Indian Gold Jewellery Retail

ICRA Research on

INDIAN GOLD JEWELLERY RETAIL INDUSTRY

“Regulatory measures, weak demand sentiments and gold price volatility adversely impact industry performance” February 2014

Gold Jewellery Industry

In this presentation…

1. Indian Jewellery Industry overview 2. Recent demand trends 3. Industry performance vis-à-vis estimates - post RBI measures 4. Impact on financial profile 5. Short and medium term outlook

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Indian Gold Jewellery Retail Industry: Trends & Outlook February 2014 Slide 2

Industry Snapshot

 Jewellery volumes in India have steadily increased over the years, aided by the strong cultural Growth (%): increasing returnsCAGR in value terms, over the last ten years (CY03 to 9mCY13) ~18% from the asset class, supported further by expanding retail base of affinity, organized jewellers. While there have beenfollowing China; long term growth owing to sharphealthy especially for periodical dips in demand potential remains price increases, Market Structure: 2ndlargest market globally demand over a long time frame has recorded healthy growth upwards ofof the market being cateredover organized players, aided by strong cultural affinity and majority 18% (in value terms) to by the last decade. the unorganized sector

Presence of MNCs:.  However, during CY12Limited; market dominated by regional volumes contracteda (by large pan Indiathe back of (H1 in particular), jewellery players with presence of few ~32%) on majors record high and regulatory interventions (such per capita incomes, lack of an effective Growth drivers: gold pricesCultural affinity, demographic diversity, rising as hike in import duty and also imposition alternate inflation hedge of excise duty which led to nationwide strike). Volumes staged a sharp recovery (~25%) during H2, CY12 driven seasonal upturn in demand amidst relatively stable prices. The trend continued into the Immediate Challenges:...