Kerala floods may impact wedding season gold demand
The usual spend of 200 grams to 1 kg of gold per wedding in Kerala may drop 50% in the next month due to the Kerala floods
Mumbai: Jewellers in Kerala, 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 kg of gold per wedding in Kerala may drop 50% in the next month, B. Govindan, president of the All Kerala Gold & Silver Merchants Association, said in a phone interview.
The death toll due to Kerala floods 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 ($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% to 70% of jewellery 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 jeweller Malabar Gold and Diamonds, which has 35 stores in the state.
People in affected areas would change their priorities from jewellery 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 jewellers 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 labour, he said.
Some of India’s biggest jewellers 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 ₹ 2 crore to the state’s relief fund and has mobilized its staff to aid with the rebuilding process, Malabar’s Asher said.