A Report on the study of
Submitted to the
MAHATMA GANDHI UNIVERSITY
In partial fulfillment of the requirements for the award of
the degree of
MASTER OF BUSINESS ADMINISTRATION
Under the guidance of
Mr. Santhosh. S
By
.
RONNY VARGHESE
Regn.No. 23319
“JOYALUKKAS INDIA LTD”
School of Technology and Management
Prathap Nagar, Muttom, Aluva, Kochi - 683106
CERTTIF ICATE
This is to certify that the project report entitled “A REPORT ON
THE STUDY OF JOYALUKKAS INDIA LTD” is a Bonafide
record submitted by RONNY VARGHESE Regn.No. 23319
.in partial
fulfillment of the requirements for the award of the degree of MASTER
OF BUSINESS ADMINISTRATION during the academic year
2010-2012.
Date
Dr. Radha P Thevanoor
Director
School of Technology and Management
Prathap Nagar, Muttom, Aluva, Kochi - 683106
CERTTIF ICATE
This is to certify that the project report entitled “A REPORT ON
THE STUDY OF JOYALUKKAS INDIA LTD” has been
successfully completed by RONNY VARGHESE Regn No.23319 in
partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION, under my guidance,
during the academic year 2010-2012.
Date Santhos. s
Internal Faculty guide
School of Technology and Management
Prathap Nagar, Muttom, Aluva, Kochi - 683106
DECLARATION
I, Ronny Varghese, MBA student of SCMS School Of Technology And Management, Cochin do hereby declare that this report titled “
A REPORT ON THE
STUDY OF JOYALUKKAS INDIA LTD
” is submitted to the Mahatma Gandhi University for the partial fulfillment of the requirements for the award of the Masters Degree in Business Administration is my own bonafide work.I also declare that this report / part, thereof has not been submitted by me to any other University / Institute in full or partial for the award of any Degree or Diploma.
Date:
Ronny Varghese
Place: Cochin Reg.no. 23319
i
ACKNOWLEDGEMENT
Fulfillment of a good project will include the help of some prominent persons. For their helping hands I must express their gratitude. I would like to express my gratitude to our Director Dr. Radha Thevanoor for her never ending support. I express my sincere thanks to my faculty guide Mr. Santhosh S who assisted me to take initiative and assume responsibility in bringing out the final piece of work.
I heartily thank Joseph Christo HR Manage r and also Mr.Jibin Toms John, Sr. Marketing Executive India Ltd of Joyalukkas who has taken time out of his busy schedule and cooperated with me to get the required information. I must specially record my thanks to divine grace and my parents, all my friends without whose support and encouragement this project would never have been a success
RONNY VARGHESE
ii
LIST OF TABLES
Sl no:
CAPTION
Ref no
Page
No:
1
Joyalukkas jewellery, and textiles, apparels
and accessories business operations as of
and for Fiscal 2008, 2009, 2010 and as of
and for the six month period ended
September 30, 2010:
1
32
iii
LIST OF FIGURES
Sl No:
CAPTION
Ref No
Page
No:
1
Gems And Jewellery Value Addition
Ladder
1.1
10
2
Organised retail in different sectors.
1.2
11
3
Geographical Segmentation of Gold in
India
1.3
13
4
Average Annual 10 Year Growth Rate
In India
1.4
14
5
Geographical Segmentation of
Diamonds in India
1.5
16
6
Managerial Organizational Structure
2.1
38
7
Procurement Of Raw Materials For
The Manufacturing Of Gold Jewellery
3.1
40
8
Manufacturing Process For Gold
Jewellery
4.1
45
9
Operations Process Flow
4.2
47
10
Map Of India Highlighting Joyalukkas
Existing Retail Stores
4.3
48
iv
EXECUTIVE SUMMARY
The MBA course offered by the M.G. University, Kerala, has its own
unique syllabus which requires its MBA students to undertake an
internship with any of the leading business houses during the second
semester for the purpose of acquiring practical knowledge of the working
and functioning of a company. This is helpful for us to study how the
different departments in an organization work and wins as a single unit.
Joyalukkas is a popular jewellery retail chain that has rapidly expanded
its presence across India in the past few years. The success and growth of
Joyalukkas has been driven by its unstinting commitment to quality, a
fact that has been widely recognized by its growing customer base.
Joyalukkas is renowned within jewellery lovers for its choice, quality,
service and value offering.
It is one of the consistently growing jewellery retail chains in India.
Joyalukkas is currently operating 23 jewellery showrooms across India.
Plans to open an additional 14 new showrooms are already in place, and
Joyalukkas to complete the expansion plans by September 2013.
Joyalukkas showrooms offer a wide variety of jewellery in Gold,
Diamonds, Pearl, Platinum & Precious Stones. Some of the Joyalukkas
showrooms also feature silver jewellery and silver items.
v
TABLE OF CONTENTS
TITLE
PAGE
NO.
ACKNOWLEDGEMENTi
EXECUTIVE SUMMARYiv
LIST OF TABLESv
LIST OF FIGURES
vi
INTRODUCTION
1
1.1 Introduction To The Study
2
1.2 Scope Of The Study
2
1.3 Objectives Of Study
3
1.4 Methodology
3
vi
1.5 Limitations Of The Study
4
BUSINESS ENVIRONMENT ANALYSIS
5
2.1 Business Environment Analysis
6
2.2 Industry Profile
8
2.2.1 Global Scenario
8
2.2.2 Indian Scenario
9
2.2.3 State Scenario
12
2.3 Indusrial Analysis
13
2.3.1 Industry Key Players
19
2.3.2 Competitor Analysis
20
ORGANIZATIONAL PROFILE
21
3.1 Background And History
21
vii
3.2 Vision, Mision, Objectives And Goals
24
3.3 Company Profile
25
3.4 Products And Materials
27
3.5 Certifications Awards And Recognitions
29
3.6 Business Performance
31
3.7 Strategic Plans And Future Programmes
34
ORGANIZATIONAL STRUCTURE
38
4.1 Managerial Organizational Structure
38
FUNCTIONAL ANALYSIS
39
5.1 Materials And Procurement
40
5.2 Operations
46
viii
5.4 Marketing Departmaent
53
5.5 Finance Department
58
5.6 Business Development Department
64
5.7 Loyalty Department
67
5.8 Administration
70
5.9 Total Quality Management
78
ORGANIZATIONAL ANALYSIS
82
6.1 SWOT Analysis
83
6.2 Corporate Social Responsibility
90
FINDINGS AND CONCLUSION
91
7.1 Findings
90
7.2 Conclusion
91
ix
CHAPTER I
1
1.1 Introduction To The Study.
This study is conducted to get a proper understanding on Organisational functioning, structure and coordination of all levels. Organization is the process of identifying and grouping the work to be performed and delegating the responsibility and authority. It is a social entity directed towards a particular goal designed as deliberately structured and coordinated activity systems linked to the external environment.
