HomeNewsGold price surge dampens demand, Senco Gold shifts focus to diamond jewellery...

Gold price surge dampens demand, Senco Gold shifts focus to diamond jewellery and consumer schemes

Ritesh Agarwal, Founder, OYO

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Senco Gold Ltd, a prominent player in the jewellery retail sector, stated that the recent sharp surge in gold prices due to geopolitical reasons has dampened demand. The company emphasized that the industry’s first-quarter performance hinges upon ongoing buying propensity during festive and auspicious New Year celebrations. Based in Kolkata, the retail chain has implemented a range of measures to address the demand situation, including a shift towards diamond-studded gold jewellery and consumer-centric schemes.

Nevertheless, a senior company official remarked that these measures might not fully offset the 15-20 percent decline in volume observed in March and April.

Senco Gold’s Managing Director and CEO, Suvenkar Sen, highlighted the significant fluctuations in gold prices, noting a recent 10 percent increase in the past month and a 23-25 percent rise over the last six months. This pronounced volatility has adversely affected retail purchasing sentiment, resulting in a notable 15-20 percent decline in industry volumes, Sen stated.

Eid, Bengali New Year, Akshay Tritiya, and various regional New Year celebrations are anticipated to boost demand in stores. However, some retailers may face obstacles due to cash movement restrictions enforced by the election model code of conduct.

Continue Exploring: Senco breaks new ground as first Indian jewellery brand to join ONDC network

Senco disclosed a 23 percent increase in its consolidated net profit, reaching INR 27.6 crore for the quarter ended June 2023. This growth was supported by a 30 percent expansion in revenue, totaling INR 1,305 crore.

He did acknowledge, however, that in terms of value, the market is anticipated to remain stagnant, given that gold prices are hovering around INR 70,000 per 10 grams.

Sen anticipates that the year-on-year fourth-quarter sales, which concluded in March 2024, will exhibit a flat performance.

The company is currently in a silent period for results, therefore Sen declined to divulge more specific details.

Senco announced the introduction of a price guarantee scheme for six months as part of the Marigold scheme. Traditionally, the industry offers such guarantees only up to one month until Akshay Tritiya. With this scheme, customers can book gold and secure immunity from price rises.

During this period, the company is additionally providing discounts on making charges to stimulate sales. Moreover, it offers DigiGold, enabling customers to invest in gold for as little as INR 300.

Continue Exploring: Top jewellery retailers hold back on lab-grown diamonds citing low consumer demand

Sen stated that the company has shifted its focus towards diamond-studded gold jewellery, a move that has either minimized the price difference or even rendered the ornaments less expensive, given their composition of 14-carat gold.

He anticipates that the contribution of diamonds, including lab-grown ones, currently comprising 11 percent of total revenue, will rise to a minimum of 15 percent within the next 2-3 years.

The company recorded a revenue of INR 4,104 crore and a net profit of INR 148.8 crore for the nine-month period that ended on December 24th.

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