Chennai: Jewellers are moving slower on their store expansion plans as securing bank credit has become tougher for the industry post PNB scam. Even the exports were affected last fiscal. However, the industry thinks that banks will take a positive outlook for the industry in FY20.
“After the PNB fiasco and reports about round-tripping of diamonds and jewellery, securing bank finance, especially jewellery loans for inventory has become tougher for the industry and this has put pressure on the expansion of stores. The industry opened lesser stores in FY19 compared to FY18,’ said Sandeep Kulhalli, SVP, Retail & Marketing, jewelry division, Titan.
According to him, Titan remained unaffected as it follows franchise model for its cash and carry stores, where the franchisee gets a letter of comfort from the company to secure bank credit.
Joyalukkas opened just three to four stores last year and this was funded through internal accruals, said Joy Alukka, Chairman, Joyalukkas. Malabar Gold has been following a joint venture model for each store by partnering with a local investor and hence it does not have to rely on bank finance. ‘However, we have been hearing from the industry that availability of bank credit has been affected and many have been going slow with expansion,” said O Asher, MD, India operations of Malabar Gold.
According to Debajit Saha, Senior Aanalyst, GFMS Thomson Reuters, a key factor that brought down gold imports in 2018 was slower store expansion. Fresh stocks for new stores accounts for a large chunk of the import demand.
