Thiruvananthapuram: The old joke on Keralites was that they had no business acumen and only knew to convert their salaries into some gold sovereigns. Turns out that those humble savings in sovereigns have become a mountain of wealth.
The state may still be an outlier in the manufacturing sector, but when it comes to the yellow metal — whether buying, selling or mortgaging — Kerala brands like Muthoot, Manappuram, Kalyan, Joyalukkas and Chemmannur have turned truly international besides multi-state operations within India.
Local media reports in Kerala have indicated that the total gold reserves, not counting the gold retail outlets, of some of the Kerala-based gold loan companies — Muthoot Finance, Manappuram Finance and Muthoot Fincorp — jointly hold gold jewellery, higher than the gold reserves of Singapore, Sweden or Australia. Between them, the leading gold loan companies in the state are believed to hold 200 tonnes of gold jewellery, though the exact quantity is not publicly known.
Industry players say that the gold mountain build-up has to do with the tradition of buying gold for festive occasions and for marriages and passing them down through generations. “It is also the most liquid of assets after hard cash, and therefore many people prefer to keep a significant portion of their savings in gold,” an industry watcher said.
The younger generation has taken a liking to diamond jewellery, but gold sellers are not overly worried. Retailers say that unlike in the north, south Indians prefer solid gold jewellery rather than stone-studded ornaments.
Kerala’s fancy for gold has been so intense that a private equity company, Warburg Pincus Llc invested $200 million (Dh735 million, Rs12 billion) in Kerala-based Kalyan Jewellers for a minority stake. Kalyan is among the leading retail jewellery brands in Kerala alongside Joyalukkas, Alappatt, Chemmanur, Bhima, Malabar Gold and Atlas, among others.
Interestingly, Kerala’s retail gold jewellery brands also have a strong presence in the Gulf countries, to directly tap the purchasing power of expatriate Keralites there. To have branches in the Gulf and in Kerala is logical, because it helps them get business first hand from the Gulf through outlets there, as well as attract some of the remittances into Kerala through the retail outlets back home. Non-resident Keralites’ remittance into the state is estimated at over Rs750 billion annually.
The gold loan and retail brands from Kerala have become such large national players that the likes of Muthoot Fincorp, Manappuram Finance and Kalyan Jewellers have the leading Bollywood and Malayalam actors as brand ambassadors. Muthoot has also recently associated with the Kerala Blasters team in India’s premier soccer league.
Kerala’s love for gold has to do partly with the general Indian affection for gold. According to the World Gold Council, India’s gold reserves of over 558 tonnes ranks it 11th in the world.
While the state is glued to gold, there is also criticism that the state is facing issues of income inequality. Noted economist M.A. Oommen recently observed that while the government seemed to support the jewellery merchants, the agricultural sector was on the decline and the scheduled castes, scheduled tribes and fisher folk were marginalised.
But even as debate rages, Kerala’s gold mountain keeps growing. And a few years back the state discovered it had another pile of gold and ornaments in underground vaults, too — at the Sree Padmanabhaswamy Temple in the state capital, estimated at over Rs1 trillion worth.
That collection, however, is not for sale, purchase or mortgage.
