Documente Academic
Documente Profesional
Documente Cultură
PROJECT REPORT ON
SUBMITTED BY
VIKASH KUMAR
IB1715261
In partial fulfillment of the requirement for the award of the Post Graduate
Diploma in Management
PGDM(MARKETING)
IN
1|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
ACKNOWLEDGEMENT
I dedicate this page to all those who have silently or actively left an
indelible mark on my project report, so that they may be given credit which they
richly deserve.
I am highly indebted to Mrs. Sonal Taneja, Deputy General Manager, Bullion
division of the State Trading Corp. of India, for her guidance and constant
supervision as well as for providing necessary information regarding the project
& also for her support in completing the project.
I would like to take this opportunity to thank Mr. AK VERMA General
Manager (Marketing) & my project mentor, Mr. VIRENDER BEJOTRA Chief
Manager (Marketing) & Mr. Ramesh Kumar Ram Deputy Manager (Marketing)
for mentoring me throughout the project and adding valuable inputs.
I would also like to thank all the staff members of STATE TRADING
CORPORATION OF INDIA LTD. for providing me a very good working
atmosphere which helped me to complete the assignment project within the
scheduled time.
I would also like to thank Nitesh Behare Associate Professor (BIIB), who
is our internal mentor and Mr Mihir Badiani, who is our external mentor for
helping me throughout the project.
I would like to express my sincere thanks to Prof. Col. A.
Balasubramanian, Dean, BIIB and Dr. Suresh Chandra Padhy, Director, BIIB, for
guidance and support in the project without whom, this project would not have
been complete.
VIKASH KUMAR
(IB1715261)
2|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
INDEX
Page no.
1. Introduction 4
2. Objective 6
3. Gold demand 7
4. Research methodology 11
5. Market Analysis 13
6. Competitor analysis 18
7. Recommendations 20
8. Conclusion 21
9. Appendix – I 22
10. Appendix – II 23
3|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
1. INTRODUCTION
Gold is a precious metal. It has emotional, cultural and financial value and
different people across the globe buy gold for different reasons, often
influenced by a range of national socio-cultural factors, local market
conditions and wider macro-economic drivers. Demand for gold in India is
interwoven with culture, tradition, the desire for beauty and the desire for
financial protection. Over the past five years, annual demand has averaged
895 tonnes, equivalent to 26 per cent of total physical demand worldwide.
For many years the most avid purchaser of gold in the world, India remains
one of the leading markets for gold globally today.
4|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
The Corporation has played a key role in the Indian economy. In the pre-
liberalization era, it acted as an arm of the Government of India not only to regulate
foreign trade but also for intervention in the domestic market. The Corporation
handled canalized exports and imports of large number of items varying from
chemicals and drugs to bulk commodities such as edible oils, cement, sugar,
newsprint, wheat, urea, etc. thereby ensuring timely availability and equitable
distribution of mass consumption items as well as essential raw materials for the
industry. Canalization also helped the nation to benefit from economies of scale and
keeping a close watch on the scarce foreign exchange.
5|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
STC is one of the agencies nominated by the Govt. of India to import gold, silver
and other precious metal into the country. STC imports Gold in 100 gms and 1
Kg bar from LBMA members as well as silver for traders/ jewelry manufacturers.
Aiming to diversify the range of bullion activities, STC is also having its presence
into the field of supply of gold/silver medallions in order to meet the customized
requirement for Corporate/Institutional orders. STC has a well-established
network of bullion associates across all the bullion active centres and ensures
supply of hallmarked gold/silver medallions. Various PSU’s/Central & State
Government Departments are inviting tenders at regular intervals to source their
customized requirements of gold/silver medallions mostly for the purpose of
rewarding/gifting their employees on special/auspicious occasions.
2. OBJECTIVE:
To conduct a market survey in the National Capital Region of India to
study about the gold import patterns of large jewelers in the region.
The survey report also aims to provide in-depth analysis of gold market in
the country.
Primary data that will be collected will also serve STC to understand the
potential customers in a broad manner.
6|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
3.GOLD DEMAND
India is second largest importer of gold in the world. According to the World
Gold Council (WGC), gold demand in India is likely to remain below its 10-
year average for a third year in 2018 as higher taxes and new transparency
rules on purchases may cap last year’s rebound in buying.
