone Studding ..................................................................................................25
6.1.10
Gold Recovery...................................................................................................................26
6.2 CASTING PROCESS AND MACHINERY REQUIREMENT .......................................................................26
6.2.1
Supply of Machineries ...........................................................................................................26
6.3 JEWELRY ITEM MANUFACTURING TIME...........................................................................................27
6.4 RAW MATERIAL ...............................................................................................................................27
6.5 MISCELLANEOUS EXPENSE ..............................................................................................................28
6.6 INITIAL INVESTMENT IN GOLD JEWELRY STOCK ..............................................................................28
6.7 MACHINERY REQUIREMENT.............................................................................................................28
6.8 FURNITURE & FIXTURES ..................................................................................................................29
7
10
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PREF-87/August, 2012/ Rev 2
Pre-feasibility Study
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. Although, due care and diligence has been taken to
compile this document, the contained information may vary due to any change in any of
the concerned factors, and the actual results may differ substantially from the presented
information. SMEDA does not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. The
prospective user of this memorandum is encouraged to carry out additional diligence and
gather any information he/she feels necessary for making an informed decision.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
DOCUMENT CONTROL
Document No.
PREF-87
Prepared by
SMEDA-Punjab
Issue Date
August, 2012
Issued by
Library Officer
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
1 EXECUTIVE SUMMARY
A lack of passion for gold jewelry in Pakistan, and even amongst the Pakistani
expatriates, is hard to imagine. It is a cultural idiosyncrasy within the South Asian
Region. Gold jewelry is perceived not only as a decorative item but a symbol of status.
The perception pervades in all classes. Another reason for the vitality of the gold jewelry
market is that all domestic jewelry products are priced by weight, which results in the fact
that people perceive gold jewelry as a means of security net for the future because gold
alone has an internationally agreed price.
Global trade for Gems and Jewellery has shown a positive growth trend showing
increasing demand for these valuable fashion articles in international market. United
Nations Statistics showed that India is the market leader right now.
The subject enterprise of this pre-feasibility study is an integrated business gold jewelry
manufacturing and retailing business. In the subject pre feasibility study we assume the
60% of total jewelry sold will be traditional jewelry normally available in gold jewelry
shop, while 40% of total jewellery will be of designer made, which is of premium quality
and high price. This designer made jewelry will target the elite class of society.
Total projected cost of the project is estimated at Rs. 12.418 million. The internal rate of
return (IRR), Net Present Value (NPV) and payback of the project are 56%, Rs.78.805
million and 3.48 years respectively.
This pre-feasibility is being prepared by SMEDA and is intended to provide general
information on the opportunity for an investor in the Gems and Jewelry sector to establish
a Gold Jewellery designer made retail outlet and workshop. This would allow the project
to manufacture Gold Jewellery and gems for local market and Global market as well,
thereby, adding value and maximizing profits.
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
SWOT Analysis
Before stepping into any venture, one has to analyze the strengths, weaknesses,
opportunities and threats (SWOT). An industrial / sectoral SWOT analysis is given
below. A prospective entrepreneur would have to conduct a micro-level SWOT analysis
on the basis of the intended city / town / village for his business.
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
SWOT Analysis
Strengths
1. Stock of skilled craftsmen;
2. Low manufacturing cost;
3. Low capital investment in
machinery;
4. Price inelasticity of demand for
gold jewelry implying the relative
ease with which an entrepreneur
may pass on increase in costs to
the customer.
5. Easy exit since gold stock can be
resold easily (though capital gains
/ loss possible due to change in
gold price);
6. Premium mark-up is accepted in
general by customers if they
perceive that the jewelry item they
are purchasing is unique or has a
designers value. Thus there is
greater
opportunity
for
an
entrepreneur to charge higher
mark-up on exclusively positioned
jewelry line.
Weakness
1. Weak sharing of information and best
practices within the industry. Trade
secrets tend to be kept within family;
2. Maintaining exclusivity of designs is
difficult due to absence of copyright
laws within the industry. Investment
in exclusive designers is thus risky.
3. Highly
skilled
craftsmen
are
concentrated in few clusters, mainly
in Karachi and Lahore;
4. Practice of hallmarking products for
export is low, thus non-hallmarked
items are less reliable abroad than
competitive but hallmarked jewelry.
Opportunities
1. Increasing
population
thus
expanding
potential
domestic
market;
2. Gold price is perceived to be
outmatching inflation thus purchase
of gold jewelry is more readily
justified in terms of future security.
3. Increasing demand for 22k gold
jewelry abroad
amongst South
Asian expatriates;
4. Increasing demand of 18k jewelry
within
Pakistan
provides
opportunity for jewelers to increase
their stock size and range with
lesser investment in gold.
5. Increasing participation of females
in
work-force,
thus
greater
purchasing power of women to
Threats
1. Improving trade relations with India
may lead to import of competitive
jewelry items into Pakistani Market;
2. Competition from Far-East Asian
countries is already somewhat visible;
3. Proper designing matching the market
taste is crucial to sales, if designing
does not match the market demand,
the entrepreneur may be stuck with
slow conversion of stock to sales.
4. Frequent turnover of key craftsmen
risks loss of quality and exclusivity;
5. Economic Condition of Pakistan;
6. Artificial Jewelry trend.
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
Entrepreneurial Fit
The prospective investor will need to assess an entrepreneurial fit in the sector in light of
the sectoral SWOT analysis. Table 3-1 below gives an example of crucial traits
contributing to entrepreneurial fit in the jewelry sector, and course of action to be taken in
case the crucial trait is present, and also if its lacking.
Table 3-1: Entrepreneurial Fit
ENTERPRENURIAL FIT
CRUCIAL
TRAITS
Family
Background
Process
Know How
Flair for
designing /
Ability to
gauge
trends
Importance
If Positive
Source of process
knowledge;
Prevents costly
managerial mistakes
more probable in trial
and error based
decision making;
Better knowledge/
guidance of the
market in terms of
trends, suppliers,
craftsmen..etc.
Effective quality
control;
Feasibility
assessment of
selecting production
technology
Entrepreneurial
advantage;
Lower risk than if any
industrial background is
lacking.
Entrepreneurial
advantage;
Effective quality check;
Less risk in management
and ownership of retail /
manufacturing unit.
Unique selling
proposition;
Premium pricing
Customer Loyalty
Entrepreneur is able to
determine the stock of
jewelry items in terms of
designs and variety.
