Mumbai - Joyalukkas Group, a gold and diamond retailer in India, is offering 12 free BMWs and 2kg of bullion in a lucky draw as it fights a lean season in the second-biggest consumer of the yellow metal.
Others are promising everything from discounts to an opportunity to dine with Bollywood celebrities.
The monsoon season starting this month, which is usually considered a lean period for gold demand due to the lack of festivals and weddings, is threatening to deepen a sales slump caused by import curbs imposed last year. India raised duties on inbound shipments of the metal three times in 2013.
“This is the first time we have come out with a single promotion for the entire India and the Gulf countries to boost demand during the rainy season,” Joy Alukkas, the managing director of Joyalukkas, said.
Sales at Gitanjali Gems dropped 24 percent to 124.4 billion rupees (R22bn) in the year to March, the first annual decline in revenue since the company listed in 2006. Sales at Rajesh Exports slid 24 percent to 235.4 billion rupees, the first annual slump since 2003.
While freebies might stem the decline in sales, Prime Minister Narendra Modi’s efforts to revive economic growth might have a greater impact on rekindling demand, Abhijeet Kundu, an analyst at Antique Stock Broking, said.
“To see an acceleration in earnings growth, the discounts have to come down and volumes have to pick up,” he said. “There is some revival in gold jewellery demand. By December, if consumer sentiment improves, then you could see better volume growth.”
Gitanjali Gems would announce a “rain and shine” plan next month, offering discounts, chairman Mehul Choksi said.
“Sales are flattish at the moment because stocks are less and people are waiting for new policies to be unveiled” by the new government, he said.
“We expect demand to pick up because of these offers and the restrictions being eased.”
India raised gold import taxes to 10 percent and required shippers to supply 20 percent to jewellers for export and sell 80 percent on the local market. The steps resulted in a drop in demand for the metal, helping China to surpass India as the leading buyer of gold.
The industry expects the Modi administration, which took office last month, to reduce the tax in the federal budget to be presented on July 10 because of improving economic conditions, according to the All India Gems & Jewellery Trade Federation.
Last year’s curbs on gold helped narrow the current account deficit, which in turn helped the rupee to recover about 13 percent since touching an all-time low last August.
These developments might allow Modi to ease the restrictions on imports, Rajesh Exports chairman Rajesh Mehta said. “We are looking at a good year.”
India’s gold imports might climb 25 percent to 800 tons in the year that began on April 1 because the central bank might relax some restrictions, Citigroup analysts Rohini Malkani and Anurag Jha said in a report last month.
Shipments were 845 tons in 2012/13, the finance ministry said. – Bloomberg