The demand for gold in India can be categorized into the following types:
Jewellery demand
Gold jewellery represents the largest source of annual demand for
gold per sector. This has declined over recent decades, but it still accounts
for around 50% of total demand. India and China are by far the largest
markets, in volume terms, together accounting for over 50% of current
global gold demand. The Asian and Middle Eastern markets are
dominated by demand for purer, high-carat gold. Gold has been an
7|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
Investment demand
Gold has unique properties as an asset class. Modest allocations to gold
can be proven to protect and enhance the performance of an investment
portfolio. Even so, globally, gold still only makes up less than one per
cent of investment portfolios. However, this is changing and investors of
all sorts are coming to accept gold as a reliable, tangible long-term store
of value that has moved independently of other assets. The annual
volume of gold bought by investors has increased by at least 235% over
the last three decades. Gold can be used in portfolios to protect
purchasing power, reduce volatility and minimize losses during periods
of market shock. Gold is at an interesting juncture at present. The
opportunity cost of holding Gold is high as equities continue to reach
fresh records, the global economy is recovering and there are few threats
to the financial system other than the large amount of debt that
8|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
has built up since the financial crisis. But, with global growth
recovering, debt may be something that can be lived with, although it
will no doubt come back to haunt the market at some stage. As such,
there do not seem to be many pressing financial security needs for
investors to be seeking safe-havens – at least not yet.
Central bank demand
The past decade has seen a fundamental shift in central banks’ behavior with
respect to gold, prompted by reappraisal of its role and relevance after the
2008 financial crisis. Emerging market central banks have increased their
official gold purchasing, while European banks have ceased selling, and the
sector now represents a significant source of annual demand for gold.
Central Banks sold 7,853 tonnes of gold between 1987 and 2009; between
2010 and 2016 they bought 3,297 tonnes.
Technology
Gold has long been central to innovations in electronics. Today the unique
properties of gold and the advent of 'nanotechnology' are driving new uses
in medicine, engineering and environmental management.
9|P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
Influencing factors
Like most commodities, the price of gold is driven by supply and demand,
including speculative demand. However, unlike most other commodities, saving
and disposal play larger roles in affecting its price than its consumption. Most of
the gold ever mined still exists in accessible form, such as bullion and mass-
produced jewelry, with little value over its fine weight — so it is nearly as liquid
as bullion and can come back onto the gold market. At the end of 2006, it was
estimated that all the gold ever mined totaled 158,000 tonnes (156,000 long tons;
174,000 short tons).
Given the huge quantity of gold stored above ground compared to the annual
production, the price of gold is mainly affected by changes in sentiment, which
affects market supply and demand equally, rather than on changes in annual
production.
10 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
4. RESEARCH METHODOLOGY:
A primary market survey was conducted in the National Capital Region
of India on large jewelers who import gold form the nominated agencies
in India for the purpose of making jewelry for sale in the domestic market
as well as for export purposes. 5 areas were covered i.e. Bank Street in
Karol Bagh, Gold Souk mall in Gurugram, Jewelers near Preet vihar metro
station, south extension near AIIMS and Greater Kailash market. The
survey broadly covered businesses which were into trading and imported
gold for the purpose of selling to domestic smaller jewelers.
But the research had limited access to the respondents as either the
owners remain at the head offices located in other cities of the country or
the managers present were unwilling to give the information because of
being uninitiated of their authority or some other mental reservations
thus, they had a fear of consequences of participation. In few cases, the
managers who were participants in the survey didn’t have adequate
knowledge regarding the business nor the adequate motivation to
cooperate. Thus, the amount of disclosure was not adequate in majority
of cases. But sufficient data was collected for drawing a competitor
analysis.
Likert scale was used to gauge customer sentiments on various
parameters. Also rating questions were asked to find out the customer
inclinations for future. The elements were selected individually and
directly from all the major jewellery businesses in the NCR region. The
average survey lasted 6-7 minutes. The survey was designed to seek
11 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
structured responses from the target group. But all these obstacles were
already expected in a survey involving big gold jewelers as they are
naturally slightly reluctant to share their business information. The major
problem in the survey was of “don’t know” responses of the store
managers. All code of ethics was followed during this research and the
right of companies to dissociate themselves from the research project was
respected.
More than 70% of the firms agreed that they also involve local traders to
source their gold
12 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
5. MARKET ANALYSIS
The bullion division of STC serves the big gold importers in the country through
its various centres across the country. The import of gold is done in accordance
with the rules and procedures mentioned in the Foreign Trade Policy of India
2015-20. The imports are also guided by time to time circulars issued by the
Reserve Bank of India. The Indian gems and jewelry industry is one of the
world’s most competitive markets due to the low cost of production and highly
skilled labour.
Hedging: The company does not take exposure in volatile commodities. It makes
gold purchases only against confirmed orders backed by appropriate margin
money. Guidelines for the company are in place
13 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
Being on this position also shows that India has a great opportunity to
move up and be present across all the points in the value addition chain.
Doing so can generate the next wave of growth and profitability as India
consolidates its position in low-value gem processing and captures a
greater share of high-value gem processing and Jewelry making. This
move is also important as other low-cost countries like China are striving
hard to wrest share from India in its current areas of strength.
