Mumbai’s Zaveri Bazaar has a large number of wholesalers and retailers selling one-gram-gold jewellery.

One of the hottest selling categories of jewellery in India, a country mad about gold, owes its success to the fact that it uses the least gold. The so-called one-gram-gold jewellery is not, however, as its name might lead one to believe, limited to tiny trinkets. It delivers the look and feel of many much larger, hugely more expensive creations. As its name suggests, one-gram-gold jewellery is affordable to almost everyone and is bought in huge quantities all over the country by consumers from every economic level.

Packing plated jewellery at Midas Technique.

To give one an idea of the size and reach of the category, Madhu Sudan Daga, one of India’s most respected gold analysts, pegs annual gold consumption by the category at 40-50 tonnes – up to seven per cent of India’s total annual gold consumption including investment-buying and the recycling of old jewellery, of 722 tons in fiscal 2006-07. There are no official figures as this jewellery is manufactured and sold largely through a huge network of small and ‘unorganized’ manufacturers and retailers, but some industry estimates put daily sales of the category at between Rs.2- and Rs.2.5 crore ($510,000 and $640,000). So big has the category become that big jewellery retailers too have begun selling it.

One-gram-gold jewellery had its genesis at the end of the 20th century, when gold sold in the Indian market at between Rs.5,000 ($127) and Rs.6,000 ($152) for 10 grams – considered extremely high at that time. The Indian consumer’s love affair with gold, however, meant that women were willing to buy even tiny pieces of jewellery just so they could wear some gold. In order to stay affordable, however, these pieces had to be extremely tiny indeed, almost defeating the purpose of wearing gold jewellery.
Smart Indian jewellery manufacturers and retailers came up with the idea of producing something large enough to have display value, yet have minimal gold content – at least one gram – and thus remain affordable. Alloying the tiny amount of gold with large amount of other metals to fabricate a piece of that size would mean that the product couldn’t even technically termed ‘gold’. It wouldn’t satisfy the wearer either. Two solutions emerged. The first was to fabricate the piece in copper, brass or silver – sometimes even just synthetic fibre – and then plate it with a thin layer of gold. The second was to use a process known as electroforming that produced large but hollow designs in a synthetic resin and then replacing the thin resin layer with gold. Both processes guaranteed the wearer that her skin would actually touch pure gold.

Madhu Sudan Daga

The idea was a runaway success. “The price-sensitive rural and middle class segments went for it because it was affordable, actually had gold and was amazingly beautiful,” says Daga. “It was as good as gold.”
The category is still growing today, largely for the same reasons. “Affordability and the wide range of designs are among the biggest drivers of demand for this category,” says Mukesh Jain of Shree Chintamani, a wholesaler and retailer of the category, based in Mumbai’s Zaveri Bazaar. Jain, who has been selling this jewellery since the late 1990s.
Estimating one-gram-gold jewellery’s potential, Sandesh Revankar, chief operating officer of Mumbai-based Alex Jewellery, one of the biggest manufacturers, wholesalers and retailers in the category, says it is still only a drop in the Rs.800-crore-a-day ($203.58 million) sales of fashion (imitation) jewellery and accessories. But the category – and fashion jewellery in general – has attracted the interest of big operators like Reliance, the Aditya Birla group, Hypercity, DMart and Archies among others and Revankar thinks their entry could bring about a major transformation. “Organized retail will change the complexion of this industry. In two years’ time, daily sales countrywide for fashion jewellery could easily touch Rs.1,500 crores ($375 million) and the demand for one-gram gold jewellery will grow manifold,” he says.

Sandesh Revankar

Revankar points to the category’s popularity with consumers from almost every strata of society. “We are already seeing a change in buying patterns. Earlier, this jewellery was bought by low- and mid-end buyers from rural areas and small towns. Gradually, those drawing and salaries of Rs.15,000 ($380) and up began to pick it up. And then, thanks to Indian television soap operas which have popularized fashion jewellery, now even those earning Rs.50,000 ($1,272) and more are fast converting to it,” he says.

Some retail chains specialise in 1gm gold jewellery.

