The gift packing business can be a profitable venture as long as you know some general business tips and demonstrate skill in gift packing. You can start this business with very little capital investment in India--even from your home. The only requirement is your skill in the art of packing and the proper raw materials. If you want to set up a full office or commercial establishment, then you need to follow the rules laid out in the Government Regulations Act for small-scale industries. If you don’t have enough capital, you can begin with a home-based business. You can pick an empty room in your house and convert it into a home office or you can build an extension. Inside the home office, you put display racks for the wrappers and other supplies. You should have a sitting area for the customers and a table where you can wrap the gifts. Once you decide to expand, you can now look for a store space and add certain items that are suitable as gifts like stuffed toys, picture frames, and many others.
STARTING A GIFT WRAPPING BUSINESS – LOCATION
A large worktable is all you need for starting a gift wrapping business. Any corner of your home, such as space set aside in your living room, will do nicely.
You can also turn your garage or attic into a work area during peak holiday seasons.
If your home is too cramped, you can travel to your customers’ homes to do up their gifts there. You can even hire a van and set it up as a mobile work area. This way you can travel to the location and still have an organized work area for business.
Some enterprising gift wrappers get into an agreement with local gift stores and malls to set up their businesses there on a temporary basis. This way you will be getting a steady stream of customers who will be loaded with gifts of all kinds. They will only be too happy to have someone at the store wrap their gifts for them.
PROMOTING THE BUSINESS
While you can wrap gifts for occasions such as anniversaries and birthdays all year round, the peak season is during holidays and festival times. By promoting your business, you can ensure that you do not miss customers at these times of year. The gift wrapper should advertise well before the seasons start.
Use geo-based (i.e. local) internet advertising where available and stick handmade posters in shop windows to let people know that they can get their tedious wrapping done by your business for a small fee.
SUPPLIES
The nice part about gift packaging is that you can start out with little money – gift wrapping supplies are not too expensive. Obtain a variety of gift wrapping paper, as you will need to wrap gifts for people with different kinds of tastes.
Have children wrapping paper, a business gifts wrapper, wrappers with religious motifs, and wrappers with cute designs. Variety is key!
Source supplies from a crafts store or gift corner, as you will find a good range of packaging at these places. Also be sure to have a stick of glue, a pair of sharp scissors, and plenty of tape handy. Gift boxes are also necessary, because many people will hand you an item that needs to be boxed before you can wrap it. Don’t forget the name tags!
If you want to stand out from your competition, use special supplies to stand out above other gift-wrapping services. You can consider using some of the following:
Place card holders
Handmade paper
Fancy ribbons and textiles
Handmade gift bags
Acrylic papers
Handmade tags
Embossed papers
Starting a gift wrapping business is fairly easy. Creativity and hard work during the peak seasons will see your business booming in no time at all. Whenever an object is given in the form of a gift, it is usually presented with the finest presentation which not only glorifies the values of present but also the true emotions of the sender.
In many cultures, gifts are traditionally packed. They not only represent one’s love but also the local culture. It is therefore vital to wrap the object in such a manner that it portraits clearly the image of sender’s sentiments. People who are short of time or want professional touch to their gift wrapping can leave their items for wrapping.
If you are looking to start a small business with little investment, Gift wrapping business can be rewarding. To get started, all you need is to put your ideas and crafting skills into good use. These ideas of yours can provide you with a lot of earnings especially during gift-giving seasons and special occasions. This is a golden business opportunity, with little money and effort you can get your business running and can make hundreds as a professional gift wrapper.
To get started with running this business you need to have a good business plan. Even running a small business requires a business plan. After making a rough sketch of plan, get hold of little investment and get along with grabbing the material you require for wrapping. Since most of the things required for wrapping can be fetched from a single shop only, try to get hold of a vendor who can provide you all these. By this you not only save your time but also your money as you can easily get good concessions from a single vendor rather than multiple.
The interesting part about gift wrapping business is that you can start out with little money as the gift wrapping suppliers are not too expensive. Obtain a variety of gift wrapping paper which should be used on all the occasions like, a business gift wrapper, gift wrapper for birthdays, anniversaries, religious motifs.
The key to success in this is VARIETY. If you can cater for all the occasions, you will definitely end up having a big list of customers. Beside simple wrappings, you can also add add-ons to your packing, like ribbons, flowers, cards, or other handmade items including stuff toys. These items can either be handmade or are available on cheap rates. This not only adds beauty but also glorifies your presentation skills, thus making the gift more presentable.
