Index

Sr. No. Subject Page No

List of Annexures ii

1 The Project at a Glance 1

2 Introduction 4

3 Present Status 5
3.1 Turnover of Last Five years 5
3.2 Break-up of Units 6
3.3 Products of the Cluster 6
3.4 Manufacturing Process of the Cluster 7

4 Major findings of the Diagnostic Study v/s Need of the CFC 12

5 Role of CFC 14

6 Technical Details 15
6.1 Land and Building 15
6.2 Plant and machinery 15

7 Other Project Details 20

7.1 Utilities 20
7.2 The Team 20
7.3 Plant Capacity Utilization 20
7.4 Miscellaneous Expenses 21
7.5 Preliminary and Pre-operative Expenses 21

8 Financial Details 22
8.1 Financial viability 22
8.2 Commercial viability 23
8.3 Key Financial Indicators 24
8.4 Implementation Schedule 24

9 Conclusion 25

Annexures 26

i
 List of Annexures

Annexure I : Format for detail proposal for CFC

Annexure II : Land and Building

Annexure III : Plant and Machinery

Annexure IV : Supporting Equipments

Annexure V : Preliminary and Pre-operative Expense

Annexure VI : Utilities

Annexure VII : Man Power Requirements

Annexure VIII : Consumable Stores

Annexure IX : Annual Repair and Maintenance Expenses

Annexure X : Phased Revenue Programme

Annexure XI : Project Cost and Source of Finance

Annexure XII : Depreciation Straight Line Method

Annexure XIII : Depreciation Written Down Value Method

Annexure XIV : Profitability Estimates

Annexure XV : Computation of Income Tax

Annexure XVI : Cash Flow Statement

Annexure XVII : Projected Balance Sheet

Annexure XVIII : Internal Rate of Return

Annexure XIX : Break Even Analysis

Annexure XX : Pay Back Period

Annexure XXI : Return on Capital Employed

Annexure XXII : Sensitivity Analysis

Annexure XXIII : Project Summary

ii
 1. The Project at a Glance:
Industries Commissionerate- Government of Gujrat has identified the jewellery cluster at
Rajkot under cluster development program approved the project for the same. EDI has been
assigned a cluster development project for capacity building of Gold Jewllery Manufacturing
Cluster. The project was taken up in the month of March-2012 and is likely to be completed
by February-2015. The institute conducted a diagnostic study during commencement of the
project. The presentation of the findings of diagnostic study was made on 12/9/12. The
finding of diagnostic study was approved by the committee members as well as the
association. The association strongly desires for a Common Facility Center for
manufacturing gold jewellery by latest technologies.
There are about 25,000 tiny / micro and small scale units functioning in Rajkot city and they
are in the business of Gold & Silver Jewellery Manufacturing. During the diagnostic study
period and subsequently implementation of soft skill programs, EDI has identified the need
of common facility center in the cluster for the up-gradation of this cluster and to become
globally competitive.
There is an urgent need to set-up CFC for latest technology in few of the manufacturing and
testing facility like ball making machine, annealing, ultrasonic cleaning, electropolishing,
hallmarking, etc. Skill development training and the brand building activities will be also
implemented by the cluster CFC. EDI was actively engaged for identification of plants and
machinery needed for the center. It carried out an extensive study on various types of
operations needed for manufacturing gold jewellery. Based on process of manufacturing, it
identified the plant and machines, contacted the manufacturers of machines for price and
specifications as per the requirement. This CFC will improve the performance of the cluster
and the cluster units will become globally competitive.
The projected performance of this common facility center for the first 8 years of operation
is appended. The payback period of the project will be about 5.94years.

1
The SPV will provide necessary land and building for setting up this common facility center
as their contribution and execute necessary arrangements and undertaking with the
implementing agency.
The day to day operating expenses of the common facility centre in terms of electricity
charges, labour charges, etc. will be borne by the SPV and required periodic maintenance,
modernization etc. will be met by the corpus fund raised from the profit of the common
facility centre.
The consortium will appoint necessary technical experts, machine operators and skilled
labours for running the common facility center.

Main features of the project are:

Name of the Cluster, location Gold Jewellery Manufacturing Cluster, Rajkot

Job-work services with latest technological

Type of CFC
equipments, Testing & Training Centre
It is proposed under Gems & Jewellery
Special Purpose Vehicle (SPV) Association-Rajkot. SPV will be formed under this
association.

Proposed Location Nearby Soni Bazar, Rajkot.