Joyalukkas which is renowned as Worlds Favorite Jeweller was selected for the study because it is a well established, organized and well managed organization with 23 outlets in India and having more than 2300 employees. This project report is based on the study conducted on Joyalukkas India Ltd at its corporate office and Joyalukkas Wedding Centre Kollam. The duration of the project was two weeks.
1.2 Scope of Study
This project report is based on the study conducted at its corporate office and Joyalukkas Wedding Centre Kollam. The duration of the project was two weeks.
1.3 Objectives of the Study
The objectives of the study are To understand organization structure. To understand the industrial discipline in the organization and the responsibility of the employees.
To know various activities involved in the organization.
To identify strength and weakness of the organization and also identify opportunities for improvement.
2
1.4 Methodology
To fulfill any task, it is necessary to follow a certain methodology. The methodology used in the study is described here
Type of study:
The type of the study was descriptive in nature.
Sources of Information
The relevant data in the subject under study was collected from the following sources. 1. Primary source:- These data was collected directly from the different departmental
heads.
2. Secondary source:- The secondary data was collected from various journals, manuals and existing records of the company.
1.5 Limitations Of the Study
The reliability of the data used in the study is depended upon the company records and information given by the employees.
3
CHAPTER II
6
2.1 Business Environment Analysis
The PESTEL analysis
The macro environment includes all relevant focus outside a company‟s boundaries relevant in the sense that they are important enough to have brought on the decision. An industry ultimately makes about its business model and strategy.
Political Factors:-
The Government of India (GoI) has been working to develop the Gems and Jewellery Industry in India through several initiatives but under the purview of Gems and Jewellery Industry. The main political factors are as follows.
• Excise duty: In the budget of year 2008-09 government reduce excise duty from 10% to 5% on cut and polished Gems and Jewellery units.
• Marketing and control orders: Import of rough jewellery are controlled by the Jewellery export Promotion Councils. The Council provides market information to its members regarding foreign trade inquiries, trade and tariff regulations, rates of import duties, and information about Diamond fairs and exhibitions.
• FDI approval: India is now the third most favored destination for Foreign Direct Investment (FDI), Government of India may permits 49% of FDI in the Gems and Jewellery Industry. FDI of $ 2 billion are invested in terms of working capital in the industry.
Trade Policy for Diamond Replenishment Licenses:
The exporters of gem and Gems and Jewellery products are entitled for REP licence as per rates indicated in the Handbook of Procedures. Such licences are transferable. Gems and Je wellery Imprest Licence :
Gems and Jewellery Imprest Licences are issued in advance for import of rough gold and diamonds and for export of cut and polished diamonds. These licences or the
7
materials imported against them may be freely transferred after the export obligation has been fulfilled.
Economic factors:-
Per capita consumption:Per capita consumption power of customers may highly affect Gems and Jewellery purchase. India`s per capita income is likely to grow more than double over the last seven years, to Rs 38,084 in the current fiscal, reflecting improvement in the living standards of the average Indian.
• Per capita income, according to the advance estimates for national income is expected to grow by 14% during the current fiscal.
• However, after discounting for inflation, per capita income is expected to rise to Rs 25,661
representing an increase of 5.6%.
National income: As & when the national income of the people of any country increase it will indirectly leads to more investment in Gems and Jewellery jewelry or ornaments.
State board regulations: Gujarat government declares various polices.
Custom Act: In the Union Budget (2007-2008), custom duty on cut & polished gold and diamond was reduced to 3% from 5%. The Council had made several representations to Government on the exemption of custom duty on cut & polished diamonds.
Social factors:-
The main social factors of the organization, which are deals as the business organization are as follows.
Emergence of retail org. makes people aware about Gems and Jewellery as a luxury product or an investment option.
Emergence of substitute: Diamond is preferred by consumers with increase in the price of gold.
Changing consumer preferences: With the increase in standard of living it‟s also considered for status symbol.
8
Technological factors:-
The main technological are as follows.
• As Gems and Jewellery Industry try to moving up in to the value chain they are focusing more on they use high end equipments.
• Technology solutions are also available for production control, supply chain and inventory management in the Gems and Jewellery Industry.
The Special Economic Zones and Gems and Jewellery Parks developed in various states offer technology-enabled
environments that are conductive to growth and quality production.
Environment Factors:-
This section draws on literature relating to the general environmental impacts and related processing activities, and – where available – and specific information relating to the production of gemstones. In relation to environmental impacts of gold and gemstone in particular, the situation in each country varies according to the type of gemstones and gold being exploited, the social and natural environment of the area and cultural and organizational aspects of the mining operation itself.
Exploration Underground Extraction Surface Extraction River Dredging .
Legal Factors:-
• Trade Facilitator: The Gems and Jewellery Export Council(GJPEC) undertakes direct promotional activities like organising joint Participation in international Gems and Jewellery shows, sending and hosting trade delegations
9
• Advisory Role: A crucial area of activity of the Council has also been aiding better interaction and understanding between the trade and the government.
• Nodal Agency for Kimberly Process Certification Sche me: GJEPC has been appointed as the Nodal Agency in India under the Kimberly Process Certification Scheme.
• Training and Research: The Gems and Jewellery Export Promotion Council runs a number of
Institutions that provide regular and part-time training in all aspects of manufacture and design in
Mumbai, Delhi, Surat and Jaipur.