LOCATION
The next factor that comes into consideration is the location of your setup. Generally this business does not require any large workspace. It can be easily be setup in homes. You can even turn your garage into a work area during peak holiday seasons. Another option is that you can travel to customer’s home to do up with gift wrapping. You can even hire a van and set it up as mobile work area. In this way you not only can travel to location but also provide good customer support at the comfort of their homes.
It is sometimes advantageous if you get into agreement with local gift stores or malls to setup your business there on a temporary basis. This way you will get steady stream of customers who will be loaded with gifts of all kinds. On the other hand they will only be too happy to have someone at the store to wrap their gifts for them. You should contain a list of all these customers and vendors whom you are willing to purchase the material from.
BUSINESS TATICS
Wrapping gifts for occasions is all year round work, the peak season of it can be during holidays and cultural festivals. By availing these events you can not only promote your business but can also ensure that you do not miss any customers. The advertisement for your business should be done well before the season starts.
The mode of the advertisement can be through newspaper, posters, or through internet. On internet you can take advantage of social websites and blogs for spreading your advertisements. Likewise shopping malls, gift stores and public places should be targeted as these places have more customers for gift wrappings.
Another factor that should also be considered is the pricing. Adjust your pricing scale according to the location and time. Like in urban or big shopping malls you can aim for higher prices as the customers can easily afford expensive gifts and their packing. Similarly at the time of events or festivals prices should be introduced that should be little higher than usual, as lots of people will want their presents wrapped at the time of event. Many customers will come at the last minute for gift wrapping; this time can be easily cashed in the form of higher charges or urgent services charges.
In the end the key to success in this business is how to study the sentiments which customer wants to express and how can you make it more beautiful enough that speaks the heart out of the sender.
Gold has given positive returns for the past 12 consecutive years, going up from Rs.500 per gram to Rs.3000 per gram. Recently, Gold fell more than 9% in a single day and is been falling since then, leading us to believe that the gold run may have been over for now.
Investors often seek guaranteed and safe returns and seeing the price of gold rise continuously over the previous years, they would have been led to believe that the price of gold would never crash. However, this is not the case and prices do correct after giving such big returns over the years.
The reasons attributed to fall in gold prices are dip in demand, rising speculative activity and increased participation in equities. Equities all over the world have performed well, despite the gloomy economic climate.
There are not many reasons for gold to remain as a good investment. Only reason that we could find is the slowing down of the perception of global economy, which make investors to park their funds in gold.
So what should retail investors do?
As we have saying in previous posts about gold, investments should be limited to 5-10% of one's portfolio and that too Gold ETFs are preferred ones. Avoid trading in commodities or investing in physical gold (unless it is for jewelry purposes) and limit your investments in gold.
The issue is ‘Offer for Sale’ and no fresh equity will be generated.
Industry Profile
Indian advertising market has generated revenue of Rs. 256 billion in 2011 and by 2015 it is supposed to grow to Rs. 370 billion at a CAGRof 9.6 %.
Local search market comprises of online (localized portals using web, phone and mobile portals) and offline (print directory and phone based searches) search services.
The players in the local search services include Just Dial Ltd., Asklaila, Burrp,Getit, infomedia18,Metromela,Onyyomo,Sulekaha and Timescity. Many of these companies provide both online and offline search services.
Classifieds is a distinct type of advertising medium and in years to come online classifieds shall surpass their offline counterparts but low presence of vernacular language in online classifieds hinders its growth to some extent.
Company Profile
Just dial, incorporated by Mr. V.S.S Mani in 1993 as A&M Communications Pvt. Ltd., is a leading search services provider in India which provides its services through multiple platforms like internet, mobile internet, telephone (voice), text (SMS).
The company started offering its search services in 1996 under the Justdial brand and launched its internet and mobile services in 2007. Just Dial Ltd. has a database of approximately 7.7 million listings (June 2012 figure).
If someone has to find the umbrella retailers or stationery shops in a new city, he can either call Justdial’s easy-to-memorize no. 08888888888 or make a search at Justdial’s portal; even if one does the Google-search Google usually displays the listings by Justdial on the first page.
Strengths
·A myriad of Google-searches ‘Just Dial Ltd.’ results on the first page. For Manykey words Justdial tops the result list
·Just dial is among a few companies that pioneered the business of local search services
·Just dial provides both online and offline search services efficiently
Just Dial Ltd. brand boasts strong brand equity. The company had roped Amitabh bachchan to promote its brand.