All types of Gold & Silver Jewelries. (Rajkot is well-

Current Products
known for its hand-made jewelries)
Particulars Rs. In Lakhs
Land including developments 100.00
Technical Civil Work 75.00
Machinery and Equipments 471.00
Cost of Project
Supporting Equipments 23.50
Preliminary And Pre-operative 18.50
Expenses
Total 688.00
Contribution from SPV 68.80
Grant from DC-MSME under 481.60
Means of Finance MSE-CDP Scheme
Grant from Govt. of Gujarat 137.60
Total 688.00

Key Financial Indicators

2
Return on Capital Employed
29.31 %
(ROCE)

Break Even Analysis (BEA) 51.58% for the 2nd Year

Internal Rate of Return (IRR) 18%

Net Present Value (NPV) Rs. 243.97 Lacs at 10% discounted rate

Payback Period 5.94 years

 Productivity improvement
 Quality improvement
 Less wastage in melting / alloying
Benefits to the cluster
 Creative designs and model making
 Market development
 Technology up-gradation

3
 2. Introduction:
Jewellery since time immemorial has remained "neighbour's envy andowner's pride". The
ornaments have remained exotic, unequalled and invaluable articles of personal glory. And
with Jewellery becoming symbol of status, fashion and taste, men and women today are
steadily moving away from conventional styles of adornment and ornamentation and are
gradually adopting modern patterns better suited to their busy life styles. Considering the
fact that India is the largest consumer of gold and has excellent infrastructure for diamond
cutting, Jewellery Designing can prove to be a very lucrative and satisfying career. Jewellery
Designing in India has an unbroken heritage that spans over 5,000 years.
With the emergence of internationally branded Jewellery in the domestic
market, the industry is subject to stiff competition and poised for a gloomy growth.
In today’s trend evoke innovative ideas in design patterns for creating entirely new
styles without leaving the touch to traditional patterns with a view to add variety
and range. The term 'Jewellery' signify a lot more than just a few precious metals
and gemstones. The industry is poised for growth and development as the demand
potential for styled variety is on the increase. There also exist young designer
entrepreneurs with dynamism and creativity who can explore new avenues and
experiment with designs to suit the modern needs.
History:

The Small group of artisans started jewellery making about 70 years back at Rajkot. Initially
they melt the old jewellery and made new jewellery out of it as per the order. Later on
demand increased and started to prepare jewellery from gold bar. After sometimes,
showrooms were opened in Rajkot. handmade gold jewellery sets of Rajkot cluster are
famous into national & international markets. Artisans from Bengal (Kolkata) invited by the
cluster to make best of handmade jewellery. Later on, Marathi people came into the cluster
and started the refinery for gold & silver. On demand of world jewellery market, Rajkot
cluster have started to make all type of Gold & Silver Jewellery like set, rings, earrings,
bengals, chains, payals, etc. Apart from handmade jewellery, cluster is also producing
machined jewellery as per the new trend in Jewellery market.

4
 3. Present Status:

The Rajkot Gold Jewellery Manufacturing Cluster has a 1.25 lakh direct and
indirectemployment having 25000 units in the cluster. All units are involved in producing
gold and silver jewellery. Most of the units are involved in job-work of individually
production process.

Investment in
Year Units Employments plant and Turnover
machinery
170 tons of gold
Approx. 1.25 Approx. Rs. 200
2013-14 About 25000 jewellery
lakhs crores
production

3.1 Turnover of Last Five Years:

The data collected for the sales turnover is highly erratic mainly because of the cluster is job
work cluster, i.e. A micro unit (carrying out manufacturing activity) earns about 1.5-3 % of
total value of the gold for the job work. The data on exports from this cluster is not available
as there are only few units are in direct export business, hardly 4-5 % of total turnover of
the cluster.

TURN OVER IN
SR. NO. YEAR
TONS of Gold
1 2009-2010 210

2 2010-2011 195

3 2011-2012 200

4 2012-2013 220

5 2013-2014 170

5
3.2 Break -up of units:

Majorityunits in the cluster are micro. Only few of the units are in small category.Majority
of the units are located at Soni bazar and they work with good interlinkages.

Type of unit (Investment in plant & Percentage

machinery) wise break-up
Micro units (less than Rs 25 lakhs) 94%

Small units (between Rs. 25 lakhs to 5 crores) 6%

Medium units (between Rs. 5 crores to 10
0%
crores)

3.3Products of the cluster:

Units of the Cluster are involved in producing of gold jewellery and silver jewellery. Major of
the units are engaged in job work in individual production.

 Neckless  Antique jewellery

 Nose pin  Silver utensils
 Bangles  Different murtis
 Mangalsutra  Bajubandh
 Earring  Jhumki
 Pendant set  Copper kadli
 Ladies ring  Bracelet
 Gents ring  Silver d-payal
 Vertical mala  Juda-kandora
 Fancy kada  And many more……

Vertical mala Neckless Fancy Bangles

6
3.4Manufacturing Process Layout of the Cluster:

Melting / Alloying of Gold + Silver+ Copper

Shaped into strips/bars of desired purity QC is to ensure purity level

Rolling to higher thicknesses Casting

(sheets, wires & pipes)

Conversion into suitable gauge sheets

Conversion into various forms like balls, chains, screws, collets

Preparation of sub-assembling

Stone setting, Minakari, Chhol

Final assembly and soldering (if needed)

Buffing, polishing, ultrasonic cleaning

Acid wash & Plating

Hallmarking/Finished Ornaments

7
Majority of cluster units are manufacturing gold & silver ornaments with traditional
processes. Few of these processesare:

DESIGNING

Designs of different jewellery items mostly

depend on demand from customers and their
own creativity. An excellent group of skill
manpower is available in the cluster to take up
any design job. The designs created are highly
attractive.

