The usual spend of 200 grams to 1 kilogram of gold per wedding in Kerala may drop 50 per cent in the next month.
Jewelers in India’s biggest gold-buying state expect sales to drop during the peak festival and wedding season after heavy rains and floods caused more than $3 billion of damage.
The usual spend of 200 grams to 1 kilogram of gold per wedding in Kerala may drop 50 per cent in the next month, B. Govindan, president of the All Kerala Gold & Silver Merchants Association, said in a phone interview.
The death toll in Kerala has climbed to at least 370 since the monsoon started in June and nearly 1 million people have taken shelter in relief camps. The state’s other major industries including tourism and rubber also are expected to be affected, while coffee production is facing a 21-year low.
In India, the monthly per capita expenditure on gold ornaments was the highest in Kerala at nearly 400 rupees ($5.70), according to the Ministry of Statistics and Programme Implementation’s 2011-2012 survey. The country’s key festival and wedding season runs from the end of August to December.
About 60 per cent to 70 per cent of jewelry manufacturing in the state has been affected as many factories are flooded and workers are not able to go to the workshops, Govindan said. “Supply is limited.”
While it’s too early to gauge the impact on the full season as the waters recede and relief and rehabilitation efforts begin, demand should remain dull for at least the next two weeks, according to Asher O., managing director of the Indian operations of Kerala-based jeweler Malabar Gold and Diamonds, which has 35 stores in the state.
People in affected areas would change their priorities from jewelry purchases to rebuilding their homes and casual buying of gold will slow, he said. “People’s focus will be to bring their lives back to normal.”
The All India Gems & Jewellery Trade Federation, which is a top industry body, has been in contact with jewelers in Kerala and representatives plan to travel to the state this week, according to Chairman Nitin Khandelwal. The visit is aimed to provide the local bullion industry whatever help it requires, mainly with labor, he said.
Some of India’s biggest jewelers such as the Warburg Pincus LLC-backed Kalyan Jewellers India Ltd., Joyalukkas Group and Malabar Gold and Diamonds are based in the southern state. Kalyan Jewellers, which has 17 stores in Kerala, is delivering packaged food, drinking water and other essentials to people. Malabar Gold has donated about 20 million rupees to the state’s relief fund and has mobilized its staff to aid with the rebuilding process, Malabar’s Asher said. – Bloomberg