Fashion Trends
Sales for one gram gold jewellery peak during marriage seasons, and regional festivals. According to Preethi Prakash of Kerala-based Parakkat Jewels, seasons dictate demand. “There is a spike in August and September because of Onam (New Year celebrated in Kerala), December and January because of Christmas celebrations, and April and May because of school vacations and the marriage season.”
Most importantly the fashion trends sway the buying trends. Jain likens one-gram-gold jewellery to Bengali sweets, which have a very short shelf life. The sales are sluggish from end of May to August, and manufacturers are left with dead stock of around 15 per cent, which is sent back to plating units for gold recovery. Once the gold has been retrieved, the piece is discarded

Goldie Jewellery

Another important driver is the popularity of Indian television soap operas which have actresses decked out in fashion jewellery. “Soaps are a hit with women across India, and that is proving to be a boon for this industry,” says Nalin Vasa of Rajkot’s Lotus Jewellery. “Women long to wear that sort of jewellery and since they can’t afford to buy real gold jewellery in those styles, the demand for plated or electroformed jewellery is strong.”

Nalin Vasa

While one-gram-gold jewellery can’t be custom-made the way its gold counterpart is, thevariety of styles available give the consumer a really wide choice. Jain adds: “We fulfill customers’ desires by offering affordable and beautiful alternatives.”
Regional tastes dictate design. Small towns and rural areas in Maharashtra and the southern states prefer yellow gold, while northern India prefers fancy studded jewellery. The western belt, mainly Gujarat, prefers an antique finish.
Prices range from as low as Rs.200 ($5) to Rs.10,000 ($254) and more, with the most popular price points between Rs.200 ($5) and Rs.2,000 ($50).
Most big manufacturers also double up as wholesalers and retailers – mainly because the retail margins are extremely good, says Narendra Athnikar, managing director of Midas Technique, a company that does jobbing in both plating and electroforming. Revankar estimates wholesale profit margins to be in the region of 25 per cent, while another industry source puts retail margins at anywhere between 100- and 400 per cent.

Jigged jewellery ready for gold plating. (Midas Technique)

Many Roads To Market
One gram jewellery is sold in all sorts of ways – from women selling out of their homes to their circle of friends, to standalone outlets, shop-in-shop concepts and now increasingly, as a distinct product category by fine jewellery retail outlets as well. Personal contact and special client lists play an important role too.

Joseph Mudaliar

Alex Jewellery has been marketing electroformed jewellery for the last 10 years and has four showrooms in Mumbai, including the biggest in a 10-storeyed building called the Imitation Jewellery Manufacturers International Marketing Arcade – a one-of-a-kind complex that houses over 240 manufacturer showrooms. Two of Alex’s their shops are standalones, while one is in a mall. “We supply all over India, but the southern region is an important destination. We also export to the Persian Gulf and Europe,” says Alex Jewellery managing director Joseph Mudaliar.
Prince Jewellers of Chennai includes electroformed one-gram-gold jewellery as a product category from his fine jewellery outlets. Says proprietor Princeson Jose, “We have combined sales of up to Rs.800,000 ($20,356) per month of one gram gold jewellery alone.”
Jain of Chintamani says the home-based-retail-to-friends channel is an important route to market for the category. “We have over 100 regular clients in Delhi alone who buy jewellery worth Rs.10,000 ($254) to Rs.50,000 ($1,272) and more twice a year. One of our clients no longer operates from home as her business has grown. She has opened several one-gram-gold jewellery outlets in Delhi!”

1gm gold jewellery includes gem-set and enamelled jewellery.

Many retailers report a dedicated clientele for the category. In Coimbatore, Joy Attokaran, proprietor of Attokaran’s Imitation Jewellery says he has around 7,000 dedicated clients. His customer service, like many others, includes buyback schemes and the re-polishing of pieces for a small fee. Till recently only a wholesaler and a retailer, Attokaran has turned to manufacturing and has introduced novel designs. “Cost-wise it is a big winner, and customers love to wear new designs for daily wear and on special occasions.”
Parakkat Jewels has 23 outlets in India and seven in Dubai, Sharjah, Abu Dhabi and Muscat. Its owner Preethi Prakash says it is the design element that draws clients to this kind of jewellery, and her firm has therefore hired about 25 designers and 500-strong workforce to help produce 50 per cent of the jewellery they stock. The remainder is sourced from Rajkot, Jaipur, Kolkata and Hyderabad.

