Gold jewellers on expansion spree

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Gold jewellers seem to be on an expansion spree and are intent on showering various offers given the uncertainty over sales and following the severe measures by the Government to discourage gold buying. While Kalyan Jewellers plans to open 15 new branches in North India and the United Arab Emirates, with an investment of Rs 1,300 crore, Gitanjali Gems recently launched its 100th store in Gurgaon and plans to add 50 more by the end of this fiscal.
Tara Jewellers has also recently launched six new stores in Bhatinda, Jalandhar, Jaipur, Jodhpur, Ludhiana and Udaipur, taking its total stores to 36 in 25 cities. T.S. Kalyanaraman, Chairman and Managing Director, Kalyan Jewellers, said that with more consumers posing faith in branded jewellery and given the encouraging response in Mumbai, the company is now targeting Delhi, Uttar Pradesh, Punjab and Rajasthan, besides opening five outlets in the UAE.
“We will raise money from banks and dip into internal accruals for the proposed investment. We expect our turnover to touch Rs 13,000 crore this fiscal against Rs 10,000 crore achieved last fiscal,” he added.
Asked about the sharp fall in gold prices and loss incurred by jewellers with regards to their inventory, Kalyanaraman said that the company’s conscious decision not to buy gold using bank credit, but instead to use the overdraft facility offered by banks, has saved it from similar problems being faced by other jewellers. “We buy gold only from State-owned MMTC. Buying gold through the overdraft facility may be 10-15 per cent costlier, but we still do it because we do not want to take any risk. For instance, if we sell jewellery worth Rs 50 lakh today, we buy gold worth the same amount the next day,” he said.
 Old Gold
Leading jewellers are also running schemes to attract old gold jewellery and coins from customers. While this will ensure adequate supply of the yellow metal for jewellers, with the Reserve Bank of India making gold imports costlier, it will also bring out some of the around 20,000 tons of gold estimated to be lying in Indian households. Santosh Shrivastav, Managing Director, Gitanjali Jewels, said that the company melts the old jewellery in front of the customer, and pays up 100 per cent value of the gold recovered.
“In the conventional method of buying back gold, there is no transparency, and customers end up with 5-8 per cent lower value for their gold,” he said. In terms of offers, Tribhovandas Bhimji Zaveri has come out with a mangalsutra festival in Maharashtra, with a making charge of Rs 99 a gram.
The retailer has also waived off making charges for diamond jewellery in Andhra Pradesh and Kerala, for a limited period.

Source: Hindu business line.
Source: Bullion Bulletin

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