• Boosting Exports: Among the promotional activities GJEPC undertakes for the sector is the
organising of joint participation of member - exporters in some important international exhibitions and puts up promotional stalls in others
Competitive Environment
Threat of Substitutes : Low
From historic times, gold has played a pivotal role in the Indian social fabric. Gold is valued in India as a savings and investment vehicle and is the second preferred investment behind bank deposits. Gold is also the preferred metal in jewellery. Domestic diamond jewellery demand is low, but increasing at a high rate because of higher incomes and aggressive marketing strategies.
Bargaining Powe r of Suppliers : Medium
With negligible production of gold and gemstones, India relies largely on imports. Bargaining power of Indian industry enhanced by the fact that India is the largest
10
consumer of gold. In rough diamonds, the major global suppliers have very few alternative customers (cutting and polishing) for their cheaper range of roughs.
Inte r-Firm Rivalry : High
Bulk of the industry in India is co n concentrated in the unorganised sector and employs around 1.5 million workers serving over 0.2 million gold jewellers and over 8,000 diamond jewellers. The majority of India's diamond workforce is employed by small units, that process diamonds on a job- lot basis. However, the share of the unorganised sector has declined in recent years.
Bargaining Powe r of Buyers : Low to Medium
Bargaining power in gold jewellery limited to fabrication charges. In diamond cutting and polishing, the bargaining power of Indian exporters arises from the fact that a majority of the world's rough diamond production is cut and polished in India.
Barrie rs to entry : Low
Low capital requirements, but skilled manpower is essential. Ability to invest in more advanced technology is becoming increasingly critical.
8
2.2 INDUSTRY PROFILE
2.2.1 Global scenario
The global market for gems and jewellery today is pegged at US$ 85 billion with key markets having registered an average compounded annual growth rate (CAGR) of 5-10 per cent in the last decade
The global market for Gold is estimated at 3300 tonnes. South Africa is the world‟s largest producer of gold, followed by U.S.A and Australia. Together, these countries account for 45 per cent of the world‟s total gold production. India is the largest consumer of gold, followed by the U.S.A. In the production of Silver, the Americas have near monopoly -Mexico, Peru and the United States are the top three silver producing countries. Platinum is an extremely rare precious metal. More than 90 per cent of all platinum supplies come from South Africa and Russia. With increased economic development, the demand for the metal has grown at a faster pace than it is being mined. The United States is the world‟s leading consumer of platinum overall, while China has emerged as the leading consumer of platinum jewellery
Over the years, global markets have been impacted by several developments like falling trade barriers, increasing competition, changing customer preferences and developments in technology in several areas. The global jewellery industry is being transformed by a few key trends such as
Increasing competition among top producing countries
.Emergence of different materials – different alloys within gold, as well asnon-gold jewellery
Emergence of new manufacturing techniques
Requirement of stricter quality norms and hallmarking.In this context, India is fast emerging as a leading destination for jewellery manufacturing in the world.
9
2.2.2 Indian
scenario
Precious metals and gemstones have been an integral part of the Indian civilisation throughout its recorded history. Gems and jewellery has been consumed by Indians for centuries for both their aesthetic as well as investment value. India has the distinction of being the first country to introduce diamonds to the world. The country was also the first to mine, cut, polish and trade in diamonds. (Source: CARE Report)
The Indian gems and jewellery industry can be classified into various sub segments for diamonds, coloured stones, gold and silver jewellery, pearls, and others. However, the two major industry segments in India are gold jewellery and diamonds. India dominates the diamond processing trade with 11 out of 12 diamonds being cut and polished in India (around 80% in terms of carats and around 55% in terms of volume). India also dominates gold and silver consumption globally with consumption of approximately 700 tonnes (gold) per year. As a major foreign exchange earner, the industry also provides employment to approximately 1.5 million people directly and indirectly. (Source: CARE Report)
The Indian gems and jewellery industry is one of the world’s most competitive markets due to the low cost of production and highly skilled labour. According to the Federation of Indian Chambers of Commerce and Industry (FICCI), the Indian Gems and Jewellery industry - consisting of the domestic and the export market has the potential to grow from the current US$45 billion to US$100 billion by 2015.
As per the FICCI Technopak Report India’s current dominant position lies in low value processed raw materials, as depicted on the Gems and Jewellery Value Addition
10
Fig ref no: 1.1 Gems And jewellery value addition ladder.
The domestic market of gems and jewellery is estimated to be in the US$ 18-20 billion range. Given the fragmented nature of the industry it is difficult to put a finger on the exact size. The industry is expected to grow at around 13% annually and at this rate it could reach US$ 35-40 billion by 2015. Currently the domestic gems and jewellery market is fragmented across the value chain. There are more than 300,000 players across the gems and jewellery sector, with majority of them being small unorganised players who are operating on wafer thin margins. Organised retail of jewellery thus presents a significant opportunity to create additional value through higher margins, which would be possible through differentiation and branding. With the onset of organised retail in the last decade, lots of new players have entered the space. Currently modern retail players in jewellery space have only 5%-7% share of the total jewellery market, but this number would increase considerably in the near future. (Source: FICCI Technopak Report)
11
Fig ref no: 1.2 Organised retail in different sectors. (Source: FICCI Technopak Report)
The industry is characterised by a significantly large unorganised sector, labour-intensive operations, high working capital & raw material labour-intensiveness, gold price volatility and export orientation. The demand for gold and diamond jewellery is driven by festivals, weddings and gifts, the increasing affluence of the middle class population and the increase in per capita on luxury items. (Source: CARE Report)
Though India plays a dominant role in the gems and jewellery industry in terms of processing and consumption, India’s role in mining gold and diamonds is amongst the lowest in the world. Gold is imported from countries like Switzerland, South Africa, Australia and the United Arab Emirates, and rough diamonds are imported from Belgium, the United Kingdom, Israel and the United Arab Emirates. There has been an impact on the demand for gold due to the record high price of gold in the last
12
couple of years, but consumers have continued to demand the precious metal and there is an increased investment-related demand for gold. The key drivers for growth in the industry are increasing disposable income, conscious marketing efforts, rising population with the urge to spend on jewellery as a fashion accessory.
2.2.3 State Scenario
CHRONOLOGICAL GROWTH OF GOLD ORNEMENT MFG. INDUSTRY IN THE STATE OF KERALA
Before 60s Dominance of Viswakarma (gold smith) based units Mid of 60s Entry of trading and branded firms into this cluster
Late 60s Ban gold movements and complete break-down of Dominance of Visa Karma (gold smith) based units
Late 70‟s Dominance of few firms and invasion of other community and unemployed youth. And losing grip of family and community based activity.
