BY. FIROZ.T.TOTANAWALA
THE BANGALORE METRO REPORTER
TAKING PEOPLE FOR A GOLDEN RIDE….
SHUBH JEWELLERS- Pay for 24 carat get 22 carat Gold…
The shubh jewelers, a retail chain of jewellery stores promoted by the Rajesh Exports, is spending millions towards publicity- both print and electronic media proclaiming that they are ushering a gold revolution. They proclaim that they are selling the gold items at real rate per gram. They also issue misleading advertisement comparing the prices of other jewellers and induce the people not to buy gold items as these ‘other’ jewelers charge 10 to 15% wastage, exorbitant making charges etc. They also tell the people that they will be saving a lot of money if they purchased gold items from Shubh stores!
REAL RATE PER GRAM?
And what is their basis for telling the people that they will be saving a lot if they purchase from Shubh? In fact, the Shubh also released an ad featuring late actor Vishnuvardhan exhorting the people to buy gold from Shubh. To buttress their claim the Shubh reels our imaginary statistics comparing its price with ‘other’ jewellers. For example, in their company ads, they claim that other jewellers charge 15 to 20 percent wastage, levy exorbitant making charges and even charge for stones bringing the cost of the gold items to 120-130 percent of the gold price!
To proclaim that they are the only honest and transparent traders, the Shubh cries from the roof tops that what they are offering is the ‘Real rate per gram’ for 22 carat gold items. They call upon the people to pay only for the quantity of gold they purchase!
To convince people of their sincerity and honesty, Rajesh exports which owns the Shubh stores, claim that the company has gold mining business in foreign countries and as such they can provide gold at its original value that is real rate per gram! They also proclaim that theirs is a 10000 crores company and that they are mining gold. It is this advantage, they say, allows them to sell gold at lesser rates than others.
If one goes by the colourful ads including and appeal by Late Vishnuvardhan, it becomes clear that the Shubh stores will sell 22 carat gold at 22 carat gold rates as they will not charge for wastage, making and stones.
Moreover, as the gold items are manufactured from their factories and that they have around ten thousand designs; people would have stood in the queue to purchase the items before the Shubh Stores.
But what is the reality of Real Rate per gram by the Shubh stores? The hard fact is that the Shubh stores do not sell the gold at the real rates. It charges 8.4% more over and above the market rates for ornamental gold that is 22 carat which means 916 purity! This implies that the so called ‘gold revolution is only a ploy to take the people for a ride.
THE COMMON PRACTICE
It is here that the crux of the matter lies. It is a well known fact that honest local jewellers charge anything between 5 to 13 percent as wastage. This depends on the design and craftsmanship. If the design, for example, is a simple bangle with minimum design, the wastage will be around 4 to 6 percent. If the bangle design is exquisite and complicated, the wastage will be up to 10%! The local goldsmiths have to work longer to carve the design. In the process some small quantity of gold is wasted. As the design needs filling, drilling, cutting etc., there sure is going to be wastage. The jeweller has to provide 60% extra gold to the local goldsmith to prepare the items. For example, if a jeweller wants 30 grams of designed items like chains, bangles, bracelets etc., he has to give at least 48 to 50 grams of gold to the goldsmith. The goldsmith returns the excess gold after making the item. It goes without saying that almost a gram gets wasted due to filing as dust. The goldsmith charges substantial amount as making charges as the work involves long hours of skilled labour. All these totally amount to one to one and half grams.
And what about the investment of the jeweller? For 30 grams of ornaments, he has to provide about 50 grams. This gold has to be purchased in the market. After the work is over, he gets 30 grams of ornaments and about 18-18.5 grams of gold. Normally one does not predict the fluctuating gold rates. Finally, he has to charge 10 percent wastage and at the end of the day, he would have earned a profit ( if there is no reduction in the gold rates), he would be earning about a gram. In this profit, he has to cover the expenses of frequent trips to the goldsmiths, expenses towards his shop etc. finally, the local jeweller may make around Rs.1000 or 1500 as profits or earnings. That comes to Rs. 30 per gram.
Of course, if the ornaments are simple in design, the margin of profit will be very less. Moreover, the local jewellers charge about 5% as wastage depending on the design and workmanship of the goldsmiths. On many occasions, the goldsmiths have vanished from the scene with large quantity of gold given to them by the local jewellers for making ornaments. This ‘Risk’ has, of late become very frequent. One has to take this risk into consideration also.
Considering all these risk and wastage factors, the local jewellers who are always at the mercy of the goldsmiths does not make a good profit from the business. This does not include unscrupulous jewellers who prepare ornaments of 70-80 purity and pass it on as 22 carat. Over the years, people have become very intelligent and they prefer their trusted jewellers to make gold items. It is the trust that drives the gold market, particularly the jewellery market. If a jeweler shop earns the trust, people will not look for another shop. People are now careful about the purity of ornaments that they get from their jewellers. As such it is not easy for the local jewellers to take people for a ride. And people always grumble on the wastage aspect of the business without realizing the ground reality.
TALL CLAIMS
And now, enters the Rajesh Exports proclaiming to the world that they are ushering a new gold revolution doing away with the practice of wastage and making charges. It issued larger than life first page advertisements in all the news paper claiming that its Shubh stores are first in the world to sell gold ornaments at real rate per gram. It also went to towns with ad films featuring the veteran actor Vishnuvardhan, who died shortly after. Even now, promos are being aired in TV channels appealing to the people to purchase gold only from Shubh Stores which means huge savings. In the promo ad Vishnuvardhan asks the people to be cautious about other jewellers who cheat people.
Forget about all these. Let us take the rate at which the Shubh stores sell the gold items. Firstly, as the company manufactures gold items in their factories from the gold mined from its own mines, one expects the total absence of wastage and making charges apart from prices being lower than any other jewellers. As the gold is mined from their own mines, the prices should remain uniform despite the fluctuation of gold rates in international market.
But nothing of that sort is offered at Shubh stores. They are selling the 22 carat gold at the rate of 24 carat. The 8.4% difference in quality and quantity is being charged to the public, not as wastage or making charge but as the Real Rate for gram!
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