Prospective customer's
feedback on preferred / not
so preferred styles;
Advice of established
jewelers catering to similar
target market;
Hire graduates from
designing / arts' institutions;
Greater investment in
jewelry catalogues.
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
3.3
The entrepreneur - assuming sufficient financial resources - then needs to decide on his
business model in terms of having his workshop in-house, or outsource jewelry
production. The following table gives advantages and disadvantages of the two options.
Table 3-2: Pros and Cons of In-House vs. Outsourced Manufacturing
Pros and Cons of In-House vs. Outsourced Manufacturing
PROS
In-House
CONS
Outsourced
PROS
CONS
Greater control on
quality
Greater chance of
securing design
exclusivity
Optimal order
processing
Better process
control when
production under
one roof
Possible to
rationalize on total
labor cost for small/
medium size business
Greater range of
choice in terms of
craftsmen to be used
4 PROJECT PROFILE
4.1
Opportunity Rationale
A lack of passion for gold jewelry in Pakistan, and even amongst the Pakistani
expatriates, is hard to imagine. It is a cultural idiosyncrasy within the South Asian
Region. Gold jewelry is perceived not only as a decorative item but a symbol of status.
This perception pervades all classes.
Another reason for the vitality of the gold jewelry market is that all domestic jewelry
products are priced by weight, which results in the fact that people perceive gold jewelry
as a means of security net for the future because gold alone has an internationally agreed
price (although there is no regulated appraisal system for selling second-hand jewelry,
more often people get much less money than they have paid when they try to return the
jewelry).
On the supply side, gold jewelry manufacturing is labor intensive. The skill of most of
the craftsmen is passed on from generation to generation or through a process of intense
apprenticeship. Gold jewelry manufacturing units tend to specialize in terms of process,
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
thus they all tend to form a cluster of independent units that utilize each others service to
complete a jewelry item. This makes it easier for a new entrant to identify craftsmen in
terms of skill, reliability and quality.
In case the entrepreneur wishes to set-up an integrated business (retail and
manufacturing), most of the machinery used is now locally made (largely in Gujranwala)
and is considered almost at par with the Italian machines for the same purpose. Hence,
initial capital investment in machinery is less and does not pose a great barrier to entry
into enterprise of gold jewelry manufacturing and retailing.
4.2
Project Brief
The subject enterprise of this pre-feasibility study is an integrated business gold jewelry
manufacturing and retailing business. In the subject pre feasibility study we assume the
60% of total jewelry sold will be traditional jewelry normally available in gold jewelry
shop, while 40% of total jewellery will be of designer made, which is of premium quality
and high price. This designer made jewelry will target the elite class of society.
The manufacturing unit known as the workshop is a self sufficient unit that out sources
only the following processes: gold refining and mixing, mechanized chain and bangle
making.
A Gold Jewellery Manufacturing and Retail Shop with a capacity of 3600 tolas a year
started in a rented shop and workshop, require total capital investment estimated at Rs
2.555 million for purchasing machinery & equipments, furniture & fixtures and for preoperating expenses. Rs. 9.864 million is estimated for working capital that should be used
to purchase raw material, pay building rent and for cash in hand. The total project cost is
estimated at Rs. 12.418 million.
Table 4-1: Project Outcomes
Project Outcomes
Net Present Value
Internal Rate of Return
Discounted Payback (years)
4.3
Rs. 78,805,233
56%
3.48
The gold jewelry retailing sector faces a seasonality factor that becomes apparent in the
sales. Sales tend to peak during the wedding season. The wedding season fall in winters
(October - March).
As far as the importance of timing of setting up a gold-jewelry business is concerned, its
preferable that the business be set up in the wedding season.
This would not only help the initial cash flows but also render any promotional tactic
(even if it may be just an attractive faade of the shop or a well designed jewelry) more
effective by having greater number of prospective gold jewelry buyers in the market.
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
4.4
Since majority of Gold Jewelry business are family owned, most of these enterprises hold
the status of registered partnerships. The other option mostly taken up is that soleproprietorship. The latter two options are preferred over the option of incorporation
mainly due to requirement, in the case of incorporation, of periodic disclosure of
financial information.
4.5
The capacity of the workshop is defined as the volume of output the workshop is can
produce when working to full capacity at a given period of time. In this case, the capacity
of the workshop is defined as the amount of gold jewelry in terms of grams (weight) that
the workshop can produce in a year when working at its full capacity. The research,
based on interviews with gold jewelry making craftsmen suggests that on average, a
skilled craftsman can produce gold jewelry worth 575 grams of gold in a month or 6900
grams (600 Tolas) worth of jewelry in a year. Since majority of gold jewelry is handmade
and only small portion, if any, of the jewelry involves casting process, number of gold
jewelry manufacturing craftsmen is the key variable determining the capacity of the
workshop.
The capacity of the retail unit in gold jewelry industry, on the other hand, is described in
terms units of gold invested in stock of jewelry prepared by a jeweler at any one time.
Table 4-1 shows how a manufacturing unit and gold jewelry retail enterprise is described
in terms of capacity and scale.
Table 4-2: Capacity Description
Capacity Description
Capacity Description for Workshop Unit
Scale
Small
Medium
Large
Scale
Small
Medium
Large
Number of
Output / year (grams)
Output / year (tolas)
Craftsmen
3-5
20,700 34,500
1,800 3,000
6 - 10
41,400 69,000
3600 - 6000
11 or more
75,900 - more
6,600 - more
Capacity Description for Retail Unit
Stock Level (Grams)
Stock Level (Tolas)
1150 - 2300
100 - 200
2300 - 8050
200 - 700
8050 or more
700 or more
This pre-feasibility report suggests that to enter the gold jewelry manufacturing and retail
industry with an integrated business of manufacturing and retailing, the new entrant
should enter with at least a medium scaled workshop and also a medium scaled retail
unit. The medium sized workshop and retail business is the minimum feasible scale for
integrated unit since the larger number of overheads (as compared to if manufacturing
and retail were separate independent businesses) require a minimum level of sales for the
overhead costs to be met. This minimum level of sales is met with operations at medium
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
scale. Medium scaled workshop can provide jewelry items for its own retail units where
generating greater profit margins. Starting at a larger scale would expose the entrepreneur
to greater risk while starting too small, with given fixed and administrative costs, can
push the break even period for the project too far ahead. For example, with the given
cost parameters described as assumptions, starting with workshop of 4 craftsmen and
retail unit with a stock of 2300 grams of gold can push the discounted payback period to
more than 10 years.