Concerns
1.Criminal proceeding against the company and some of its employees including MD and a few directors is not a good omen and raise question on its corporate governance. Some grave allegations of unlawfully deducting money and signature forging are worrisome as it could lead to customer dissatisfaction and could end up in a business loss
2.The company is highly technology-driven and any major technological failure or company’s inability to keep itself abreast of the latest developments in technology could adversely affect its profitability
3.This sector is highly competitive – there are many competitors like OLX.in, quicker.com, sulekha.com etc. Some of these names may belong to little different domain but they compete Just Dial Ltd. for the space in the result list of search engines.
4.Company’s promoters and principal shareholders have a vested interest in a group company called, JD Global, which is involved in the same business in USA and Canada through its subsidiary JD USA. Just Dial Ltd. has sold its equity interests in JD USA and there is no no-compete-clause between the two entities. This may prove as a hindrance to growth in case Justdial enters this market.
5.Promoters and principal shareholders own almost 100 % equity in JD Global and this poses following threats-
a.There may be a conflict of interests in future due to the absence of no-compete-clause between JD Global and Just Dial Ltd.
b.There may be a spooking threat of promoters siphoning money from Just Dial Ltd. into JD Global (also refer point 8) – a deadly vulnerability as promoters hold only 37 % (post issue 33 %) equity in Just Dial Ltd. while they own quite a chunk in JD Global
7Just Dial Ltd. depends significantly on search engines that are also its competitors. Just Dial Ltd. has made arrangement with search engines through ad campaigns and pay-per-click programme. Any breach of rapport between Just Dial Ltd. and search engines could wreak havoc on its profitability.
8Jusdial’s cancelling of its preference shares worth Rs. 72.48 crore in JD Global followed by adjustments resulting in a decrement in its net worth by Rs. 72.5 crore in the name of streamlining the business operations (of both entities) raises concerns
9Recessionary period has seen a decline in the ad-spending by Justdial's customers resulting in a loss of income
10Auditors have found slew of discrepancies in past few years
11Top 11 largest cities contributed for 85 % of total campaigns with the company and a major chunk of revenue comes from these cities. Mumbai and NCR contribute for around 37 % of campaigns. Any sort of upheaval or turmoil in these cities could adversely affect the revenue of Just Dial Ltd..
12ESOP to some employees was done at less than one-fifth of the present price band. Amitabh Bachchan, a well-known Indian celebrity who had promoted the brand Just Dial was issued 62,794 shares at just Rs. 10 per share, this shows how steep valuations of this IPO are!
Financial Analysis
# All calculations at the cap-price for retail investors i.e. Rs. 496 (considering the retail discount) and hence are different from the same for other investor categories
## for information purpose only as in FY 12 Just Dial Ltd. sold its shareholding in JD USA and thus comparison with the past may not be meaningful
Parameter
FY 13 Annualized
FY 12 ##
Basic EPS
Rs. 8.8
Rs.7.2
Book Value
Rs. 57.9
Rs.14.8
P/E
56.6
68.5
P/B
8.6
33.5
NPM
17%
18%
Profit CAGR(3 years) ##
47%
89%
PEG
1.2
.8
Debt/Equity(exhaustive)
.4
1.4
ROE
15.1%
48.9%
EV/EBITDA
37.63
48.3
Current Ratio
3
1.4
M-Cap/Sales
9.6
12.6
The Analysis
·Believing the authenticity of the financials shown in the prospectus, fundamentals of the company seems satisfactory. But the net worth of the company becoming almost 4 times in FY 13 (in just 9 months) of the same a year ago (FY 12) is difficult to believe.
·Price to earnings ratio is on higher side but 3-year profit CAGR justifies the PEG ratio. But if in future Justdial fails to maintain this growth, its valuation shall erode greatly
·The biggest threat to such companies is from search engines like Google,Yahoo and Bing. An internet user’s first choice for doing a local search will be Google(with around 70 % search share) and presently Google shows the listings from Justdial. But, in future if Google enters in this niche-market or stops showing listings from Justdial or even restricts its listings to later pages, it shall affect Justdial adversely.A Smartphone user is more likely to search his needs on a search engine rather than either opening the portal of Justdial or giving a call to Justdial. There is very high probability that in future Google will try to grab this lucrative market.
