Author: Paul Ploumis17 Apr 2015 Last updated at 08:27:03 GMT
NEW DELHI (Scrap Monster): The medium to long term prospects of Indian gold jewellery industry looks bright, suggests the latest study report published by renowned credit rating agency, ICRA. As per the report, the gold jewellery sector in the country is poised to grow robustly at 8%-10% over medium to long term. The organized sector players are likely to expand their presence all over the country.
In the near term, gold volume growth will remain extremely robust. The agency foresees several reasons behind the rise in domestic gold volumes. Firstly, supply concerns are likely to be eased, thanks to increased gold imports and recently announced gold monetization schemes. Re-introduction of gold metal loans will further improve the gold availability in the country. Notable improvement in consumer sentiments and aggressive expansion plans by organized retail players are the other key factors that may drive demand growth, ICRA notes.
Organized gold retailers are likely to post moderate improvement in same store sales growth and revenues. ICRA forecasts that organized retailers may gain more market share through penetration into Tier-II and Tier-III rural markets, which currently are dominated by unorganized players. Improving demand prospects in rural India will lead to better sales and profitability for these companies.
The ICRA study report points out that gold jewellery volume in India posted strong growth of 8% during CY 14. The demand had dropped 14% over the year during the first half of the year. However, the demand growth recorded significant jump of 37% during H2 CY 14. The fourth quarter of the year alone witnessed 19% growth in gold demand when compared with the corresponding quarter a year ago.
According to ICRA, the supply side of gold looks strong, which in turn may reduce the inflow of the yellow metal through unofficial channels and sourcing from recycled gold. However, the prevailing high import duty on bullion is feared to cause some gold imports through illegal channels.
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