The financial model given at the end of this report assumes initial capacity of workshop
to be manufacturing of gold jewelry worth 41,400 grams / year (3600 tolas / year).
This model shows that the workshop will initiate its operations at 50% of its capacity in
year 1, and the level of operations will increase as manufacturing unit receives more
orders from its own retail unit. The maximum capacity of manufacturing unit is assumed
at 95%.
4.6
Project Investment
Table 4-2 below gives an estimate of the initial investment required to set up a workshop
with annual capacity to manufacture gold jewelry items worth 41,400 grams.
Table 4-2: Initial Investment
Description
Capital Investment
Machinery & equipment
Furniture & fixtures
Office equipment
Pre-operating costs
Total Capital Cost
Working Capital
Equipment spare part inventory
Raw material inventory
Upfront building rent
Cash
5,750
8,157,813
1,200,000
500,000
9,863,563
Total Investment
4.7
12,418,163
Pre-feasibility Study
Earrings
Rings
12 Bangles' Set
Bracelets
Chains
Necklaces
Pendants
Teeka
Bridal Set
Jhoomer
Average Gold
Content / Item
4.2
3.9
41.2
13.15
13.4
35
3.4
4.1
69
12.65
Calculation of average gold content for earrings (as an illustration) is calculated thus: 3.5
grams * 0.8 + 7 grams * 0.2 = 4.2 grams
Table: 4-3 is to be read as, for example, of the total units of earrings kept as stock for
sale, 80% weigh around 3.5 gms, while 20% of earrings kept in stock weigh about 7
grams.
Given the average weight of gold (gms) per jewelry item and the information regarding
average item wise stock composition of jewelers participating in this research, Table: 4-4
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
below gives an idea as to how, percentage wise, total gold available for jewelry stock
may be distributed among various jewelry items.
Furthermore this distribution is translated into number of units per jewelry for initial
stock level of gold jewelry items worth 4600 grams (400 tolas).
It is of note that smaller items have higher sales turn-over than larger jewelry items.
Thus, though small items like earrings, rings and pendants utilize together only 16 % of
total gold available for stock, unit wise they constitute 61% of total units prepared as
stock.
Table 4-4: Weight wise distribution of gold metal
WEIGHT WISE DISTRIBUTON OF GOLD METAL STOCK AMONG JEWELRY ITEMS
Item
Earrings
Rings
Bangles' Design (four
bangles per design)
Bracelets
Chains
Necklaces
Pendants
Teeka
Bridal Set
Jhoomer
TOTAL
Item-wise Distribution of
Gold Stock (%)
4%
9%
14%
7%
3%
43%
3%
0%
17%
0%
100%
24 units
10 units
56 units
42 units
2 unit
12 units
0 units
310 units
It is important to note that as such jewelers in Pakistan do not compose their stock on the
basis of any hard and fast rule. The stock size and its composition are improved as the
retailer gains experience of the market itself and as the sale increases. If sales remain low
or constant, the stock of jewelry would be decreased because Gold is expensive item and
your money will be tied up in your stock.
4.8
Proposed Location
Pre-feasibility Study
The downturn of locating the gold jewelry manufacturing workshop that integrates many
processes that are usually outsourced (eg. Polishing and buffing, casting) is that the space
required for the model workshop will be far greater than the average workshop found in
Sarafa bazaar. Sarafa bazaars are often located in the oldest part of the city. Finding
rentable space is hard and if available, space in terms of complete room is often small.
This implies that the workshop may have to be set up in two different rooms / tiers.
Also, the rents and rates of space in a jewelry cluster is almost double that of space for
workshop outside the cluster. The difference becomes greater the further one goes from
the cluster. For example, space 20 by 25 square feet may be let at Rs. 25,000/ month if
located within the cluster but may cost Rs. 12,000/ month in old part of the city but far
from the cluster.
4.8.2 Location for Retail Unit
An ideal location for setting up a jewelry shop would be in main market or shopping
center where more females tend to shop frequently. Ideally that location should not only
have a wide range of shops in terms of clothes, shoes etc but also have a cluster of
competing jewelry shops.
The latter characteristic is important for jewelry buyers tend to shop around for designs
and variety before making a purchase, and because it is convenient for a prospective
buyer to window shop amongst clustered shops, they are less likely to enter a recently
set-up, and not so renowned shop located in isolation.
Its noted that even shops of established reputation ultimately shift to main market areas
to boost their sales.
In short, factors important in considering the location of the shop would be:
4.9
Accessibility
Security
Area frequented by female shoppers
Cluster of competing jewelers
Key Success Factors / Practical Tips for Success
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
Strategic Recommendations
4.10.1 Marketing
Marketing and promotional schemes are financially feasible only if you have sufficient
capital / stock in terms of finished product that you are able to satisfy a customers need.
Hence, unless one has a sufficiently wide range of jewelry items to cater to a prospective
buyer attracted by marketing scheme, the attraction of that customer to your shop may
not translate into sales but into higher average selling cost.
Excellent customer service can play a vital role in converting a window shopper into a
customer and a small order into a large.
4.10.2 Ratio of Order to From-Counter Purchase
In the wedding season, purchases on order outnumber those from the displayed stock and
vice versa on other occasions.
4.10.3 Nature of Stock Keeping
Increase the average stock size to hedge against increasing trend in gold prices. Some
stock is kept of gold and those stones, precious and semi precious gems the type of which
have been used in displayed jewelry items to cater to the possibility that a customer may
want to purchase a displayed item with some alterations. Stock in term of duplicates of
displayed jewelry item is not kept.
4.10.4 Pricing Policies:
Increased competition has reduced jewelers control in terms of price determination of
smaller and relatively non-exclusive jewelry items. One is, however, able to charge a
premium on exclusivity and uniqueness of the design.
Price of gold jewelry item is extremely sensitive to price of gold. Furthermore since gold
jewelry has a high income elasticity of demand, the jeweler is not free to pass all of the
increase in cost of raw material to the customer but has to absorb some of it himself.
If a customer has ordered an item, then the rate of gold that a customer will pay is
established when the order is given by the customer and is largely the current market rate
at that time.
4.10.5 Mode of Payment
Advance: Advance is normally taken when the jewelry item being sold is to be made on
order. There is no fixed percentage of the orders cost demanded since our business
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
The type of jewelry items in term of design and quality depends on the clientele of the
jeweler. The type of clientele, in its turn depends on the location of the shop.
