Even as gold prices have fallen 22 per cent from their all-time high levels touched in mid-2013 and have remained low for a prolonged time — down 4.4 per cent in 2015 year to date — the volume growth of many Indian jewellery companies has not seen a major pick-up. 

For example, volume growth of India’s largest jewellery retailer, Titan Company, was zero per cent in the September 2015 quarter following a decline of 4-6 per cent in the December to June period.

 

Mid-sized player Tribhovandas Bhimji Jewellery’s same-store sales growth in value terms was flat at 0.9 per cent year-on-year in the first half of FY16. The company derived about 77 per cent of its revenues from gold jewellery in this period.

 

Competition has gained momentum and has impacted making charges — a major driver of revenues that is calculated as a percentage of gold prices. An analyst said Titan has cut its making charges and the same is closer to that of its competitors now.

 

Both these factors are a risk to the topline growth of companies going ahead. The festive season has got over and there is no significant trigger for buying gold or gold jewellery.

 

“There is a shift in asset classes and equities are giving higher returns than gold. There is no chase for gold. Also, volume growth is subdued across all consumer products,” said an analyst who did not wish to be quoted.

 

Stock prices of many companies have not seen a positive reaction even as gold prices have declined. The stock prices of companies such as Titan Company, Shree Ganesh Jewellery, Tara Jewels, Gitanjali Gems, Shrenuj and Company, Tribhovandas Bhimji Zaveri, and Vaibhav Global have declined 3-64 per cent in the last one year.

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