70 days on, jewellers in Mumbai to up shutters
Jewellers are betting big on a revival in sentiment, with shops i n Mumbai set to reopen on Friday after nearly 70 days of the lockdown. Some have already resumed business in other regions of the country.
While initial business will likely be focused on redemption of old jewellery for cash, jewellers also expect customers to buy fresh jewellery in return, given the pent-up demand pertaining to deferred wedding ceremonies.
In Mumbai, j ewellers will start with an odd-even formula, in which shops on the same side of the street will open on alternative days. The i nitial days could see more customers coming t o sell jeweller y/gold i n exchange for cash.
“Now, consumers will visit stores to sell old ornaments for cash. While rural farmers will use the cash to purchase seed and fertilisers for kharif sowing , urban customers will use cash for credit card payments and school fees, etc. Therefore, the market will see some selling pressure,” said Kumar Jain, director of Umedmal Tilokchand Zaveri, a bullion dealer and jewellery retailer in Zaveri Bazaar.
Jewellery stores in green belts such as Bengaluru, parts of Pune, West Bengal, northern states, and north-eastern states had reopened weeks ago. With the reopening of stores in Mumbai, rollover of gold and jewellery into the country will increase and, consequently, business across the value chain will gather momentum.
Owing to the lockdown, the peak buying period comprising the wedding season, Chaitra Navratri, and Eid was a washout.
“We may see redemption that was on hold due to the lockdown. Along with exchange of old gold, consumers also buy ornaments with additional grammage of new gold. Therefore, we estimate demand to revive despite a lean buying season,” said Rajiv Popley, director of Popley & Sons, a city based jewellery retailer.
Wedding-related demand is expected to be of low caratage. “There will be no downside in jewellery buying at this level. There will be recovery even during the current lean season, as supply from the key Mumbai market will start the ball rolling across the value chain,” said Surendra Mehta, national secretary of the India Bullion and Jewellers Association (IBJA).
Meanwhile, jewellers are facing margin calls on gold metal loans due to appreciation i n prices. Standard gold prices rose to ~46,225 per 10g on Thursday, from its level of ~42,078 per 10g just before the lockdown.
However, Ananth Padmanabhan, chairman of All India Gems and Jewellery Trade Federation, believes jewellers will use the stock they had built for sale before lockdown.
“Jewellers will clear old stock and go slow on new manufacturing. Also, skilled workers have migrated back to their native place, which will impact manufacturing,” said Padmanabhan.
Jewellers have paid ~4,500 as one-time help to skilled workers, and arranged for travelling to their native place. Jewellers are planning to offer higher salary and incentives to bring them back to jewellery making.