Artisans is designing jewellery

MELTING/ ALLOYING

Majority of the units in the cluster follows

traditional process of melting & alloying. In this
process, they take gold and other alloys in a
simple bowl, localy known as KULDI. The size and
shape of the Kuldi depends upon the quantity of
the melt. For heating this kuldi the entrepreneurs
use a normal gas operated heating torch. Melting & alloying in open furnace

CASTING

The first step of making casting jewellery is to create

a master piece. Using wax injector making machine,
a wax tree is prepared. The tree flask is heated into
electric furnace. A centrifuge is used to force the
molten metal in to the investment mould. Finally,
the pieces are taken out, clean, file and polished.

Centrifuge casting machine

8
WIRES/SHEETS DRAWING

The wires are drawn and the sheets are

rolled by using wire drawing and sheet
rolling machine. The wires and sheets are
drawn and rolled for different gauge. A
suitable lubricant is used for wire drawing
and sheet rolling process.
Wire drawing by roll press

ANNEALING

Annealing is the process to soften the metal

and reduce its hardness. A heating torch is
used for annealing, which causes uneven
temperature variation on sheets/wires. The
annealing process develops an undesired
brownish colour on the sheets and wires.
The brownish discolouration is removed by
sulphuric acid. Annealing process

PRESS WORKING

The sheets and wires are given a particular shape by

using a conventional fly press and simple punches and
dies. The cluster carries out the operations like
piercing, bending, forming, embossing and several
other operations as per the demands of the design.

Press Operation

9
SOLDERING
Soldering is the process to join the pieces of gold
alloys. Mainly Cadmium is used as a filler metal for
joining. A soldering torch is used to melt the filler
metal at the joint.

Soldering process

BUFFING

A buffing process is preparatory to polishing. A

normally a buffing station is used in which an
operator buffs the metal parts by using
appropriate buffing wheel and suitable buffing
compound. The buffing process caused slight loss
of metal.
Worker buffing earring

POLISHING

The cluster uses a vibro finishing process for

improving the finish of product. This process
involves use of small metal pins, appropriate
media and another chemical known as
shampoo in the cluster. The process of vibro
finishing takes about 30 minutes time in order
to improve the glitter of the jewelleries.
Vibro Finishing

10
ELECTROPLATING

Electroplating&rhodium of jewelleriesis
essential, which deposit of metal on the
jewelleries. In order to carry out the process,
the units use rectifier, plating tank, various
types of buss bars, anodes, cathodes and
suitable electrolyte.

Electroplating Plant

TESTING/HALLMARKING

The testing / Hallmarking is performed as per the

standards laid by Bureau of Indian Standards.
The purity of the gold is determined by a
spectrometer. A test for the purity of the gold is
carried out in the units which are certified for
the hallmarking.

An ordinary Spectrometer

11
4. Major findings of the diagnostic study v/s Need of the CFC:
The state is far behind in manufacturing technology of gold jewellery and silver jewellery.
Gold jewellery comprises operations like designing, melting/alloying, annealing, punches &
dies, casting, polishing, electroplating/rhodium, engraving and other necessary operations.
The state also needs skilled man power for adopting new technologies for designing and
manufacturing of gold jewelleries. City like Mumbai have demonstrated ability for
manufacturing of gold jewlleries.
People are living in highly faith traditional areas having lot of formalities and essential need
of gold jewellery and as well as silver jewellery to fulfill traditional values. So that each
community needs jewellery and it seems necessary to make world class jewellery to attract
those type of community to increase their faith and traditional values in gold jewellery. Due
to high value of gold it is necessary to put paddle on unwanted loss during manufacturing.
This loss can be minimize by adopting new technologies in CFC. This kind of center will assist
the state to meet the desired technological gap.
Some of the major findings and its solution as per the diagnostic study are:
Important findings during
Sr. Probable solutions via
Process Diagnostic study and soft skill
No. establishment of CFC
interventions
No modern facility for designing CAD/CAM machinewill
Design/Model available and the same can’t be endowed to create innovative
1
making afforded in the individual level design to improve quality of
by the goldsmiths. the product.
The cluster uses vintage process
Induction furnace will be
to melt gold and gold alloys, by
Melting/Alloying recommended to cure losses of
2 this process such loss in
of gold gold and gold alloys, this will
melting/alloying is been
improve productivity.
occurring.

A salt bath annealing furnace

Annealing in open area with
will be installed to get uniform
simple gas torch makes
hardness of the gold wires and
3 Annealing oxidation on the surface of gold
sheets as well as eliminating
wires and sheets. Also it is not
oxidation on surface of the
having uniform hardness.
sheets and wires.