Early 80s Entire gold Jewellery manufacturers are turned into a job workers category and the entire markets were being controlled by few traders.
Early 90s New trade policy , which did favour to the artisans type cluster Mid 90s Quitting and changing of trade and business was witnessed for better survival 2000 The entry of few registered SSI based units into this sector were witnessed
13
2.3 Industrial Analysis
Precious Metals and Gems
Gold
Gold is more than a precious metal in Indian culture and is truly entrenched in India’s culture. For hundreds of years, gold has been an important part of the Indian society and fused well into the psyche of an Indian. There is a tradition of buying gold during auspicious occasions such as Diwali, Akshaya Tritiya, Dussehra, and also during weddings. In rural India, farmers typically buy gold jewellery after a successful harvesting season as it is valued for its investment characteristics and as a hedge against inflation.
14
In 2009, total Indian gold consumption reached US$19bn or ` 974 bn equivalent at the end of 2009. Over the past decade, this has increased at an average rate of 13% per year, outpacing the country’s real GDP, inflation and population growth by 6%, 8% and 12% respectively.
Gold jewellery demand in India, the world’s largest gold jewellery market, rose 67% year -on- year to 272 tonnes in the first half of 2010. Over the same period, the average domestic gold price surged to almost ` 52,800/oz, before hitting a new high of ` 60,460/oz on October 15, 2010. Despite the higher gold price, market sentiment remains positive, especially with the local gold market also benefitting from the strengthening of the rupee against the US dollar.
Fig ref No. 1.4 Average annual 10 year growth rate in India
India is the biggest consumer of gold in the world. To meet Indian consumption requirements for jewellery and investments, India imported 590 tonnes of gold in fiscal 2009. Almost 95% of the gold imported to India is used for jewellery. The
15
major countries which supply gold to India are Switzerland, South Africa, Australia and the United Arab Emirates. A majority of gold in India is sold in retail sales and a small portion is held as reserves with the central government treasury.
Silver
The CARE Report indicates that along with gold, silver enjoys a special place in the psyche of the Indian consumer and is considered the second-best investment option in precious metals. In the last two years, silver prices have grown significantly in line with the rise in gold prices resulting in a decline in demand for jewellery and fashion accessories. Going forward, CARE Research expects that the silver price movement will tend to follow the gold prices as the prices of silver and gold in Rupees have shown a correlation of 0.98 in the last 10 years.
Diamonds
India is one of the leading diamond processors in the world. With the rise in gold prices, consumers are turning to diamond-studded jewellery which gives them a higher perception of luxury and value. The craftsmanship and low cost of Indian diamond processors has given India a competitive edge in diamond cutting and polishing. The CARE Report indicates that India accounts for approximately 55% of the global polished diamonds market in terms of value, 80% share in terms of caratage and 92% in terms of pieces. India’s dominance in the cutting and polishing segment has been attributed to superior craftsmanship, low cost of Indian lab Joyalukkas and superior technology. ()
Due to the global slowdown, diamonds are comparatively less expensive than they were in 2007. With only a gradual recovery from developed markets for diamonds, especially the US, Indian manufacturers have now focused in on the ever-growing demand from domestic market for diamond-studded jewellery. Given these new
16
trends for diamond jewellery, diamond jewellery sales have increased by a multiple of four, from USD 1 billion to USD 4.2 billion in the last four years according to industry experts.
Fig No.1. 5 Geographical Segmentation of Diamonds in India
According to some estimates, about 25% of the gold jewellery purchasers have switched to diamond- studded jewellery because diamond-studded jewellery is typically created in less-pure 18-carat gold compared to gold jewellery which is made from 22-carat gold.
Demand and Supply
India experienced the highest growth in jewellery demand, posting an increase of 36%. A rise in the value of the rupee against the US dollar offered Indian consumers some degree of protection from the full extent of the rise in the US$ price during the quarter. Demand increased to 184.5 tonnes from 135.2 tonnes a year earlier. In local currency value terms demand reached a remarkable ` 338bn, 67% higher than the same period of 2009. Restocking by the trade ahead of the fourth quarter festive season was a key driver of growth. The India International Jewellery Show (IIJS) in
17
August in particular witnessed enthusiastic demand. Given the dual purpose of Indian jewellery, as both an adornment and an investment, the rising price helped to support demand for jewellery. Furthermore, consumers have adjusted their price expectations and are anticipating yet higher prices. This has had the twin effects of further reinforcing investment related demand for gold jewellery while also encouraging consumers to purchase gold now rather than defer purchases to a time when prices are higher. (Source: Gold Demand Trends, November 2010)
Manufacture of Jewellery
Jewellery manufacture, diamond polishing and setting is a process that requires significant skill. Although machines can perform some part of the work, the process is very labour intensive. India, with its availability of low-cost skilled labour is in a position to deliver products of good design and quality at a low cost.
India has well-established capabilities in manufacturing hand- made jewellery in traditional as well as modern designs. Indian hand- made jewellery has ethnic demand in various geographies with a high Indian population like Middle East, the US and Canada. With traditional hand- made jewellery, India has also progressed in using the latest technologies in diamond-processing and jewellery- making. Many of India’s manufacturing companies are now equipped with latest Computer Aided Design /Computer Aided Manufacture systems and other advanced software programmers. The diamond processing companies have modern equipment, such as laser machines, automatic and semi-automatic bruiting machines and auto planners. India also has an ample professionally-trained workforce which is well- versed to operate the latest equipment.
18
Jewellery Retail
Branded jewellery has been a relatively recent phenomenon in India because most jewellery is sold in the unorganized sector. Consumers have become more informed about the quality and certification of gold jewellery and are now insisting on certification. Traditionally, gold has been purchased because of its investment value along with aesthetic value, unlike in countries other than India, where it is bought only for ornamental purposes. With changing demographics, the branding of jewellery and the retail revolution, young customers (from age groups of 20-40 years) prefer buying jewellery for fashion rather than for investment. Many companies have started investing in brand-building exercises for their products. All these efforts are expected to result in higher growth in the branded and therefore also organised jewellery market.
