Coimbatore: Demonetisation, GST (items and services tax) and a bunch of different regulatory measures has resulted in the jewellery sector getting organised. Though India’s jewellery marketplace has remained flat at Rs 2.7 lakh crore a year between 2013-14 and 2017-18 as both volumes and costs have remained stable, large organised jewellers have registered a CAGR (compounded annual growth rate) of 11% all over the timeframe.
The marketplace share of 17 large organised jewellery chains is estimated to have grown from 23.2% in 2015-16 to 29.2% in 2017-18. The most sensible six jewellers in India alone account for 4%-5% of the BIS-listed jewellery stores and command about 20% income marketplace share (RMS) now.
“Given their (most sensible six jewellers) bold growth (plans) over the following five years, RMS-to-store ratio is predicted to increase further. We expect them to account for almost one-third of the home consumption (jewellery plus funding) in India through 2022-23,” Jay Gandhi and Rohit Harlikar of HDFC Securities said.
The 2nd round of laws, which kicked in from 2014, has decisively been in favour of organised jewellers. While the 80:20 import rule was revoked in November 2014, the ban of gold on hire was completed away in February 2015. The cap on gold deposit schemes also has been revised upwards to 35% of net value all over 2016-17.
The mandatory hallmarking, which is likely to be carried out quickly, may be expected to help the shift of customers from unorganised to organised jewellers. Industry dynamics have oscillated from being beneficial to unorganised jewellers (between 2012-13 and 2014-15) to being beneficial for organised jewellers (from 2014-15 onwards) due to a spate of regulatory interventions.
Multiple damaging laws such as the ban on gold on hire in July 2013 and the imposition of the 80:20 import rule in August 2013 had critically impacted the financial health of organised jewellers as operating capital needs and because of this debt larger.
Jewellers had to buy gold upfront. This bloated up the capital hired and put the returns profile of jewellers below force. The capping of gold deposit schemes to 25% of net value and the passion that can be paid on such schemes in April 2014 further added to the woes of organised jewellers.
The most sensible 17 jewellers in the nation would sign up a 12% CAGR between 2017-18 and 2022-23, estimates made through HDFC Securities confirmed. They would gain a 2.5% marketplace share yearly on an average all over that period. With this, their share in the jewellery industry is predicted to touch about 42% through 2022-23 at the back of an aggressive growth power, design might and increasingly more aggressive pricing vis-à-vis unorganised jewellers.
“Our interactions across jewellery chains and mom-and-pop jewellers across India suggests that whilst hallmarking isn't but mandatory, customers are increasingly more insisting on hallmarked jewellery,” Gandhi and Harlikar of HDFC Securities said.
“This has larger the cost of procurement for jewellers and the nearly 25%-30% pricing arbitrage between jewellery chains and standalone jewellers is shrinking,” they said.
The marketplace share of 17 large organised jewellery chains is estimated to have grown from 23.2% in 2015-16 to 29.2% in 2017-18. The most sensible six jewellers in India alone account for 4%-5% of the BIS-listed jewellery stores and command about 20% income marketplace share (RMS) now.
“Given their (most sensible six jewellers) bold growth (plans) over the following five years, RMS-to-store ratio is predicted to increase further. We expect them to account for almost one-third of the home consumption (jewellery plus funding) in India through 2022-23,” Jay Gandhi and Rohit Harlikar of HDFC Securities said.
The 2nd round of laws, which kicked in from 2014, has decisively been in favour of organised jewellers. While the 80:20 import rule was revoked in November 2014, the ban of gold on hire was completed away in February 2015. The cap on gold deposit schemes also has been revised upwards to 35% of net value all over 2016-17.
The mandatory hallmarking, which is likely to be carried out quickly, may be expected to help the shift of customers from unorganised to organised jewellers. Industry dynamics have oscillated from being beneficial to unorganised jewellers (between 2012-13 and 2014-15) to being beneficial for organised jewellers (from 2014-15 onwards) due to a spate of regulatory interventions.
Multiple damaging laws such as the ban on gold on hire in July 2013 and the imposition of the 80:20 import rule in August 2013 had critically impacted the financial health of organised jewellers as operating capital needs and because of this debt larger.
Jewellers had to buy gold upfront. This bloated up the capital hired and put the returns profile of jewellers below force. The capping of gold deposit schemes to 25% of net value and the passion that can be paid on such schemes in April 2014 further added to the woes of organised jewellers.
The most sensible 17 jewellers in the nation would sign up a 12% CAGR between 2017-18 and 2022-23, estimates made through HDFC Securities confirmed. They would gain a 2.5% marketplace share yearly on an average all over that period. With this, their share in the jewellery industry is predicted to touch about 42% through 2022-23 at the back of an aggressive growth power, design might and increasingly more aggressive pricing vis-à-vis unorganised jewellers.
“Our interactions across jewellery chains and mom-and-pop jewellers across India suggests that whilst hallmarking isn't but mandatory, customers are increasingly more insisting on hallmarked jewellery,” Gandhi and Harlikar of HDFC Securities said.
“This has larger the cost of procurement for jewellers and the nearly 25%-30% pricing arbitrage between jewellery chains and standalone jewellers is shrinking,” they said.
Demonetisation, GST helping streamline jewellery business
![Demonetisation, GST helping streamline jewellery business]()
Reviewed by Kailash
on
June 26, 2018
Rating:
