India's jewellery retail industry is undergoing a slow and steady transformation from being a largely unorganised sector to a more organised one. Family-owned jewellery stores remain the predominated retail format for consumers. The organized sector is expanding its share by rapidly penetrating markets in metro cities, thereby auguring healthy competition.

Jewellery industry is highly labour-intensive and price sensitive. During the past two years, RBI has taken stringent measures to curb gold imports. The custom duty was hiked to 10%, the 20:80 scheme was introduced and the gold lease scheme was discontinued, which impacted the profitability of the players. However, the situation has started improving now with the RBI scrapping the 20:80 scheme and permitting more entities to import gold. The curb on gold lease schemes has also been removed.

Source: Acuité Research; Ace Equity

Key Risks & Attributes

• Gold price volatility
• Intensity of competition
• Government regulations
• High dependence on gold imports