The branding of jewellery in India follows the pattern in the international market where 90% of the jewellery is sold as a fashion accessory or as everyday wear and not as an investment. Branded jewellery in India is positioned as a lifestyle and personality statement. There has also been a shift in consumer preference towards diamond-studded jewellery due to the extensive positioning of diamond-studded jewellery as both affordable and contemporary. Another key development in branded jewellery] has been the introduction of value added services such as the certification of gold and diamonds, and lifetime return and buy-back schemes. These trade practices have resulted in the perception of superior quality being associated with branded jewellery. The new generation of jewellery purchasers does not have ongoing relationships with local jewellers and prefers to buy branded jewellery. ()
19
Retail Formats
In India, organised retailers account for a mere 4% of the total jewellery retail market. This is because of the buyer‟s preference and trust in their neighborhood goldsmith. Even the standardisation of designs is not possible due to varying local tastes. There are about 15,000 vendors across the country in the gold processing industry, with over 450,000 gold smiths spread across the country. There are also more than 6,000 vendors in the diamond-processing industry (). Organised vendors have been growing steadily, carving a market share of 4% of the industry (). With consumer preference for fine quality goods, branded jewellery, hallmark certification and maturity in the jewellery market, organised retail share is expected to grow. Elevated go ld prices, higher borrowing and operating costs, makes the survival of family-owned jewellers difficult as well.
Pricing
Gold is a renowned metal not only for its traditional use for adornment but also for its stance as a time tested investment-class asset. The price of gold is determined by the fundamental demand-supply dynamics of the gold bullion market. Gold is considered to be a relatively safe investment in times of economic volatility and uncertainty. With the recent weakness and high fiscal debt levels of major western paper currencies, gold has attracted many investors, as evidenced by gold’s record high prices in the last two years. The Indian consumer is generally regarded as sophisticated and price sensitive and remains very risk averse when the prices are volatile. When prices are high an increase in sales of scrap gold is often observed and conversely when prices fall or show signs of stability, it results in an increase in demand.
20
2.3.1 Industry Key Players
Gitanjali GroupHaving won over 50 awards from the Ministry of Commerce, India for outstanding exports of diamond and jewellery, is today over $1000 million multinational group, and a publicly listed entity. Operations span the globe, all the way from USA, UK, Belgium, Italy and the Middle East to Thailand, South East Asia China, and Japan.
JoyalukkasThe Group has grown with 10 million customers and employs a highly committed and satisfied team of over 3000 people in various countries.
TanishqBelonging to the House of Tata, it is one of the most successful jewellery brands in India. There are a total of 84 stores in 61 Indian cities at present.
D‟DamasD'damas is one of the most popular jewellery brand in the country today with a presence in over 159 towns and cities.A joint venture between Gitanjali Gems and the Dubai based Damas Group; D'damas is a sub-brand that combines international quality with Indian values.
Reliance Jewelsplanning an aggressive entry into the jewellery retail market
21
TbzThe original has been pioneers in jewellery business since inception in 1864. The original has employeed a leadership status in its design. Quality and consumer satisfaction for well over a centuary across generations
Of late, some of the world's biggest names in the jewelery and luxury items such as watches and cuff- links are making inquiries to set up shop in India. Multi- national jewelery brands such as Tiffany, Cartier, Zales and Harry Winston are all said to be interested in coming here following the Government's decision to allow foreign direct investment of up to 51 per cent in single brand retail stores. Most of these stores have been sourcing cut and polished diamond and gold items from Indian firms. Now they are making inquiries for possible tie-ups in India.
2.3.2 Competitor Analysis
Major Competitors Gitanjali grp Tanishq Tbz Prince jewellers.22
Chapter III
23
3.1 Background And History
JjJoy Alukkas, followed in his visionary father‟s footsteps and expanded the „Joy Alukkas‟ name to a global level. His father Varghese Alukkas started his first jewellery showroom way back in 1956 and since then Joy Alukkas has made „Joyalukkas‟ an household name in jewellery. Joy Alukkas took his first step by setting the jewellery showroom in UAE in the year 1987.
Joy Alukkas‟s success is the result of his forethought. In 1987 he flew to UAE to explore the untapped market and little did he rea lize that he was going to change the way the world looked at jewellery. He set up his first shop in Abu Dhabi followed by Dubai, Sharjah, Al Ain and Ras al-Khaimah. The expansion since then has continued to Europe in countries like UK, Qatar, Oman, Bahrain and Kuwait.
Despite running a multi dollar retail gold and diamond jewellery business halfway across the world, Joy Alukkas wears his success lightly. He has his ear to the ground, his finger on the pulse and his feet on the ground. The fact is Joy Alukkas got to where he is because he never compromised with its corporate values and strongly believed that satisfied customers are the backbone of a company.
Joyalukkas became the first jeweller in the Middle East to be awarded both the ISO 9001 and ISO 14001 certification and to be recognized by the Dubai government with the Dubai Quality Award under Trade category in 2008.
.Joy Alukkas revolutionized retail jewellery trade in India by introducing training programs for its employees and also brought the concept of „wedding centre‟ within the jewellery store. Many a feathers are attached to the success hat of Joy Alukkas, including the opening of the world‟s largest showroom and the first Diamond Cave in Chennai, India, considered the jewellery hub of India. The phenomenal success of this showroom and this unique concept has proved his foresight and business acumen.
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3.2 Vision, Mission, Objectives and Goals
VISION
To become a global brand by ornamenting the world.
MISSION
To improve and enrich lives everywhere by offering extraordinary lifestyle solutions backed by incomparable value-additions, adhering to globally approved processes and norms and creating a successful value- chain for our associates.
OBJECTIVES
Plans to open 100 new showrooms by 2010, making it Asia‟s largest chain of jewellery showrooms.
By the end of the decade, Joy Alukkas is poised to be the World‟s No. 1 jewellery chain
Goals
The primary goal of Joyalukkas is to ensure that every customer is 100% satisfied with their Joyalukkas purchases
.