Vijay Chheda

Opened three years ago, Mumbai’s Swarg retail chain selling one gram gold jewellery has 12 shops in Maharashtra and Gujarat. In December, Swarg opened its first franchised store in Kolhapur. Vijay Chheda, co-proprietor of Swarg, says that the company has registered a 25 per cent growth since its inception. It manufactures and forms its own jewellery. “We plan to open 81 shops all over India next year, with a greater concentration in the south,” says Chheda.
Much one-gram-gold jewellery is exported, mainly to cater to ethnic Indian pockets in overseas markets. Vasa says, “We cover around seven Indian states including Gujarat, Maharashtra, Karnataka, and Hyderabad, and export to Sudan, Australia, Fiji, and London. Our products are traditional and are appreciated by the Indian population living abroad.”

Goldie Jewellery

Buyback Policies in Place
So robust is the category that retailers have even developed buy-back policies for old one-gram-gold jewellery, much like the schemes they have for other categories. “Customers get a healthy return with buy-backs for this category,” says Jain of Chintamani.

Mukesh Jain

With soaring gold prices, buy-back assumes greater importance. Daga points out that consumption will be driven because of buyback policies. Cost-consciousness is high among Indian consumers. Daga says: “When a woman buys pure gold ornaments, she knows she can get at least a substantial proportion of her money back if she were to sell it. The same logic applies for one gram gold jewellery, too.”
Most retailers have buyback policies in place. Parakkat pays between 50- and 60 per cent of the piece’s purchase value on buy-back. “Recycling this kind of jewellery is easy for the customer as she doesn’t incur much loss and nor is the acquisition cost high as in the case of fine gold jewellery,” explains Prakash. Most retailers give back 50 per cent of the value if the goods are exchanged within two years. Swarg pays back 50 per cent cash if the jewellery is returned within one year. Chheda says, “We also make exceptions for some of our customers who recycle the jewellery they buy within a fortnight. For such clients we offer 60 per cent cash back. However, most refuse to accept cash, and instead buy new jewellery.”
Vasa of Rajkot, who sells two distinct lines – the Saubhagya one-gram- and the Hiral 500mg-gold – has different buyback policies for both. For the former, if the piece is returned within a year, he pays back the value of 750mg of gold. If returned two years later, he refunds the value of 500mg of gold, and from the third year on, the value of 250mg. For Hiral, he returns 50 per cent of its sales value if returned within one year.
Why are the buybacks so generous? Athnikar of Midas explains: “The retailer can afford it because his mark-ups are high. Secondly, manufacturers retrieve gold via recycling.” Part of Athnikar’s job is also to recover gold from the returned items sent to him by manufacturers. “We can recover 60 to 70 per cent of the originally deposited gold even after the jewellery has been used for a year. We refine and reuse gold. Fifteen per cent of my gold requirement comes from recycling.”

Ramesh Janani

Apart from buy-backs, one-gram-gold jewellery also comes with guarantees just like fine jewellery. Says Krunal Janani of Glory Jewellery, a Mumbai-based manufacturer: “Our guarantee cards provide content disclosure, the buyback policy, and a one-year guarantee for plating.”
Mumbai is the main manufacturing hub with about 100 wholesalers nestled in Zaveri Bazaar alone. A cluster of over 100 plating units are based in

Krunal Janani

Malad, a suburb of the city. There are about 700 plating units across India, and of these, around 20 are of substantial size. One gram gold jewellery manufactured in Rajkot is mostly exported, while Indore and Kolkata provide the skeletons made in copper and brass. The other manufacturing centres are Jaipur, Hyderabad and Coimbatore.
In an effort to boost its sales, the industry has dedicated a lot of effort to promotion. It has organised trade fairs and has participated in the India International Jewellery Show (IIJS) as well as regional fairs. Jain of Chintamani has held almost 50 exhibitions of his own to date. He says, “We started selling one gram gold jewellery in 1999, and since then have witnessed a growth of 100 per cent in our business. Because of the shows, today we even supply directly to fine jewellery retailers from Pune, Chennai, Kerala, Bangalore and Hyderabad.”