The choice of target customers may be gauged by the general trend as seen via the
jewelry items sold by other jewelers in the same or similar area and by trial and error.
However, the jewelers vision and his understanding of the market trend have a great
bearing on the range and variety of jewelry items displayed in his shop.
Industry Structure
Pakistans jewellery sector is basically retail driven due to a huge local market. Karachi
and Lahore are the main hubs for jewellery manufacturing. Dubai is the main exporter of
bullion to Pakistan. The dominant reason for the purchase of jewellery in Pakistan is
marriage, as gold is perceived as a form of savings and it is accumulated for this purpose
over several years. However, with increasing awareness and education, along with other
emerging investment opportunities, jewellery is now gaining preference as more of a
fashion symbol.
The range of jewellery items produced by the jeweller is very wide. The popular items of
Pakistans jewellery are Teeka, Pendants, Bazuband, Jhoomer, Bangles, Nose Pins, Kara,
Earrings, Rings, Balian, Pazeb and Necklace.
Jewellery industry is highly fragmented, with very few players having complete in-house
production facilities. Most of the players outsource manufacturing process to small
vendors. The trade consists of small companies (generally up to 15 workers) with
freelance craftsmen. The workforce works in the traditional manner sitting on the floor at
low benches rather than seated at conventional workbenches, which are more comfortable
and productive. The tools and technology employed are mostly basic. The use of hightech machinery is missing throughout the value chain.
Each of the major cities of Pakistan has a Sarafa Bazaar, consisting of hundreds of
small showrooms, bullion dealers and casting shops. Major cities and their markets are:
KARACHI
LAHORE
RAWALPINDI/ISLAMABAD
Pre-feasibility Study
The industry structure is very fragmented and one with high degree of operational /
functional specialization. For a polisher of gold jewelry will not do anything but polish.
Thus a polisher can be an independent unit in manufacturing process and may cater to
multiple jewelers. Complete jewelry manufacturing and integrated retailing units are rare
in the industry.
The markets preference leans towards exclusive designs. Thus jewelry manufacturing is
very labor intensive, and unlike in the West, degree of mechanization and production of
standardized items except in case of generic gold chains and perhaps bangles is very low.
Hence, every process of jewelry making requires high level of expertise and skill as
jewelry manufacturing is closer to being a form of art. It is an art in the sense that when
it comes to making of handmade jewelry, each process has more than one way of doing
it, and the quality of work depends on the skill of an individual worker/ craftsman.
Because jewelry manufacturing is spread over number of specialized units in terms of
process, jewelry making industry tends to be clustered or geographically concentrated.
These clusters of workshops are found in Lahore, Karachi, and Rawalpindi in what are
called the Sarafa Bazaars.
Large and renowned jewelers tend to have their workshops preferably in Karachi or in
Lahore due to exceptional skill level developed there over time. In order to supervise the
quality of workmanship and design of their jewelry item, jewelers not located in the main
jewelry manufacturing cities but having their workshops there then have a representative
or an agent in the city where their jewelry is being manufactured.
5.1.1 Average Workshop
An average gold jewelry manufacturing workshop tends to be a 200 (10x20) square feet
covered area that is located within or near a jewelry manufacturing cluster if the
workshop depends on outsourcing some of the processes as gem setting or polishing.
Workshops visited in the jewelry manufacturing clusters (Sirafa Bazaars) were further
specialized in terms of bangle manufacturers alone; makers of plain jewelry only; makers
of studded jewelry only, making gold balls to be sold to other workshops etc. A
completely self-sufficient workshop is seldom found in the industry.
Average number of workers in a typical gold jewelry manufacturing workshop found
within a cluster like Sirafa Bazars is 5 to 6 craftsmen. These craftsmen tend to be
generally the pattern makers, or those craftsmen who transfer the design on to the gold.
Few workshops have a polisher and a finisher, and even fewer have a stone setter
in the same workshop. Within the workshop, however, workers tend to be specialists in
terms of their functions. For example, a workshop will have one worker who specializes
in copying designs from catalogues; another, a maker of studded jewelry; another, a
maker of plain jewelry, or a worker who only makes bangles etc.
The average working hours of a craftsman are 9 hours a day, six days a week. Workers
are often part of a local union.
The recruitment of craftsmen is based on references and personal recommendations.
According to some jewelers the turnover rate of workers recruited on the basis of
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
personal recommendation / reference tends to be low since the workers recruited in this
manner would not like to lose the confidence of their referees.
The remuneration of the craftsmen is a combination of base salary and performance (in
terms of units made and / or quality of work).
5.2
Export Market
India
9149.9
Avg.
Growth
(%)
06-10
16.5
China
8971.2
29.3
131
11.6
USA
7075.2
5.7
12.3
9.1
Switzerland
6161.6
13.6
25.2
8.0
Italy
5772.8
0.3
29.9
7.5
Hong Kong
5630.2
4.1
21.3
7.3
United Kingdom
4458.1
5.6
18.2
5.8
3720.1
47.5
21.4
4.8
Thailand
3437.1
16.0
25.4
4.4
Singapore
2559.5
41
52.9
3.3
Country
Value
(Million US $)
Growth
(%)
09-10
World
Share
(%)
-32.9
11.8
1http://www.fbr.gov.pk/TradeStatistics/PCTSUMMARY411.ASPX?view=ExternalLink&ActionID=+&Artic
leID= (HS Code of Gold Jewelry is 7113.1910)
Pre-feasibility Study
Value
(Million
US$)
USA
Switzerland
Hong Kong
United Arab Emirates
United Kingdom
Singapore
France
Japan
Germany
Italy
10306.7
8844.6
6758.1
6349.2
3806.2
2892.2
2501.8
1847.5
1787.1
1472.3
Avg.
Growth
(%)
06-10
-2.4
30
21.3
16.5
-4.1
27.6
9.7
-2.4
7.5
9.8
Growth
(%)
09-10
Market
Share
(%)
16.4
45.9
52.3
17.7
10.9
53.7
23.4
20.7
16.0
40.9
16.8
14.4
11
10.3
6.2
4.7
4.1
3.0
2.9
2.4
Market Potential
The consensus amongst the jewelers spoken is that the demand of Jewelry in Pakistan is
decreasing day by day due to high rise and instability in Gold Price. In last five years
gold prices in the world market increases by 145.18%4. Due to high rise in gold price
purchasing power of purchasers influenced diversely, people prefer artificial jewelry on
original gold jewelry for even wedding events.