12
 Currently cluster is making A ball making machineare
hollow balls by manual process. available in the international
The productivity is very low and market. By installing this kind
4 Ball making
it needs special types of skills. of machines in the common
The demand is not fulfilled by facility centre, cluster can
the cluster. improve the productivity.

Currently old methods and Latest technology which is

machines are being used to known as electropolishingcan
5 Polishing polish jewellery. By this process, be brought in the CFC and
they are unable to produce quality can be improved as per
export quality jewelleries. international requirements.

This type of technology does not

available in the cluster. It will Laser marking, writing and
bring new era for jewellery cutting machine need to
6 Laser Cutting
making. The workers do establish for sufficient
mechanical work without accuracy.
sufficient accuracy.
Majority of the spectrometers in
A spectrometer need to be
the cluster are not accurate as
installed in CFC to measure
7 Testing per the BIS standards. They do
such correct value of impurities
not check all the impurity
in gold alloys.
elements.
There are several units, engaged
A gold refining plant will be
in refining process. There is no
installed in CFC to achieve a
8 Refining full recovery of gold and this
purity of treated metal close to
process is hazardous to health,
99%.
as it involves nitric acids.

Once the CFC will be set up, it can provide valuable service to all stakeholders in various
areas of manufacturing process. Additionally it will enable the stakeholders to grow
awareness of modern technology, its advantages in cost effectiveness and ability to produce
right quality. Consequently the stakeholders will grow economically and in future will be
able to adopt similar facilities individually to an affordable scale.

13
5. Role of CFC:
The Common Facility Centre is going to play the most vital role in the cluster development
in the true sense.

 Role of CFC starts from providing design service to the stakeholders. It will maintain
an archive of traditional and innovative designs of numerous items.
 Service of model making using suitable CAM/rapid prototyping. Once this facility is
set up the local artisans can go for new and creative designs and make models
accordingly before finalizing.
 Next role of CFC is in providing service related to different stages of manufacturing
process starting from melting, casting, rolling, wire drawing, presswork and polishing
and others. The facilities being planned to maintain in CFC will develop economically
under-developed artisans in this cluster to face increasing competition in present
market scenario.
 Much important is to install ball making machine to improve productivity & quality
of the products. This machine will glitter the CFC.
 Another very important role of CFC is to provide all artisans a reliable testing service.
 Next role of CFC is going to help the artisans to get high quality casting products,
which will provide better finishing of the cast jewellery due to valuable casting
machine and computer added designing.
 The polishing of the jewelleries are inconvenient, this causes a poor finishing of the
jewellery after polishing. With highly sufficient imported machine in CFC of the
polishing unit will solve problems in polishing of the ornaments.
 The CFC will play a very important role in overall economic development of this
cluster as economy of this cluster has been largely dependent on this jewellery
industry. Once with the valuable support from the CFC the stakeholders-members of
the SPV start growing economically.

14
 6. Technical Detail:
Although it is desirable to have all possible equipment and services within the CFC but it is
highly unpractical. After making diagnostic study and soft skill interventions, EDI has
identified latest equipments for improvement of quality and productivity. EDI and the
proactive members of the proposed SPV discussed on the need of these machineries, their
functions, price and specifications.

6.1 Land & Building:

Land including developments:

The common facility centre is proposed to be set up on a plot of land measuring about
1000sq.ft. located near soni bazar, which is the main bazar for jewellery market. The cost of
land for common facility centre is Rs. 1 crore including land developments.

Technical Civil Work:

The proposed factory and office building have a total area of 4000 sq.ft. required for CFC.
The building for CFC is likely to build in four floors. The cost for technical civil work is Rs. 75
lakhs. The detailed of floor plans are mentioned below.

Floor Plan:

Ground floor: parking and office & waiting lounge (MD and GM)

1st floor: training centre, designing, refining & repairing

2nd floor: ball making units and testing lab

3rd floor: casting and polishing

6.2 Plant & Machinery:

A plant is a place where men, material, money, equipment, machineries, etc. are brought
together for manufacturing products. Today in modern industry;latest equipment and
machineries are very essential part of the precious job work. To improve such job work
quality below is a list of plant & Machinery.