·As more and more SMEs and small traders going for their own web presence,they may not go for paid-advertising with Justdial. Besides, this may also result in the reduction of the site users.
·Company being an almost debt-free company enjoys an edge over its competitor
·Related party transactions as discussed in ‘Concerns’ are worrisome
·The issue being an offer for sale, proceeds of the issue shall not come into the company to benefit it.
Inference
This IPO being highly priced and due to the underlying concerns, is a risky proposition. Though high price-to-earnings ratio can be justified by the present profit CAGR but it is doubtful that this growth shall be maintained in future especially under the looming threat of the growing prowess of search engines. This issue may not be suitable for risk-averse value investors but success of an IPO is determined not only by its underlying value but also by the market sentiment, overall liquidity condition and the euphoria about the issue. Those who have understood the underlyingrisks and are ready to take the risk may go for the issue as due to retail discount and the prevailing market sentiments there may be chances of listing gains in this issue.
Disclaimer
Analysis is for the information purpose only. Though due care and caution have been taken while preparing this report, analyst shall not be responsible for any error and shall not bear any financial liability to the users of this report.
Amid the global financial turmoil Indian economy too is reeling under pressure and the main reason being attributed for the same is higher borrowing cost arising due to higher prevailing interest rates.
Higher interest rates are badly affecting the profitability of Indian companies and forcing them to defer the capacity expansion which is a must for the growth of the economy.
Besides oversees recession, higher interest rates are responsible for the slowing of the Indian economy which is being reflected by falling GDP numbers.
Image source: tradingeconomics
RBI or Reserve Bank of India-the Indian central bank, controls the interest rates in the country by its monetary tools viz. Policy Rates and ReserveRatios.
One of the major constituent of policy rates is the Repo Rate – the rate at which the RBI lends to commercial banks. Reverse Repo Rate –the rate at which commercial banks park their excess capital with the RBI- has been fixed at 100 basis points lower than the repo rate.
1 basis point is equal to .01 percent.
Recently on May 3, 2013, RBI governor slashed the repo rate by 25 basis points to 7.25 % and thus Reverse Repo Rate got automatically calibrated to 6.25 %.
Banks are not only demanding for the further slashing of repo rate but they want CRR to be slashed as well.
CRR or Cash Reserve Ratio is the fraction of deposits that banks need to park with the RBI and no interest is payable on it. CRR too is expressed as a percentage.
The current CRR rate is 4 % that means all banks shall necessarily have to park 4 % of their deposits with the RBI and as there is no interest payable on it, it acts as an idle capital for banks.
Banks want RBI to slash the CRR along with the repo rate so that they can reduce the lending rates.
The other option available with banks is reducing the deposit rates and as banks are already short of the capital this option is not viable.
The reason for the shortage of the capital was due to the fabulous returns that Goldand real estate market generated in past several years pulling investors’ money from the banks and deprived banks of the capital. This is the reason responsible for the higher deposit rates of banks –a measure to attract the deposits.
Now the question is why RBI is not slashing the CRR and Repo Rate?
And the answer is -the fear of raging inflation. The RBI governor is very cautious about it and this is why he is not slashing the rates liberally.
The Indian economy is already under pressure due to the twin deficit- Fiscal Deficit and Current Account Defict (CAD). Higher CADresults inweaker currency and weaker currency further boosts the inflation. When CAD rises beyond a limit, credit-rating agencies downgrade the economy. Lower credit rating means newer debt at higher cost and this is how economy goes into a negative spiral.
Is there any silver line?
The recent fall in Gold was a great solace for the Indian economy as the same helped to tame the increasing twindeficit. In coming years, with more and more power plants adding capacities more imported coal shall be required which might aggravate the deficits.
Indian government needs to decontrol the diesel prices fully and major subsidies (oil, fuel & fertilizer) should be transferred directly into the Aadhar linked bank accounts of beneficiaries so that only genuine and needy people get benefited.
Government should also cut down on its expenses in the name of populist measures. Higher government spending increases the CAD and is responsible for higher interest rates in the economy as it renders lesser borrowable money in the system for the businesses.
The oncoming food security bill is supposed to give food security to 65-70% of the population while only 33 % of people in India live below the poverty line and only these people should be given benefits of this scheme. In the backdrop of employment guarantee schemes there was no need of extending the benefits to 65-70% of people and unnecessarily strain the economy.
To bring back the Indian economy back on the track a lot of reforms need to be done but having a look at the present political scenario it seems difficult.