Threats: Uncertainty surrounding global projections has increased and
risks continue to be tilted to the downside. This reflects the possibility of
prolonged period of heightened policy uncertainty taking electoral
outcomes of the next year’s general elections into consideration. In few
past years high volatility has been observed in the prices of bullion as well
as Indian rupee-US dollar exchange rates. Change in government policies
like providing licensees even to the private firms to import gold when the
balance of trade improves or current account deficit decreases.
The bullion import turnover of STC has decreased from Rs. 4,711 crores to Rs.
4,272 crores in 2016-17 financial year. But, if we look at the share of bullion
division in net imports of STC it has increased from 53.93% to almost 67%. The
basic precious metals like gold and silver contribute 55.11% of the total turnover
of STC.
Oil and Gold prices have tended to be positively correlated, although oil prices
fell more severely in the financial crisis, while Gold initially sold off but then
benefited from safe-haven buying.
14 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
A greater insight is obtained when we take a deeper look into the bullion
department of STC. Though the bullion purchases of stock in trade is
reduced but the purchase of gold has increased in 2016-17 fiscal thus
reflecting a strong market sentiment for gold.
15 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
India has seen a strong import in gold in past few years. According to the World
Gold Council (WGC), gold demand in India is likely to remain below its 10-year
average for a third year in 2018 as higher taxes and new transparency rules on
purchases may cap last year’s rebound in buying.
The GFMS estimated India’s gold imports in the December quarter at 140
tonnes, taking total imports to 780 tonnes by the end of the year. “Hallmarking
rules will be the next important development to look out for, specifically the
timeline and implementation plan. This will cause a rush to convert jewelry to the
standardized 22 carats, 18 carats and 14 carats purity. This will create additional
demand and see many small jewelers exit the trade.
If we go by the technical analysis, then the total gold imports in 2018-19 fiscal
will be at 735.81 tonnes approximately. The demand for gold may also be lower
as jewellers had already kept stocked gold before the GST was rolled out.
16 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
Gold prices have generally consolidated in 2017 after their initial rebound
in 2016, which followed a four-year bear market. Gold prices are 21
percent above the 2015 low and 33 percent below the 2011 high. Global
economic growth has become more concerted in 2017 and that bodes well
for fabrication demand for Gold - greater prosperity is also expected to
breathe some life back into the depressed jewelry market, and that alone
could have a significant impact on demand.
According to the World Gold Council, annual mine production of gold over the
last few years has been close to 2,500 tonnes. About 2,000 tonnes goes into
jewelry or industrial/dental production, and around 500 tonnes goes to retail
investors and exchange-traded gold funds.
17 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
6. COMPETITOR ANALYSIS:
There are various other nominated agencies like STC which are import
canalized goods into the country like Metals and Minerals Trading
Corporation, Gems and Jewelry export promotion council, etc.
Apart from the nominated agencies, the Reserve Bank of India has
nominated 16 banks to import gold and silver in the 2018-19 fiscal.
The State Bank of India leads the pack of state-run lenders, while there
are also international lenders like the Industrial and Commercial Bank of
China and Bank of Nova Scotia.
18 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
19 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
7. RECOMMENDATIONS:
20 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
8. CONCLUSION
STC’s strength is that the market trust in its policies and procedures. Being a
government agency has its advantages as well as some weaknesses. Its weakness
being more regulated than banks and thus is loses its flexibility as compared to
its major competitors.
Many jewelers favour banks despite the banks charge much more
commission/premium than STC on quantity of imports because there is a lower
limit of gold imports that STC has to abide by, whereas, in most cases the demand
for gold by the jewelers is lesser than the lower limit of STC.
Import of gold is expected to increase in the next year, thus offers great
opportunity for an institution like STC to increase its revenue by both, increased
quantity of gold for already existing customers and also by increasing its
customer base by attracting new associates.
21 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
Exporter
Domestic Jewellery
Trader
Other
YES
NO
22 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
10. Please rate the following parameters according to your preference by which you decide your supplier(s)
11. Kindly rate your agencies on the following parameters ( rate out of 10 )
A.
B.
C.
D.
E.
12. What kind of issues do you face while dealing with your agency?
13. What extra benefits/features/support do you look for while importing gold through an agency?
14. Do you look forward to change your current nominated agency in future?
Yes
No
Maybe
16. Did you source gold from any other nominated agency in the past? (Please specify, if yes)
17. What were the issues/reasons that made you change your agency?
1 2 3 4 5 6 7 8
Unsatisfactory Satisfactory
23 | P a g e
Study on gold import patterns of large jewelers in the Delhi NCR region
24 | P a g e