AHMEDABAD (Commodity Online): With Pushyanakshtra, Dhanteras and Diwali round the corner, jewellers in India have started reeling out their products to beat competition from the banks and other big brands.
In fact, this time around the jewellers have started selling imported gold and silver coins to customers, causing a big competition to the banks.
And, certain jewellers are now offering the coins at lower price than the banks. Some of them have even announced some schemes with the gold and silver coins.
Banks like Corporation Bank, Axis Bank, IndusInd Bank, ICICI Bank and HDFC Bank sell coins through their branch network.
Eyeing the big gold coin pie, jewellers in India’s commercial capita Mumbai and Gujarat’s big city Ahmedabad have imported Swiss-made coins, which will be in big demand during the festival season.
Several jewellers have already started selling coins. Since the jewellers sell the coins at a lesser price, banks are finding it tough to face the competition.
Imported coin sales are up 20 per cent this year. India, the world’s biggest importer of the yellow metal, accounts for over 20 per cent of global demand for gold jewellery.
Even though investment-led demand accounts for 30 per cent of gold sales, it is growing faster than the jewellery segment in India now.
Gold coins and bars are better form of investment because one can save on wastage and making charges.
HDFC Bank quotes Rs 18,933 for a 10 gm gold coin, while an Ahmedabad jewellers quote Rs 16,750.
This is a big challenge to fight small jewellers (in coins market) as they have many advantages because of their small scale. Another big disadvantage is banks cannot buy back coins, which again works in favour of jewellers. In fact, several jewellers who buy back the gold coins, sell them at a profit but still the price will be much lesser than the banks.
Banks incur huge holding cost and distribution cost, pretty much higher than the market.
The organised retail market, which is dominated by banks, sells 8 tonnes of coins per year, according to a bank source. However, the market for coins and bars is much larger.
India imported 211 tonnes in 2008 for gold bought as investment, while jewellery was at 501.6 tonnes.
