Gold seems to have lost its sheen in the recent floods, with the jewellers in the State witnessing a dent in demand.
“The overall picture is very bad as the sector has registered a 20-30 per cent sales drop. Besides, floods have impacted operations of many of the jewellery manufacturing units in and around Thrissur, affecting the sales in a big way, B Govindan, president of All Kerala Gold and Silver Merchants Association, said.
Rain havoc
Thrissur is considered the Gold Smith hub. Shortage of workers due to floods have affected the timely availability of work orders given for ornaments manufacturing for Onam festival and the wedding season. The sector was expecting a good sale this year on account of various positive factors. But the rains have dampened the hopes, leading to a sluggish demand, he said.
The rural demand was also down as the devastating floods have impacted the farming community. Last year, the gold sector’s national contribution of VAT was ₹2,600 crore and of this, the Kerala’s share was ₹639 crore, he said.
According to PC Natesan, general secretary, All Kerala Gold and Silver Merchants Association, the sector was on a revival mode in the last three months after recovering from demonetisation and GST related issues. With a positive trend and stabilising rates, the jewellers were expecting brisk business.
Last year, business during this season was around ₹5,000 crore and the sector is expecting a 20 per cent growth this year. However, the floods have played spoilsport and the situation is likely to be grim throughout the year, he added.
Gold, according to him, is generally considered as an asset and farmers use the sales proceed of their harvest to buy jewellery. But this year, the extensive crop loss in the production centres of Wayanad and Idukki will have an impact on sales. Last year, the gold sales in southern States was in the range of 268 tonnes, valued at ₹83,616 crore. Of this, Kerala’s contribution was 10-12 per cent, he said.
National trend
Somasundaram PR, Managing Director (India), World Gold Council, pointed out that India’s gold demand in Q2 2018 was 187.2 tonnes, 8 per cent lower than the strong Q2 in 2017, when consumers rushed to make advance purchases ahead of the GST rollout. A strong Akshaya Tritiya and wedding season boosted demand at the start of the quarter but the onset of ‘Adhik Maas’, which is considered inauspicious, and a rising Indian rupee price in spite of softening international prices kept the quarter range bound.
The short-term disruption has started to wane with industry transitioning well across the spectrum. For the second half, good monsoons and the festive season, aided by the government’s effort to boost farm incomes, will revive the demand, he said.