3
http://www.goldprice.org/gold-price-history.html#10_year_gold_price
19
Pre-feasibility Study
One big problem in this sector is that the price of gold varies dramatically on daily
basses, which cause loss for the goldsmith/jeweler.
5.3.1 Customer Loyalty
Customer loyalty in urban areas and cities is less than in rural areas. Urban customers
tend to shop around for an item before making a purchase. The loyalties of these
customers have to be retained via good designs, long product range and relationship
building.
5.3.2 Trends
The main driver of demand for jewelry tends to be weddings whereby shopping for
jewelry to be given in dowry starts years back and goes on till few days before the event.
Larger, prominent and gem studded jewelry, thus, constitutes the traditional demand.
However, with increasing rate of females working and earning a salary for themselves;
and greater exposure to outside culture through magazines and TV the demand for
smaller and contemporary western designs is emerging in the main urban cities. The rural
and semi rural areas tend to present a more traditional demand.
5.4
Target Customers
The gold jewelry manufacturing and retail enterprise will have two broad sets of target
market. Given the proportion of workshop output, the main set of target market are the
traditional consumers (purchasers) of gold jewelry. The other is designer made jewelry
which is for elite class.
The first set of target market consumer market can be sub-defined in terms of how the
enterprise decides to position its gold jewelry items. Tapping an exclusive niche that falls
under Designer Jewelry may require lower initial investment in terms of stock per
gross margin. However, that position strategy would have additional demands of offering
exclusive and appealing designs and range to the target market. For this purpose, it is
suggested to hire in house designers who could design different styles of jewelry to meet
the demand of target market.
The positioning strategy, that is, whether the prospective jeweler (retailer /manufacturer)
decides to cater to a local niche or mainstream market; or to the export market has crucial
bearing on gamut of decisions ranging from site and dcor of the showroom to production
process / feasibility of mechanization of process.
The following table depicts how the choice of target market affects some of the decision
variables.
20
PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
Price
NICHE
MARKET /
DESIGNER
Designer's
Premium for
exclusivity
LOCAL
MAINSTREA
M MARKET
Competitive
pricing;
Lesser
profit
margin than
in designer
products.
EXPORT
MARKET
(Expatriates
from the SubContinent)
Competitive
in the
foreign
market
EXPORT
MARKET
(NonExpatriates)
Competitive
in the
foreign
market
Promotion
Product
Exhibitions;
Fashion
Shows;
Fashion
Magazine
shoots / Ads
Word of mouth;
Window
displays;
If justified by
capacity,
fashion
magazine
advertisement
near seasonal
peaks.
Exhibitions
Trade
promotion
Distribution
22 karat - 18 karat;
Exclusive designs;
Low duplicity;
Labor Intensive
processes
Location in the
main market is not
crucial;
Dcor of showroom
must support the
brand image
22 - 21 karat items;
High stock to sales
ratio;
Larger range of
jewelry items
available for
display;
Variety of smaller
(high turnover
items)
21 karat;
Studded jewelry
preferred;
Both Asian and
contemporary
designs; Smaller /
lighter jewelry
18- 14 karats;
Contemporary
designs; Smaller /
lighter jewelry;
Mechanization
feasible for mass
distribution
High importance of
central location in
a busy shopping
centre, or in a
cluster of jewelry
shops
Importing agents;
Own agent abroad;
Exhibitions
Importing agents;
Own agent abroad;
Exhibitions
6 PRODUCTION PROCESS
6.1
Figure 6.1 below shows the production process flow from contracting an order and
completing an order. The production process depicted in Figure 5.1 is described in detail
later.
Note: This model is based on catering to the local mainstream market. The various target markets
mentioned above, however are not mutually exclusive. For example a gold jewelry manufacturing and
retailing enterprise may have mainstream local market for volume of sales as the primary target market
but can have separate product lines for exclusive / niche and export market for greater profit margin as
secondary target market
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Pre-feasibility Study
6.1.1
Contract Order
6.1.6 Engraving
6.1.7 Finishing
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Pre-feasibility Study
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Pre-feasibility Study
angle and pressure applied both own-ward and forward. The tool buries itself into the
sheet, forms a chip, and pushes that curl of metal ahead of it as it cuts.
6.1.7 Finishing
Once the design has been transferred, engraved and design pieces soldiered to form one
item, the craftsman gives the piece a finish technically called deburring before the item
is sent for polishing. Deburring is the removal of all sharp edges, air bubbles and burrs on
a piece.
6.1.8 Polishing and Buffing
Polishing is the use of abrasives to get general surface finish improvement. Buffing is the
step to get a smooth, bright, high luster final finish. There are many different polishing
and buffing compounds. An often-used breakdown of compounds is:
Cutting Compounds: These include the brown Tripoli and bobbing compound
Intermediate Compounds: These include Gray Tripoli, Graystar, white diamond, and
crocus. Platinum Tripoli and yellow bobbing compound.
Polishing Compounds: Some polishing compounds are red rouge, yellow rouge, white
rouge, black rouge, green rouge.
Super Finish Compounds: Blue rouge, Blue magic, Fabuluster, and Zam.
The Polishing and Buffing process is performed on buffing wheels. There are buffing
wheels to go with different types of compounds being used. There are cotton wheels,
chamois wheels, bristle brush wheels and more. Cotton buffing wheels are the most
common, felt wheels are also popular as are the brushes. Chamois wheels are great for
final buffing, but they are also fairly expensive.
Polishing may take one to three days depending on the item being polished and buffed.
The polisher is paid in kind that is considered as wastage by the jeweler. A polisher sets
his rate in terms of 500mg on 11.5g (1 tola) of gold. This means that if a polisher is given
13g of gold to polish, and after polishing the weight of gold goes down to 12.5 g, then
500mg was his compensation. If the weight lessens by more than the set rate, the goldjeweler will write the excess amount payable by the polisher and will be adjusted at the
end of a month when the polisher will melt his gold and pay off the excess to the
jeweler.
6.1.9 Beading and Stone Studding
Beading and gem studding process occurs after the finishing, polishing and buffing of the
main gold base of the jewelry item.
Beading is the stringing of gem beads on to the main gold jewelry item. There is often a
beader in every workshop whose job is only to put on the beads on to the gold jewelry.
Gem studding is fixing of gem stones on to the jewelry. While some workshops may have
their own gem studder, most of the workshops outsource the gem / stone studding to an
independent stone setter. Stone setting may take two to three days.