Sr. Name Proposed Specification No. of Power Total Functions

15
 of the requir Price in
Machi
N0. Machin Supplier ement Rs.
nes
es in KW Lakhs
Dimensions: 826 x 1429 x 1740 To design detailed
mm jewellery and
3D
3d system Net Build Volume (xyz): 298 x produce Rapid
printer
1 corporatio 185 x 203 mm 1 3 43.00 Prototyping (RPT)
(CAD-
n,USA Resolution:375 x 375 x 790 DPI pattern for casting
CAM)
(xyz); 32μ layers, unbelievable
Temperature Range: 18-28 ºC jewellery items.
Dimension : 470x510x920mm
Melting OPDEL snc, Capacity : 2.8kg au To melt gold and
2 1 3.5 4.50
Furnace Italy 1.9kg ag gold alloys
Max. Temp. - 1150ºC
Capacity : 3 kg Au
1,5 kg Ag
Vacuum This machine is use
TopCastS.r Max. temperature : 1600 °C
3 Casting 1 10 25.50 for casting a
.l., Italy Vacuum pump Built-in : 25
Machine jewellery
m3/h
Pressure over vacuum : 3 bar
This machine is use
Dimension : 130x52cm
for pour molten wax
Automa Rubber Size:Min.50x30x8mm
Riacetech, into rubber mould
4 tic Wax Max.95x90x45mm 1 0.5 11.85
Italy automatically to
Injector Operating temperature:
create wax tree for
Massive objects 68-70°C.
casting jewellery
This machine is use
Dimension : 582x473x517mm for pour molten wax
Wax
5 Yasui& Temp. set range : 40to100°C 4 1.5 22.68 into rubber mould to
injector
Co., Japan create wax tree for
casting Jewellery
Cylinder width: 200mm
Mario Di This machine is use
Roll Cylinder Dia.: 105-110mm
6 MaioSpA, 2 11 11.00 for to draw gold’s
Press Rolling speed: 7.5 m/min.
Italy  wires and sheets
Max. rolling pressure: 38ton
Salt Temp. max.: 750°C in the salt
For annealing of
Bath Naberther bath
goldwires/sheets
7 Anneali m GmbH, Inner dimensions Crucible: 1 4.00
17 with neutral
ng Germany 230(Ø)mm 500(h)mm
atmosphere
Furnace Bath temperature control
Gold MAX 180 Balls/1MIN For making gold balls
ball
Internatio Min. diameter balls 1.50 mm. for different
8 making 2 3 90.00
nal Hole from 0.5 to 0.8 operation of
machine
Machinery Max diameter balls 5.5 mm. designing jewellery
CNC Faimondsrl Dimensions: 120x135x175cm Fully automatic,
9 2 5 36.36
diamond Italy Air supply: 6 bar multi axes CNC,

16
 cutting
machine diamond cutting
for balls, machine projected
beads, for lapping, faceting
ovals and decorating
and spherical beads
cylinders
Cousins This machine
Electrop Material removes metal
Size: 480 x 250 x 420mm
10 olishing House Ltd, 1 2 1.30 surface to polishan
Bath sizes: Ø125mm x 130mm 
plant United ornaments with
Kingdom electrolytic process
This is a universal
machine used for all
dimensions: 350 x 350 x 1000
the wet processes of
Circular OPDEL snc, mm
11 4 1.5 13.00 finishing-Roughing,
Vibrator Italy Vibration intensity: 3000rpm
Sanding and
Tank capacity: 5Ltr
Polishing on jewelry
parts
This machine used
Centrifu Dimensions: 900 x 850 x mainly for
1500mm comprehensive finish
gal OPDEL snc,
12 Tank capacity: 3.5Ltr 1 1.5 8.87 treatments like
Tumble Italy
Tanks: 4 Roughing, Grinding
r Max motor speed: 1400rpm and Polishing of very
small objects
Magnetic Shiners are
Dimensions: 350 x 410 x
used for polishing of
330mm
jewelry with stones
Magneti OPDEL snc, Tank Dimensions: ø=250- 4
13 8.00 and jewels that have
c Shiner Italy h=160 11
small undercuts and
Vibration Intensity: 2800rpm
cavities that are
Tank Capacity: 3Ltr
difficult to reach
Size: 135X66X120cm
For buffing jewellery
Max Speed: 2800rpm
Single or double
Polishing OPDEL snc, Speed regulation:
14 4 3 5.52 place bench with
Bench Italy 800 – 2800 rpm
suction system for
Air flow: 2x600 m3/h
dust recovery
Dimensions:606 x660 Ideal for de-burring
Disc x1220mm of micro mechanical
OPDEL snc,
15 Finishing Total capacity: 9Ltr 2 0.5 6.16 parts and for
Italy
Machine Barrel speed: 0-450 rpm achieving a mirror
Motor speed: 1340 rpm finish