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3.3 COMPANY PROFILE
Joyalukkas is a popular jewellery retail chain that has rapidly expanded it‟s presence across India in the past few years. Today the jewellery retail chain has strongly marked its presence in the states of Tamil Nadu, kerala, Karnataka & Anthra Pradhesh is also present in the cities of Mumbai, Puducherry, Guragon (Haryana). Joyalukkad employs a high;y commited and trained team of over 2300 employees across its various locations in India. The success and growth of Joyalukkas has been driven by its growing customer base.
Joyalukkas jewellery has won many awards and recognition for its excellent business practices and skilled jewellery retailing. The most recent being the Retail chail of the year and Best Single Store (Joyalukkas Chennai Showroom) at the „National Jewellery Award 2011” organized by All India Gems And Jewellery trade federation (GJF), it has also been recognized for being the highest VAT paying jewellery Group at the Kerala Gem and Jewellery show organized by the Deopartment of Industries and Commerce, Government of Kerala.
Jotalukkas is renowned within the Jewellery lovers for its choice, quality and service, and value offering. It is one of the consistently growing jewellery retail chains in India with plans to expand its presence all across India.
Joyalukka is currently operating 24 Jewellery showrooms across India. Plans to open an additional 13 new showrooms are already in place, and Joyalukkas to complete the expansion plans by September 2013. Joyalukkas showrooms offer a wide variety of jewellery in Gold, Diamonds, Pearl, Platinum & precious stones. Some of the joyalukkas showrooms also feature silver jewellery and silver items.
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The Joyalukkas chain also includes „Wedding Centers‟ which offers a wide variety of clothing and fashion accessories for weddings and regular use of ladies, gents and kids. The „weddimg centers‟ aim to offer an integrated shopping experience to shoppers, where they can purchase jewellery ,clothing and accessories for wedding and other occasions from one single store. The Joyalukkas Wedding Centers are located in Kerala and is most popular in its respective locations.
Joy Alukkas Group has always believed that people and the community within which operates are the cornerstones for its success and as such is active ly involved in CSR activities across various states in India. Joyalukkas consistently undertakes various programmes to help the needy and encourage cases that benefit the society. From building homes to helping flood victims when they require financial ass istance, the group ha always believed in being there when needed the most.
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3.4 Products And Market
Products
Joyalukkas portfolio of finished jewellery products includes, among others, Studs Chains Bangles Necklaces Bracelets Rings anklets.
Textiles and Apparels Market
Joyalukkas textiles, apparels and accessories business operations are carried out through their four Wedding Centres situated in Kerala. Joyalukkas‟s largest Wedding
Centre is situated in Kollam having a floor area of approximately 39,896 sq. ft. Our Wedding Centres aim to offer an integrated shopping experience where Joyalukkas
customers can purchase premium jewellery, clothing and accessories for weddings and other festive occasions in the same store. Further, our Wedding Centres cater to the textile requirements of an entire family, with its wide collection of men’s, women’s and children’s apparel. Joyalukkas believe this is an innovative concept and enables their Company to cross sell their products and also to create a loyal customer base.
The purchase division for the Wedding Centres is spread across their four stores. The Manager (Textiles) heads the textile division. All purchases for the Wedding Centres
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are directly controlled by the Manager (Textiles) and orders for purchase are placed based on the requirements received from each of the Wedding Centres.
As of December 31, 2010, Joyalukkas textile and apparel division comprised of 535 employees. Joyalukkas textile and apparel purchases can be broadly categorized into: (a) seasonal purchases, (b) non-seasonal purchases and (c) purchase for export sales.
A. Seasonal purchases - These are bulk purchases made to fulfill Joyalukkas seasonal requirements, such as during Onam, Christmas and New Year seasons. Based on the previous year‟s sales figures, Joyalukkas purchase division prepares a purchase budget for the upcoming season. The purchase requisitions and purchase orders are prepared and approved based on this budget.
B. Non-seasonal purchases - These purchases are made based on Joyalukkas stock position and the anticipated marketability of certain unique and new products.
C. Export sales - These purchases are made for the purpose of Joyalukkas export sales of textiles and apparels to Joy Alukkas Center LLC, Sharjah.
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3.5 Certifications, Awards, Recognitions
Fiscal
Year Awards
2011 Best Single Retail Store of the Year‟ award to Joyalukkas chennai showroom at the National
Jewellery Awards
2011 Organized by the All India Gems and Jewellery Trade Federation
2011 Best Retail Jewellery Chain of the Year‟ award at the National Jewellery Awards 2011
organized by the All India Gems and Jewellery Trade Federation
2010 Retail Chain of the Year Award at the Retail Jeweller India Awards 2010 instituted by
the Retail Management Group‟
2010 Highest Commercial Tax Payer in Jewellery Retail at the Kerala Trade Awards 2010
organised by the Government of Kerala
2009 Retail Jeweller India Awards for the television campaign, 2009 instituted by the „Retail
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2009 360 Degree Marketing Campaign for the Year 2009 at the Retail Jewe ller India Awards
instituted by the„„Retail Management Group‟
2009 Kerala’s Highest VAT Payer in Gem & Jewellery Industry at the Kerala Gem &
Jewellery Show – Gold Souk Awards
2008 Best Consumer Choice Award at the Retail Jeweller Awards, 2008 instituted by the
„Retail Management Group‟
2008 Best Overseas Retailer of the Year at the Kerala Gem & Jewellery Awards, 2008 at the
Kerala Gem & Jewellery Awards, 2008
2007 Best Retailer of the Year at the JJS Gold Souk Awards, 2007
2006 Best Retail Promotion of the Year at the Retail Jeweller Awards, 2006 instituted by the
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3.6 Business Performances
Joyalukkas is one of the leading jewellery companies with focus on Large Format Stores. Joyalukkas jewellery business consists of the sale of jewellery made of gold, diamond and other precious stones, platinum and silver. Joyalukkas have also engaged in the business of selling textiles, apparels and accessories through our Wedding Centers in Kerala. Joyalukkas offer a wide range of products across various price points and cater to customers across all market segments. In Fiscal 2008, 2009 and 2010, Joyalukkas sold 7,154.35 kg, 8,430.05 kg and 8,807.46 kg of Gold, respectively. In Fiscal 2008, 2009 and 2010, Joyalukkas total income from sale of Gold was ` 7,500.64 million, ` 11,248.35 million and ` 14,468.25 million, respectively, representing a CAGR of 38.89% over the a foresaid period.