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
If a new design is to be casted, the first step to casting is making a model of the design by
hand either with gold, silver or iron. The model is then used to make a rubber mold
known as dye. For this process, rubber that comes in rolls and is known as Casting
Rubber is heated, using a Dye Press Machine, under pressure and flows around the
prototype making a mold. When cool it is then is cut apart leaving a cavity in the rubber
in the shape of the original piece. Wax Injector machines are used to inject molten wax is
into the rubber mold creating a wax copy of the original. The wax model is attached to a
rubber base with a heating pen like device known as Waxer with a number of others into
a tree like form in the process known as sprueing.
The wax tree is then surrounded by a metal cylinder called a flask which fits onto the
rubber base. This cylinder is then filled with plaster which has been mixed under vacuum
in a vacuum machine to draw out the air it contains. The plaster encases the wax pieces
and then hardens. The base is removed and the assembly is placed in a Gas Furnace. The
flasks with the plaster encased waxes are heated overnight to 1350 degrees which burns
away the wax leaving cavities in the plaster in the shape of the original pieces.
Gold is melted in a flask like attachment on a casting machine. The flasks of plaster that
are ready from the Gas Furnace are put on the Cast Machine that is turned on. The caste
machine, using system of pressure makes the molten gold travel into the plaster mold
while at the same time removes trapped air and gases.
When the process is done, the plaster is broken off and the tree is then put under a
motorized pressure machine that washes away any remaining plaster. The gold tree is
then dipped into nitric acid and heated with a blow torch to get the gold color on the gold
caste pieces. The caste pieces are then cut away from the base and are sanded and filed
to remove traces of the spruce, mold lines and any imperfections. The pieces are
oxidized if required and undergo a multiple step tumbling process using different grit
media to achieve the final desired finish.
6.2.1 Supply of Machineries
As mentioned above, most of the gold manufacturing machinery is made in Pakistan.
Gujranwala is the hub where most of the locally made gold manufacturing machinery is
manufactured. The suppliers are concentrated in Sadar bazaar of Gujranwala. Simple
machines like motorisd polishing and buffing machines can be bought from any Sarafa or
old city bazaar of main urban centers.
Earlier, casting machines had to import from either Italy or German. The main suppliers
through which the imported casting machines were bought are located in Karachi. Some
26
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Pre-feasibility Study
of the suppliers of imported casting machines have now started manufacturing (with
some imported parts) the casting machines and equipment themselves.6
6.3
Table 6-1 below gives an average time for a medium sized workshop to produce the
respective jewelry items.
Table 6-1: Jewelry Item Manufacturing Time
Item
Ring
Bangle
Earring
Chain
Necklace
Teeka
Jhoomer
Nose pin
Pendant
Baazoband
Bridal set
Time
1-2 days
1 week
2-3 days
3 days
1 week
1 day
3 days
1 day
2 days
5 days
1 month
The time taken on completion of a small order is not far less than time taken for a bridal
set because of the way craftsmen schedules the work on order. Craftsmen prefer to work
on larger items since for almost a similar amount of concentration the craftsmens
earning on a large item is far greater than his earning on a smaller item.
6.4
Raw Material
Table 6-2 below lists the main raw material needs and the purpose for their use. The
monthly requirement assessment for each raw material is based on the workshop
operations at 41,400 grams / year.
One such supplier is Ayub Brothers Engineering Works and Alay Casting Equipment. Phone# 0212254747, Address: LR9/14, Amil Street, Wahab Road, Ghazi Nagar, Karachi 3.
6
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
Purpose
For making casting dyes for new designs
Surf / Detergent
Coloring Chemicals
6.5
Miscellaneous Expense
The retail unit of the integrated modeled enterprise will begin operations with initial
stock level one month for Jewelry Manufacturing. Total raw material inventory for Year
0 will be of Rs. 8,157,813.
6.7
Machinery Requirement
Pre-feasibility Study
No. of
Units
Price /
unit (Rs)
Place of Origin
/Manufacturing
Gujranwala,
20,000
Lahore
Gujranwala,
20,000
Lahore
Karachi
150,000
20,000
20,000
150,000
10,000
10,000
5
2
1
-
16,000
10,000
11,800
-
80,000
20,000
11,800
311,800
Gujranwala
Gujranwala
Gujranwala
Chinese / Italian
-
Most of the above mentioned tools and machines are manufactured locally. Gujranwala
specializes not only in gold jewelry making tools, equipment and machinery, but also in
terms of furnishings (like special safes) required by gold jewelry retail outlet. However,
some machines like gold plate making and wire making machines are also manufactured
in Faisalabad and Lahore.
There are clusters of Gold jewelry related tools and machine manufacturing and are
located in Sadar bazaar in each of the three main cities mentioned above.
The general practice amongst the jewelry manufacturers is to use locally made tools and
machinery. Machines generally imported are chain making, bangle making and casting
machines. The main origin of imported machines is primarily Italy or Germany. Till
recently, casting machines had to be imported as electricity based casting machines were
not being manufactured in Pakistan. Casting machines are now being manufactured in
Karachi at a small scale. Interviews with users with locally manufactured casting
machines have expressed their satisfaction with the latter. Because the enterprise subject
to this model deals primarily with hand crafted jewelry and casted jewelry component or
whole items constitute only small portion of total output, the model enterprise invests in
locally manufactured casting machine and equipment.
6.8
Furnishing and fittings required for a workshop is estimated to cost around Rs. 199,000/which includes design department furniture, work stations for craftsmen, chairs, safe and
split Acs.
Furniture and Fixture of retail outlet will cost Rs. 1,358,600/-. The renovation of Out let
is estimated at Rs. 1,200,000/-. Beside this furniture include counters, office chairs,
visitor chairs, safes, Split Ac, weighing scale and hand tools.
Table 6-4 below shows the break-up of the cost for furniture and fixture for both the
retail and the workshop unit.
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
Units
Unit Cost
Total Cost
1
4
8
1
20,000
9,000
2,600
1,200,000
2
2
20,000
25,000
40,000
50,000
10,000
10,000
6
10
3
4,000
2,500
40,000
24,000
25,000
120,000
1,545,800
20,000
36,000
20,800
1,200,000
Mostly Gold jewelry retailers contract for fixtures like lockers and showcases and
decided upon after consultation with and recommendation of other jewelers who have
had experience in acquiring those items. The whole industry runs on the basis of trust and
word-of-mouth reputation. Jewelers tend not to recruit un-vouched for suppliers or
workers. However, Gujranwala specializes in specialized lockers for gold jewelry retail
shops.
