While consumers are advancing purchases to take advantage of the price crash, retailers and manufacturers too are making the most as the gold which they had leased will yield more.
Most jewellers source gold either as outright purchase (held as inventory) or lease it from nominated agencies (14 banks as identified by the Reserve Bank of India). The usual inventory holding period ranges from 100 days to 150 days. If the sharp price correction of gold continues, it may to lead to inventory write-offs for jewellers who purchase outright.
“We are not worried about inventory losses. We usually take gold on provisional basis and the capital has been freed. The price crash will yield us more on the same price,” Sanjeev Bhatia, Chief Financial Officer, P. C. Jeweller, said. The retailer has said it consumers have been preponing jewellery-buying in nearly a decade.
Gitanjali Jewels, which has one of the largest retail network pan-India, also pointed that the nearly 15 per cent drop in retail prices is causing a near-frenzy in the retail market. “Offtake has gone up by almost 40 per cent and walks-in have also increased similarly,” Sanjeev Aggarwal, Gitanjali Exports Corporation, said.
The gold buying frenzy is not just restricted to offline retailers. Online players such as Bluestone have reported strong demand.
“Volatile prices had kept buyers away. We are seeing that the average ticket size is also increasing. Consumers are buying and the demand is trickling in from both metros and non-metros,” Gaurav Singh Khushwaha, Founder and MD, and Bluestone.com, said. The PE-funded online jewellery portal said that rings and earrings are the fastest moving and consumers have warmed up to the idea of buying jewellery online.