Joyalukkas conduct jewellery retail business under the brand name „Joyalukkas‟. Joyalukkas started retailing jewellery in India in the year 2002 with the launch of their first retail store at Kottayam in Kerala.
As of December 31, 2010 Joyalukkas had 22 retail stores, of which 10 are Large Format Stores, each having a floor area of 12,000 sq. ft. or more. Further, Joyalukkas intend to set up three new Large Format Stores in Kumbakonam, Hubli and New Delhi and three new Wedding
Centres in Kozhikode, Thrissur and Thiruvananthapuram by September 2013, each with an
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The following table depicts the details of Joyalukkas jewellery, and textiles, apparels and accessories business operations as of and for Fiscal 2008, 2009, 2010 and as of and for the six month period ended September 30, 2010:
Sr.No. Particulars
particulars Fiscal 2008 Fiscal 2009 Fiscal 2010 Six months ended September 30, 2010 1 Number of stores 13 15 20 21 2 Floor area (sq. ft.) Jewellery 185,713 200,893 235,438 261,752 Textiles, Apparels and Accessories 104,617 104,617 104,617 104,617
3 Gold Sales (in
kg)
33 4 Revenue (` in million) Jewellery 8,345.53 12,843.45 16,730.07 11,765.13 Textiles, Apparels and Accessories 1,280.90 1,428.29 1,490.52 779.49
*As per the certificate obtained from Molekules Interior Studios, Sai Lake Residency, Near
Adarsh Nagar, Kolbad, Thane (West), Mumbai 400 601.
Table ref no 1.
Joyalukkas jewellery, and textiles, apparels and accessories
business operations as of and for Fiscal 2008, 2009, 2010 and as of and for the
six month period ended September 30, 2010
Joyalukkas premier Stores are the three Large Format Stores situated in Chennai, Bangalore and Coimbatore, having an aggregate total floor area of 96,309 sq. ft. Joyalukkas sell textiles, apparels and accessories through Joyalukkas four Wedding Centres situated in Kerala (Angamaly, Thiruvalla, Kollam and Ernakulam) having an aggregate floor area of 157,593 sq. ft. Our Wedding Centres aim to offer an integrated shopping experience where Joyalukkas customers can purchase premium jewellery, textiles, apparels and accessories for weddings and other festive occasions in the same store. Joyalukkas believe this is an innovative concept and enables their company to cross sell their products and also to create a loyal customer base. Further, our Wedding Centres cater to the textile and apparel requirements of an entire family, with their wide collection of men’s, women’s and children’s apparel.
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of 2,222.74 kg and 2,385.47 kg of Gold, respectively. In addition they maintained an inventory of jewellery made of diamond and other precious stones, platinum and silver, all with an extensive array of designs.
As of December 31, 2010, Joyalukkas had 2,347 employees, comprising 1,311 employees working in division, 535 employees in textile division, 420 employees in administrative office and 81 employees in purchase department.
3.7 Strategic Plans and Future Programmes
The key elements of Joyalukkas business strategy are as follows:
Continue to expand
Joyalukkas network of Large Format Stores and Wedding
Centres
We intend to continue to develop Joyalukkas existing branded jewellery lines and introduce additional sub-brands and product offerings to cater to Joyalukkas customers and price segments in the diamond and platinum jewellery markets through expansion of Joyalukkas retail operations. We intend to capitalize on Joyalukkas significant experience and expertise in developing the branded jewellery market in India. Further we intend to leverage Joyalukkas goodwill associated with Joyalukkas existing brands, to further develop Joyalukkas various sub-brands in target markets and product segments in India. Joyalukkas seek to achieve this through expansion of Joyalukkas retail operations, increased marketing initiatives, innovative promotional campaigns and extensive advertising.
Joyalukkas large Format Stores are typically situated at strategic locations in prominent cities, such as in Chennai, Bangalore and Coimbatore. By September 2013 we intend to set up three new Large Format Stores in Kumbakonam, Hubli and New Delhi and three new Wedding
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Centres in Kozhikode, Thrissur and Thiruvananthapuram, each with an estimated floor area of
12,000 sq. ft. or more. Joyalukkas large Format Stores in India offer comprehensive product range of jewellery made of gold, diamond and other precious stones, platinum and silver to target various jewellery categories and different customer and price segments as well as to provide custom made jewellery.
Our Wedding Centres are Large Format Stores that house a wide range of jewellery, textiles, apparels andvaccessories that specially cater to customers looking for wedding related purchases. Our Wedding Centres aim to offer an integrated shopping experience where Joyalukkas customers can purchase premium jewellery, apparel and accessories for weddings and other festive occasions under one roof. In Fiscal 2010 and for the six month period ended September 30, 2010, Joyalukkas total income from sale of textiles, apparel and accessories in our Wedding Centres was ` 1,404.81 million and ` 751.26 million respectively, which constituted 7.70% and `
Further increase
their
percentage contribution of diamond and platinum
jewellery business to
their
total revenues
The sustained growth of Indian economy coupled with growing employment levels, income levels and availability of credit in India has resulted in greater consumer spending and disposable income. This has boosted the retail business in India and consequently resulted in the growth of retail jewellery business and increasing demand for jewellery made of diamond, platinum and other precious stones. In Fiscal 2009, 2010 and six months ended September 30, 2010, Joyalukkas revenue from the sale of jewellery made o f diamond, platinum and other precious stones constituted 10.61%, 11.98% and 13.50% respectively of Joyalukkas total revenue. We intend to continue increasing Joyalukkas diamond and platinum jewellery retailing business and use Joyalukkas ability to provide a wide range of jewellery products of various grades, designs and price segments, Joyalukkas strong branded jewellery lines and our wide retail trade operations to increase Joyalukkas market share in diamond and platinum jewellery in India. Joyalukkas also intend to capitalize on the gradual shift of consumer
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preferences in India from traditional gold jewellery to jewellery made of diamond, platinum and other precious stones.
