Gold Jewellery: The craze of people for gold in India is not hidden from anyone. Whether it is women’s love for jewellery or men’s investment in investment options like gold bars, gold bonds, gold ETFs, the purchase of gold is increasing every year in the country. Now the hope of further increase in gold sales in this festive season has increased further and there is a very interesting reason behind it. In a report released by Crisil Ratings on Monday, it has been informed that this year gold and gold jewellery will be sold a lot and you will buy a lot of gold, due to which jewellers are also expected to get good profits.
The outline of the golden move of gold was prepared in the budget itself – gold had become cheaper by Rs 4000
Due to the huge cut in the import duty on gold by the central government in the budget, the income of jewelers in the organized sector is expected to increase by 22 to 25 percent. Earlier it was estimated to be 17 to 19 percent. In the current financial year, the effect of this reduction in gold duty on an annual basis can be seen that people will come forward to buy gold in large numbers. The effect of reduction in import duty will be seen on profits, but due to higher revenue, the cash flow of retailers will improve. Due to this, strong expansion can be seen. On the day of the budget i.e. 23 July, the Finance Minister had announced a cut in the import duty on gold and on the same day gold became cheaper by Rs 4000 per 10 grams on MCX and other markets. After the reduction in import duty in the budget, it had come to a decade low.
Crisil Ratings has said in its research report that organized gold jewelry retailers will benefit greatly after a huge cut in import duty in the country’s Union Budget. Jewelers’ revenue is expected to increase by 22-25 percent or 500-600 basis points (bps) this financial year.
What does Crisil’s report on gold outlook say?
- Crisil has said in its report that the reason behind the increase in the income of bullion traders or jewelers in India is the sale of large quantities of gold.
- After the reduction in import duty, gold prices have come down significantly and the bullion market will benefit from it in the coming times.
- The sudden drop in gold prices has led to a loss of inventory but the impact will be minimal as it is supported by improved demand for gold.
- Due to increasing demand for gold and gold jewellery, the supply of gold is also expected to increase.
- Crisil’s report said that the operational profit of jewellers may decline by 40 to 60 basis points (0.40-0.60%) to 7.1% to 7.2%.
What do CRISIL management officials say?
Crisil Ratings Director Himan Sharma said that the reduction in import duty is an opportunity for gold jewelers. According to the report, jewelers should stock up gold for the festive season and the upcoming wedding season. Crisil Ratings Associate Director Gaurav Arora also said that jewelers will maintain comfortable financial metrics this financial year. He further said that these will be better than our previous expectations, due to which the credit profile will remain stable.
CRISIL input also from IANS
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