17
 Length: 11.80 in. This machine
Elma
Width:5.90 in. generates ultrasound
Ultraso Schmidbau
16 Depth: 5.90 in. 3 3 2.10 which clean
nic er GmbH
Volume: 5.7ltr jewelleries of each
Germany
corners and edges.
CNC
diamond Semi-automatic,
cutting multi axes CNC,
machine projected for
for lapping, faceting and
Faimondsrl Dimensions: cm 115x90x180h
17 decorati 2 3 40.00 decorating on rings
Italy Air feeding: 6 bar
on and bangles build
on rings, up in different
bangles shapes and
and dimensions
medals
This machine will cut
sheets as per the
Dimensions: 64.5x38x52.7 cm need of designing,
Laser
Laser-Source Type: multi-diode writing text on
Cutting,
pumped fiber laser 1064 ± 2nm jewellery and create
Marking orotigsrl,
18 Pilot lasers:2.4 mW, 635 nm, 1 0.5 18.50 extraordinary design
and Italy
diode-lasers (Class 3R) 3R class on sheets or
Writing
Pulse duration at 20khz: 70 ÷ jewellery while
Machine
120 ns ensuring the
accuracy by laser
technology.
Interior space: 580 mm x 510
mm x 230 mm
X-ray tube: 100 W This machine can
Spectro Oxford
PIN detector: 25 mm2 find out impurities
19 meter/X Instrument 1 0.5 27.00
Multiple collimators and accurate alloys
RF s plc, UK
Sample surface can be in gold jewllery
measured anywhere within the
focal range of 0.5 – 3.5 inches.
Dimensions: 52 x 73 x H50 cm
Type of Crystal: 6.3mmNd-YAG
Power impulse & Time: 60J at
The machine
15mS
Laser orotigsrl, successfully welds
20 Spot Size: From 0.3 to 1.5 mm 1 4 9.26
Welding Italy the broken joints of
Access controls External with
the jewellery
TFT 3,5” colour touch-screen
display

18
 Dimensions: 160x130x220cm
Average of refined alloy per
It is possible to
Gold normal working shift: over 12
Orostudio achieve a purity of
21 Refining Kg. 1 5 70.00
"Italy" treated metal close
Plants Numbers of working glass
to 99.99%
reactors: 02

Mettler-
Toledo
Weighin India
22 4 0.60 2.40
g Scales Private
Limited,
Mumbai
Electrific
23 - - 10
ation
Rs.471
Total 90 KW
lakhs
*above all the mention dimensions/sizes are in sequence of (w)x(d)x(h).

Also there is a need of Supporting Equipments like office & training room
setup,computers/printer, firefighting system, CCTV set-up andand safety lockers. The cost
of support service equipments, refer Annexure lV.

19
7. Other Project Details:

7.1 Utilities:

Power:

Electric power is a life support utility for machines. This will provide by Paschim Gujarat Vij
Co. Ltd. (PGVCL). The total connected load for common facility centre is 90 KW. The annual
electric charge is estimated at Rs. 10.32 Lakhs per annum at full capacity of utilization. The
details are given in Annexure VI.

Water:

The source of the water will be provided by Rajkot Municipal Corporation. Suitable
arrangement will be made for proper disposal.

7.2The Team:

The consortium will arrange necessary and skilled artisan/goldsmith operators for running
this common facility centre. The continuity of skilled workers are ensured by the
consortium.

Accordingly to organizational structure envisaged for the CFC General manger will be in
charge of the functions of the unit. Each floor needs an operation manager to accomplish
the task. There will be two designer needs for design and CAD/CAM operation, 10 high
skilled workers, 13 semiskilled workers, 10 unskilled workers and other staffs. The detailed
of salary and benefits are shown in Annexure VII.

7.3Plant Capacity Utilization:

The common facility centre will have operating time around 12 hours service per day.
Around 3360 working hours can be utilized from this tool room annually. Because of down
time and other various reasons,

The capacity may not be utilized fully from the day of operation starts and it is assumed less
than its installed capacity. The estimate is shown in below table:

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 1st year 2nd year 3rd year 4th year 5th year 6th year 7th year 8th year

65% 70% 75% 80% 85% 85% 90% 90%

The above estimate for capacity utilization is considered optimum in thistype of

manufacturing industry. The detailed of plant capacity utilization is shown in Annexure VIII.

7.4Miscellaneous Expense:

This item includes repair and maintenance of building, plant and machineries, cost of
printing and stationary items, insurance charges. Estimation of this cost is approximately Rs.
1 Lakhs. For detail refer Annexure IX.

7.5Preliminary and Pre-operative expenses:

These items include company registration, project preparation, building design and drawing,
technical consultancy fee etc. The preliminary and pre-operative expense required for
implementing the proposed project is shown in Annexure V.

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8. Financial Details:

8.1Financial Viability:

Assumptions:

The projected profitability of the unit is shown in Annexure XIV and is based upon the
following assumptions.

 All the machines and supporting equipments will be installed along with the
completion of building construction work in the one year time and from the next
year, here considered year 1, operations of the CFC will be started.
 The unit will be 12 working hours per day and the unit will work for 280 days in a
year.
 The installed capacity of the unit is 3360 service hours per day.
 The capacity utilization is at 65% during first year, 70% during second year, 75%
during third year, 80% during fourth year, 85% during fifth year, 85% during sixth
year, 90% during seventh year, 90% during eighth year.
 The main utility is power. The total power requirement is 90 KW. The power charge
is supposed to be Rs. 10.32 Lakhs per annum per annum.
 Repair & maintenance expenses are estimated at 2% on building and 2% on plant &
machinery.
 Detail of computation of depreciation is attached as Annexure XII & XIII. Straight line
method of depreciation is applied for project purpose. However, for income tax
purpose, written down value method is applied for.
 Administrative expenses are provided in the profitability estimate in Annexure XIV. It
includes rates & taxes travelling expenses, postage telephone & telegram, printing
&stationery and other office expenses.
 Income tax is provided considering the rates applicable to private limited company.
Computation of income tax is attached as Annexure XV.
 A corpus fund is raised form the profit of the common facility centre.