A plating plant. (Midas Technique)

Plagued by Problems
A major cause for concern today is the fact that much of the ‘one-gram-gold’ jewellery sold today does not contain even that much gold. The term has been used to sell jewellery plated with varying amounts of gold under 500mg, says Athnikar. “Initially I used to plate one gram of gold on every piece of jewellery, but it gradually decreased to 250 grams or 500 grams – depending on the manufacturers’ orders. As compared to five years ago, I use less gold, but churn out the same volume of jewellery.” Attokaran laments the fact that many fashion jewellery retailers sell low-cost items ranging from Rs.200 ($5) to Rs.800 ($20) as one-gram-gold, thus cheating their customers. “The cost of one gram of gold alone is Rs.1,000 ($25) or more, so how can anyone sell jewellery for less than a thousand?”

The money is in wholesale and retail.

With high gold prices, manufacturers have been looking for ways to further reduce the gold used in this category. The kind of usage the piece of jewellery is intended for also determines the thickness of the gold plate. For instance, mangalsutras (necklaces that symbolize marriage the way rings do in the west) which are worn constantly, are coated with 500mg or actually one whole gram of gold, while a set of four bangles, which might be worn occasionally, can all together be coated with just one gram of gold. This jewellery can last for up to two years without losing its sheen. For a pair of small ear studs with plain surface, 50- to 100 milligrams does the trick. Anywhere between 150mg to one gram is used on simple, plain jewellery.
Industry sources say that 25- to 30 per cent of this business is in the ‘unorganized’ sector. Athnikar says that one can start in the business with only Rs.25,000 ($636). And even though the category is supposed to give consumers a low-cost alternative to other jewellery, one-gram-gold itself has cheap imitations that are made in the slums, where operators without licences make ‘flash’ jewellery (plating less than 0.25 microns of gold) and sell it as ‘the real thing’. These operators are unchecked and untaxed and bring disrepute on everyone, he says.

Narendra Athnikar

“If this industry is to grow – and it has a huge potential – manufacturers must disclose the exact amount of gold used in the jewellery. And since the term ‘one-gram-gold’ has become elastic in usage, it should be changed to ‘net gold’ jewellery so that the exact gold content can be disclosed to the customer,” says Revankar. Agrees Athnikar: “The entire industry should come up with standardized specifications and guidelines, like hallmarking, warranty, customer service, to build consumer confidence. When that happens, the industry will grow exponentially.”
High local taxes keep a lot of the industry clandestine, say sources. Electroformed 24-karat gold jewellery, though classified as fashion or imitation jewellery, attracts an 8 per cent excise duty. Says Mumbai-based Imitation Jewellery Manufacturers Association (IJMA) president Ramesh Janani, “We would like the government to eliminate the duty completely to boost this sector which employs hundreds of thousands of people.”

Goldie Jewellery

For an ‘unorganised’ sector, this industry shows a surprising amount of organisation. Currently, IJMA has 1,500 life members in Mumbai, including wholesalers, raw material suppliers, imitation jewellers, electroplaters and the like. In a bid to further organize and unify the industry, Janani says, “This year we are planning to introduce chapters in cities like Rajkot, Ahmedabad, Delhi Amritsar, Jaipur, with Mumbai being the central body.” The IJMA has a directory of members, and has held several shows in order to promote this sector. The 8 per cent duty on the electroformed jewellery is a result of the IJMA having made a representation to the government and reduced it from the original 16 per cent.

The Road Ahead
Further organisation is the key to surviving and thriving in the future. Standardisation and transparent business practices are seen as essential, especially since the big retail chains have now begun moving decisively into the segment. Industry watchers expect a great deal of consolidation.
The far-sighted ones have already begun by introducing transparency in their business processes and branding their product with guarantees to back it. “If we want to gain consumer goodwill, we will have to have more branded jewellery,” says Krunal Janani. “Brands spell quality and will be the key to transforming the market.
A final word from Daga: “The surging price of gold is good news for this category. The impact on it will be negligible compared to that on fine jewellery. One-gram-gold jewellery is best positioned to ride the difficult times that will come with high gold prices.”