Continue to invest in their
marketing initiatives and brand building exercise
We intend to continue investing in Joyalukkas marketing initiatives and brand building exercise, including advertising through various media. In Fiscal 2010, and for the six month period ended September 30, 2010, Joyalukkas had expended ` 480.56 million and ` 333.92 million respectively, towards advertising and sales promotions expenses, which constituted 2.64% and 2.66% respectively of Joyalukkas total income. Further Joyalukkas shall continue to consult external agencies on the optimum a llocation of Joyalukkas marketing resources by determining the appropriate media vehicle for reaching out to Joyalukkas retail customers. Joyalukkas believe that effective marketing is important for future revenue growth, to improve Joyalukkas company’s brand visibility, to establish relationships with target markets and to sell a great number of Joyalukkas products in a competitive cost effective manner.
Set up service centres in Bangalore and Chennai
We intend to set up specialized service centres in Joyalukkas large Format Stores situated in Bangalore and Chennai. These service centres would cater to our wide range of customers by providing free service on Joyalukkas jewellery products. This may also increase the number of repeat customers, establish long term relationships with Joyalukkas repeat customers and increase the sales of a wider range of jewellery products.
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CHAP TER - IV
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4.1 Organisational Structure
Joyalukkas‟s managerial organisation structure is given below:
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CHAPTER V
FUNCTIONAL ANALYSIS
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5.1 Materials & P rocurement
The following flowchart indicates the mode of procurement of raw materials for the manufacture of gold jewellery:
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Joyalukkas jewellery products consist of four product segments:
(a) Gold jewellery; (b) Diamond jewellery;
(c) platinum jewellery and jewellery made from other precious stones; and (d) silver jewellery.
Sourcing of Jewellery
Gold je wellery
Joyalukkas source Joyalukkas inventory of gold jewellery through the following routes:
(a) Purchase of bullion/standard gold from bullion suppliers and converting them into finished
jewellery through job-work arrangements;
(b) Purchase of finished gold jewellery from independent jewellers/ suppliers; and (c) Purchase of old gold jewellery from customers and converting them into finished jewellery
through job-work arrangements.
Joyalukkas place orders for the purchase of bullion/standard gold from gold suppliers or finished gold jewellery from a large number of local independent jewellery manufacturers, based on Joyalukkas requirements received from each of Joyalukkas
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retail stores, through Joyalukkas centralized purchase division having regional offices. The bullion/standard gold is converted into finished gold jewellery through job-work arrangements with Joyalukkas dedicated group of goldsmiths/ job-workers. Joyalukkas select the jewellery designs, based on market trends and Joyalukkas requirements in each of Joyalukkas retail stores, or Joyalukkas obtain designs through leading design houses. The raw materials required for the manufacture of gold jewellery products, such as, standard gold/bullion, copper and colored-stones are provided by us to the job-workers, based on Joyalukkas requirements. Joyalukkas have entered into agreements with major suppliers of bullion, such as, with the Bank of Nova Scotia for spot purchase of bullion and also entered into supply agreements with some of Joyalukkas major suppliers of finished jewellery and job-workers. Additionally, Joyalukkas procure old jewellery from Joyalukkas customers who intend to exchange their old jewellery for new designs or against payment of cash.
Joyalukkas currently have five purchase divisions for the purchase of gold, situated at Thrissur, Coimbatore, Chennai, Bangalore and Hyderabad.
Diamond Jewellery
Joyalukkas source inventory of diamond jewellery through the following routes: (a) Purchase of finished diamond jewellery from independent jewellers/suppliers; and (b) Job-work arrangements for manufacture of diamond jewellery.
The procedure followed for the sourcing of diamond jewellery is similar to that of gold jewellery. We currently have four regional purchase divisions for the purchase of diamond jewellery, situated at Thrissur Chennai, Hyderabad and Bangalore. Joyalukkas have entered into supply agreements with some of their major suppliers of finished diamond jewellery.
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Platinum Jewellery and Jewellery made from other precious stones
Joyalukkas source their inventory of jewellery made of platinum and other precious stones completely through purchase of finished jewellery from independent
jewellers/suppliers. The procedure followed for the sourcing of jewellery made of platinum and other precious stones is similar to that of gold and other jewellery products. Joyalukkas currently have three regional purchase divisions for the purchase of jewellery made of platinum and other precious stones, situated at Thrissur, Chennai and Bangalore. Joyalukkas have entered into supply agreements with some of their major suppliers of jewellery made of other precious stones.
Silver Jewellery
Joyalukkas source their inventory of silver jewellery through the following routes: (a)Purchase of finished silver jewellery from independent jewellers/suppliers; and (b) Purchase of old silver jewellery from customers and converting them into finished jewellery
through job-work arrangements.
The procedure followed for the sourcing of silver jewellery is similar to that of gold jewellery. Joyalukkas‟s purchase division for the purchase of silver jewellery is currently situated in Chennai.
Upon receipt of finished jewellery from job-workers/independent jewellers, Joyalukkas undertake the following measures, prior to final sale of jewellery products to end-customers:
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Quality control involves physical verification and inspection of the finished jewellery products and mechanized purity check of the finished jewellery products on a random basis. The physical and mechanized verification is to ascertain the craftsmanship, finishing and purity of the jewellery products. Apart from the regular quality control measures, finished diamond jewellery products are tested on a fourpoint scale: carat, color, cut an clarity. Based on this test, the diamond jewellery is given a grade such as Flawless (FL), Internally Flawless (IF), Very Very Slightly Included (VVS), Very Slightly Included (VS), Slightly Included (SI) or Included (I).
B. BIS Hallmarking/ IGI and PGI certifications
Hallmarking is a gold purity assurance certification obtained from certain agencies certified by the Bureau of Indian Standards („BIS‟), a Central Government authority. BIS is a recognized certification authority in the gold jewellery industry. The hallmarking agencies test the purity of gold contained in the finished gold jewellery products and certifies such purity for each product. Joyalukkas company typically sells hallmarked gold jewellery through its retail stores.
Diamond jewellery is certified by International Gemological Institute („IGI‟). The IGI certification is a purity assurance certification. All diamond jewellery sold at Joyalukkas retail stores is certified by IGI except very small ornaments like nosepins etc.
Joyalukkas platinum jewellery is certified by Platinum Guild International („PGI‟). The PGI certification is a purity assurance certification. All platinum jewellery sold at Joyalukkas retail stores is certified by PGI except very small ornaments like nosepins etc.