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8.2 Commercial Viability:

Following financial appraisals tools will be employed for assessing commercial viability of
the project:

 Return on Capital Employed (ROCE): The total return generated by the project over
its entire project life will be averaged to find out the average yearly return. The
simple acceptance rule for the investment is that the return (incorporating benefit of
grant-in aid assistance) is sufficiently larger than the interest on capital employed.
Return on excess of 25% is desirable.
ROCE = 29.31 %
 Debt Service Coverage Ratio: Acceptance rule will be cumulative DSCR of 3:1 during
repayment period.
NOT APPLICABLE AS THERE IS NO TERM LOAN ENVISAGED
 Break-even-(BE) Analysis: Break-even point should be below 60% of the installed
capacity.
Break Even Point = 51.58% for the 1st Year
 Sensitivity Analysis: Sensitivity analysis will be pursued for all the major financial
parameters indicators in term of a 5-10% drop in user charges or fall in capacity
utilizationby10-20%.
THERE WILL BE NO NEGATIVE CASH FLOWS ON ANY STRESS TESTS AS PER
THE ABOVE PARAMETERS
 Net Present Value (NPV): Net Present Value of the project needs to be positive and
the internal Rate of Return (IRR) should be 10%. The rate of discount to be adopted
for estimation of NPV will be 10%. The project life may be considered to be a
maximum of 8 years. The life of the project will be considered for this purpose needs
to be supported by recommendation of a technical expert/institution.

NET PRESENT VALUE @ 10% DISCOUNT FACTOR = Rs. 243.97 Lakhs

IRR = 18%

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8.3Key financial Indicators:

Return on Capital Employed

29.31 %
(ROCE)
Break Even Analysis (BEA) 51.58% for the first year

Internal Rate of Return (IRR) 18%

Net Present Value (NPV) Rs. 243.97 Lacs at 10% discounted rate

Payback Period 5.94 years

8.4 Implementation Schedule:

The implementation schedule will be decided by the SPV. There is requirement to form SPV
and make the contribution from SPV before acquiring the land and installation of plant and
machineries. Once SPV will be formed, they can decide the further implementation
schedule for the CFC establishment.

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9.Conclusion:

The cluster is desire for common facility centre, which will acquire latest technologies and
up-graded manufacturing process.The member of the CFC and other entrepreneurs will
take advantages to improve their products; this will greatly improve productivity & quality
of their job work and products. The CFC will standardize the jewelleries of Rajkot and will
give the standardize name /brand name as Rajkot’s jewelleries. This will also improve the
employment in the cluster as well as skilled manpower.

This CFC is practically an extraordinary facilitated, one of its kind in India. Cluster units will
take the benefit of this and become globally competitive.

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 Annexure 1

Format for Detailed Proposal for CFC

Sr No Particular Remarks
1 The basic details / documentation
I Name & Location of the cluster Gold Jewellery Manufacturing Cluster,
Rajkot
Ii Nature of activity and products The cluster manufactures produce
several types of gold and silver jewellery.
The manufacturing activity includes
melting/alloying, annealing, designing,
casting, polishing, soldering, testing &
hallmarking.
Iii Number & size (also in terms of Type of unit Nos.
installed capacity) of units Micro About 23500
units
Small About 1500 units

In the above mentionedunits; majority

are doing different operation in job
workas per the requirement of the
Jewellery, only few of the units have own
manufacturing process even though they
are depended on other units for some
operation of the manufacturing process.
They have ordinary machines for
manufacturing of Jewellery.
Iv Scale of investment (also in terms of Net Fixed Assets : Rs. 450 Crore
net fixed and important current Current Assets : Rs. 55 Crore
assets)
V Value of output in the last 5 years Enterprise Segment : Gold Jewellery
(different enterprise segment - wise), manufacturing items
including export output, if any Turnover table for last 5 years is
mentioned on pg. no.5 of DPR
Vi Projected performance of the cluster By establishment of this CFC, cluster will
after proposed intervention (in terms have excellent scope of growth in terms
of production, export/domestic sales of market, productivity and quality.
and direct/indirect employment, etc.) Projections for the CFC are mentioned on
Annexure XIV of DPR.
Vii Diagnostic study /comparative The diagnostic study was carried out
advantage benchmark survey (main from May 2012 – Aug 2012as a part of