Land Requirement
7.1.1 Rent
Rent varies with space and location. For workshop, the location may be within jewelry
cluster or outside it. The rents and rates within the jewelry cluster tend to be higher. For
example, a workshop within the jewelry cluster would seek rent of Rs. 25,000/- per
month whereas the same nature of space further to the jewelry cluster may seek only Rs.
12,000/- per month. This model assumes a workshop located within the jewelry cluster.
Hence the monthly rent for the first year is Rs. 25,000/- per month with annual increase
of 10%.
The rent for the gold jewelry retail shop of 500 square feet located in a central shopping
centre of a major urban city, is estimated to be around Rs. 75,000/- month and is
estimated to increase at 10% annually.
The rent for both the workshop and retail shop is often pre-paid in terms of lease.
30
PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
7.2
Utilities Requirement
A medium sized 500 square feet sized retail shop that is open six days a week for about
10 hours / day, tends to incur electricity bill worth about Rs. 538,500 / Year. This
amounts to a monthly average of Rs. 44,875/- after considering the fact that electricity
bill tends to be higher in summers and lower in winters.
Currently established gold jewelry manufacturing workshops concludes electricity
amount on average Rs. 38,875/ month. The main electricity usage in the workshop will
be in terms of lighting and operation of machines such as wire and plate making,
polishing and most significantly, the casting machine and of Air Conditioners which will
be placed in production room and Design Department.
There will be total three telephone lines, one in outlet and 2 in work shop. Average
telephone bill for one line is Rs. 1000/.
No of
Employees
Monthly Salary /
Employee
Annual Salary
Rs. 000
1
2
1
1
50,000
12,000
7,500
10,000
600
288
90
120
1
1
1
6
2
2
2
1
70,000
30,000
35,000
15,000
12,000
18,000
12,000
15,000
840
360
420
1,080
288
432
288
180
10,000
120
5,106
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
9 FINANCIAL ANALYSIS
9.1
Calculations
SMEDA
Income Statement
Year 1
113,001,300
Year 2
162,167,969
Year 3
218,569,195
Year 4
288,502,307
Year 5
374,798,482
Year 6
457,703,471
Year 7
529,396,533
Year 8
610,976,538
Year 9
705,128,023
Rs. in actuals
Year 10
813,788,251
97,893,750
2,691,000
34,500
466,500
101,085,750
11,915,550
140,487,150
3,059,992
45,045
513,150
144,105,338
18,062,631
189,347,894
3,361,272
55,235
564,465
193,328,866
25,240,329
249,931,396
3,691,291
66,332
620,912
254,309,931
34,192,376
324,690,326
4,053,037
78,400
683,003
329,504,765
45,293,717
396,511,448
4,458,534
87,106
751,303
401,808,391
55,895,079
458,619,607
4,903,376
91,663
826,433
464,441,079
64,955,454
529,292,889
5,380,776
96,246
909,077
535,678,987
75,297,552
610,856,923
5,904,656
101,058
999,984
617,862,621
87,265,402
704,989,975
6,479,541
106,111
1,099,983
712,675,610
101,112,642
2,298,000
68,940
1,200,000
538,500
114,900
172,350
229,800
565,007
213,060
84,800
5,485,357
6,430,194
2,521,737
75,652
1,320,000
592,350
126,087
189,130
252,174
621,507
213,060
84,800
5,996,496
12,066,135
2,767,256
83,018
1,452,000
651,585
138,363
207,544
276,726
683,658
213,060
84,800
6,558,010
18,682,319
3,036,680
91,100
1,597,200
716,744
151,834
227,751
303,668
752,024
213,060
84,800
7,174,861
27,017,515
3,332,336
99,970
1,756,920
788,418
166,617
249,925
333,234
827,226
213,060
84,800
7,852,505
37,441,211
3,656,777
109,703
1,932,612
867,260
182,839
274,258
365,678
909,949
213,060
8,512,135
47,382,944
4,012,806
120,384
2,125,873
953,986
200,640
300,960
401,281
1,000,943
213,060
9,329,933
55,625,520
4,403,498
132,105
2,338,461
1,049,384
220,175
330,262
440,350
1,101,038
213,060
10,228,333
65,069,219
4,832,229
144,967
2,572,307
1,154,323
241,611
362,417
483,223
1,211,142
213,060
11,215,278
76,050,124
5,302,702
159,081
2,829,537
1,269,755
265,135
397,703
530,270
1,332,256
213,060
12,299,498
88,813,143
15,000
6,445,194
12,066,135
147,231
18,829,551
577,318
27,594,833
1,369,642
38,810,854
2,696,330
50,079,274
4,509,155
60,134,675
6,694,357
71,763,576
9,291,538
85,341,662
15,703,597
104,516,740
202,614
193,796
739,228
1,135,638
5,309,556
218,878
162,857
618,647
1,000,382
11,065,753
16,264
126,662
477,294
620,220
18,209,331
84,320
311,590
395,909
27,198,924
34,785
117,340
152,124
38,658,729
50,079,274
60,134,675
71,763,576
85,341,662
104,516,740
Tax
NET PROFIT/(LOSS) AFTER TAX
1,327,389
3,982,167
2,766,438
8,299,315
4,552,333
13,656,998
6,799,731
20,399,193
9,664,682
28,994,047
12,519,818
37,559,455
15,033,669
45,101,006
17,940,894
53,822,682
21,335,415
64,006,246
26,129,185
78,387,555
Revenue
Cost of sales
Cost of goods sold 1
Operation costs 1 (direct labor)
Operating costs 2 (machinery maintenance)
Operating costs 3 (direct electricity)
Total cost of sales
Gross Profit
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PREF-87/ August, 2012/ Rev 2
Pre-feasibility Study
9.2
Calculations
SMEDA
Year 1
Year 2
Year 3
Year 5
Year 6
53,822,682
213,060
(7,795)
(1,469,742)
(2,968,246)
(2,314)
(13,145,470)
(233,846)
3,444,890
39,653,219
Year 9