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 findings) soft promotional skill. The project was
supported by Industries
Commissionerate, Govt. of Gujarat. The
important findings were:
 Cluster needs to improve their initial
stage known as melting/alloying of
gold and gold alloys; they are facing
loss while this process.
 The annealing process is not
uniform, due to this uniformity the
hardness of the sheets and wires are
improper.
 Waste of time during ball making
process, these causes lower
productivity.
 Not accurate method to identify
impurities in gold and gold alloys.
There are many finding of Diagnostic
Study,some of them are mentioned at
pg. no.12 of DPR.Separate DSR is also
enclosed herewith.
Above all findings can be lead to need of
CFC establishment, on successfully
implementation; cluster will not have
any above mentioned problems.
Viii Information on nature of critical gaps  Poor productivity and quality due to
identified (such as poor testing and lack of technology.
quality assurance facilities-item-wise  Poor testing of gold and gold alloys.
cost estimates)
Ix Implementation schedule *Proposed SPV is advised to prepare the
implementation schedule as per their
planning of land acquisition, building
construction and machinery
procurement.
Structuring of the SPV, such as copy *To be decided by proposed SPV.
of certificate of incorporation, articles
of association and letter of
agreement with stakeholders.
X Revenue generation mechanism for The CFC will provide the latest
sustainability of assets (service/user- technological services and will charge for
charges to be levied, any other-to be the same from the members. Revenue
specified) model for the same is mentioned in
Annexure-X of DPR.

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 xi Project highlights—
-Total cost of project Refer Annexure XXIII of DPR
-Contribution from cluster Refer Annexure XXIII of DPR
enterprises/stakeholders
-Average contribution by individual *To be decided by SPV
enterprises
-Grant in aid under MSE-CDP Refer Annexure XXIII of DPR
Term loans *The SPV may decide for term loan, if
they desire so.
-Debt-equity ratio & Repayment *As such there is no term loan, it is not
schedule and estimated debt service applicable. In future SPV may decide for
coverage ratio (DSCR) term loan, if they desire so.
-Annual estimated income, Refer Annexure XIV of DPR
expenditure gross and net profit at
expected/optimal levels of
operations
-Break even (BE) 51.58% for the 1st Year(refer Annexure
XIX of DPR)
-Internal Rate of Return (IRR) 18% (refer Annexure XVIII of DPR)
-Payback Period 5.94 years(refer Annexure XX of DPR)
Xii In-principle sanction of loan from a *Not applicable. (SPV may decide for
bank, if applicable term loan, if they desire so)
Xiii Previous track record of co-operative There are no such co-operative efforts
initiatives pursued by SPVmembers done by SPV in past and no CFC kind of
need to be highlighted with support facilities in the cluster by its
documentation stakeholders.
Xiv CFC may be utilized by SPV members All the members of proposed SPV and
as also others in a cluster. However, the other cluster units will avail the
evidence should be furnished with facilities of proposed CFC. On the basis of
regard to SPV member ability to that capacity utilization is calculated.
utilize at least 60 per cent of installed Please refer Annexure X of DPR
capacity
2 Elements of DPR
2.1 Plant and machinery
A List of Plant and Machinery Refer pg. No.15 of DPR
B Capacity of plant and machinery on Refer Annexure X of DPR
single shift basis
C Production pattern Refer pg. no. 20 of DPR
2.2 Annual requirement of raw materials Refer Annexure VIII of DPR
and consumables at 100% capacity
Utilization
2.3 Utilities and services at full capacity Refer Annexure VI of DPR
utilization

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 A Power for industrial purpose Refer pg. no. 20 of DPR
B Power requirement for commercial/ Refer pg. no. 20 of DPR
domestic purpose
C Water Refer pg. no. 20 of DPR
D Gas/Oil/ Other utilities Not Applicable
2.4 Site Development and civil Refer Annexure. 15 of DPR
construction
2.5 Organizational set up and man power Refer Annexure VII of DPR
requirement
2.6 Project cost Refer Annexure XXIII of DPR
2.7 Means of finance Refer Annexure XXIII of DPR
2.8 Working capital and margin money As there is no production centre, this
(actual capacity utilization year wise) only latest technology service centre;
there is no requirement of working
capital.
2.9 Cost of production (Projection for 8 Refer Annexure XIV of DPR
years of operation in tabular form)
2.10 Estimation of profitability Refer Annexure XIV of DPR
(projections for 8 years of operation
in tabular
form)
2.11 Cash flow statement (projections for Refer Annexure XIV of DPR
8 years in tabular form)
2.12 Debt Service coverage ratio Not Applicable
(Projections for 8 years)
2.13 Balance sheet & P/L account Refer Annexure XVII of DPR
(projection for 8 years)
2.14 Break-EvenPoint Refer Annexure XIX of DPR
3 Commercial Viability
I Return on Capital Employed (ROCE): Refer pg. no. 24 of DPR
Ii Debt Service Coverage Ratio
Iii Break-Even (BE) Analysis
Iv Sensitivity Analysis:
V Net Present Value (NPV):

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