64,006,246
213,060
(7,795)
(1,685,096)
(3,424,318)
(2,551)
(15,929,746)
(257,231)
4,006,896
46,919,466
Rs. in actuals
Year 10
13,656,998
213,060
84,800
(1,012,295)
(2,057,227)
(2,648)
(6,714,232)
(145,200)
2,284,431
6,307,686
20,399,193
213,060
84,800
(1,211,425)
(2,548,120)
(3,085)
(8,778,024)
(159,720)
2,851,056
10,847,736
28,994,047
213,060
84,800
(1,498,089)
(3,141,498)
(2,646)
(9,283,094)
(175,692)
3,454,386
18,645,274
1,277,300
4,931,781
6,209,081
(182,148)
(699,948)
-
(213,087)
(820,529)
(2,352,272)
-
(249,282)
(961,882)
(188,816)
-
(291,624)
(1,127,586)
-
(341,159)
(1,321,836)
-
12,418,163
(882,096)
(3,385,888)
(1,399,980)
(1,419,210)
(1,662,995)
(9,363,563)
45,101,006
213,060
(7,795)
(1,482,447)
(2,572,900)
(2,098)
(10,847,843)
(212,587)
2,998,465
33,186,861
Year 8
8,299,315
213,060
84,800
(471,461)
(1,651,345)
(2,267)
(5,103,712)
(132,000)
1,960,682
3,197,072
(5,750)
(8,157,813)
(1,200,000)
37,559,455
213,060
(7,795)
(1,622,477)
(2,985,589)
(1,944)
(9,044,490)
(193,261)
3,323,682
27,240,641
Year 7
3,982,167
213,060
84,800
38,975
(2,167,148)
(4,395,033)
(2,133)
(4,134,813)
(120,000)
4,529,949
(1,970,176)
78,387,555
213,060
(7,795)
(1,944,770)
(3,950,541)
27,435
91,139,237
2,829,537
122,114
166,815,832
(2,554,600)
(2,554,600)
500,000
(2,852,272)
(188,816)
4,907,706
33
PREF-87/ August, 2012/ Rev 2
Year 4
9,428,525
16,982,279
27,240,641
33,186,861
39,653,219
46,919,466
166,815,832
Pre-feasibility Study
9.3
Calculations
SMEDA
Balance Sheet
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Rs. in actuals
Year 10
500,000
2,638,609
6,046,378
10,149
17,396,338
1,452,000
27,543,474
4,907,706
3,650,904
8,103,605
12,798
24,110,569
1,597,200
42,382,783
14,336,232
4,862,329
10,651,725
15,883
32,888,593
1,756,920
64,511,682
31,318,510
6,360,419
13,793,223
18,529
42,171,688
1,932,612
95,594,980
58,559,151
7,982,895
16,778,812
20,473
51,216,178
2,125,873
136,683,382
91,746,012
9,465,342
19,351,712
22,571
62,064,021
2,338,461
184,988,119
131,399,232
10,935,084
22,319,958
24,885
75,209,491
2,572,307
242,460,956
178,318,697
12,620,181
25,744,276
27,435
91,139,237
2,829,537
310,679,363
345,134,530
14,564,951
29,694,817
389,394,297
Assets
Current assets
Cash & Bank
Accounts receivable
Finished goods inventory
Equipment spare part inventory
Raw material inventory
Pre-paid building rent
Total Current Assets
5,750
8,157,813
1,200,000
9,863,563
2,167,148
4,395,033
7,883
12,292,626
1,320,000
20,182,689
Fixed assets
Machinery & equipment
Furniture & fixtures
Office equipment
Total Fixed Assets
311,800
1,545,800
273,000
2,130,600
280,620
1,391,220
245,700
1,917,540
249,440
1,236,640
218,400
1,704,480
218,260
1,082,060
191,100
1,491,420
187,080
927,480
163,800
1,278,360
155,900
772,900
136,500
1,065,300
124,720
618,320
109,200
852,240
93,540
463,740
81,900
639,180
62,360
309,160
54,600
426,120
31,180
154,580
27,300
213,060
424,000
424,000
12,418,163
339,200
339,200
22,439,429
254,400
254,400
29,502,354
169,600
169,600
44,043,803
84,800
84,800
65,874,842
96,660,280
137,535,622
185,627,299
242,887,076
310,892,423
389,394,297
4,529,949
2,352,272
6,882,221
6,490,631
188,816
6,679,447
8,775,061
8,775,061
11,626,118
11,626,118
15,080,504
15,080,504
18,404,187
18,404,187
21,402,652
21,402,652
24,847,541
24,847,541
28,854,438
28,854,438
28,976,551
28,976,551
38,975
1,095,152
4,231,833
5,365,960
38,975
882,065
3,411,304
4,332,345
38,975
632,784
2,449,422
3,121,181
38,975
341,159
1,321,836
1,701,970
38,975
38,975
31,180
31,180
23,385
23,385
15,590
15,590
7,795
7,795
6,209,081
3,982,167
10,191,248
22,439,429
6,209,081
12,281,482
18,490,563
29,502,354
6,209,081
25,938,479
32,147,561
44,043,803
6,209,081
46,337,672
52,546,753
65,874,842
6,209,081
75,331,719
81,540,800
96,660,280
6,209,081
112,891,174
119,100,256
137,535,622
6,209,081
157,992,181
164,201,262
185,627,299
6,209,081
211,814,863
218,023,944
242,887,076
6,209,081
275,821,109
282,030,191
310,892,423
Intangible assets
Pre-operation costs
Total Intangible Assets
TOTAL ASSETS
Liabilities & Shareholders' Equity
Current liabilities
Accounts payable
Short term debt
Total Current Liabilities
Other liabilities
Deferred tax
Long term debt (Project Loan)
Long term debt (Working Capital Loan)
Total Long Term Liabilities
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES
1,277,300
4,931,781
6,209,081
6,209,081
6,209,081
12,418,163
34
PREF-87/ August, 2012/ Rev 2
6,209,081
354,208,665
360,417,746
389,394,297
Pre-feasibility Study
10 KEY ASSUMPTIONS
Table 10-1: Assumptions Related to the Scope of Operations
Aspect
Scope
In-House Operations
Scale
Legal Status
Assumption
Gold Jewelry Retailing and Manufacturing
Retailing and Manufacturing
Medium
Sole proprietorship
330
8
1
10
month 800
20
10%
Rs. 75,000
10%
Rs. 25,000
10%
50:50
16%
5 Years
6%
35
Pre-feasibility Study
15
Accounts Receivable
30 Days
60 Days
15 Days
5%
Traveling Expenses
5% of Admin Expense
Communication expenses
Office Expenses (Stationary, Entertainment,
Janitorial etc of Admin Exp)
Promotional Expenses (of Sales)
Machinery Depreciation Rate
Furniture Depreciation Rate
36
PREF-87/ August, 2012/ Rev 2
0.5% of Revenue
10%
10%