US tariff impact minimal for Kalyan Jewellers, says Ramesh Kalyanaraman

Executive Director Ramesh Kalyanarama

Kalyan Jewellers, one of India’s biggest jewellery retailers, expects marginal impact from the reciprocal tariffs announced by US President Donald Trump, executive director Ramesh Kalyanaraman told Moneycontrol on April 4.

The company has no export market and the inventory for its sole US showroom is sourced from the Middle East, Kalyanaraman said.

"We don’t export from India or anywhere. Our only US store sources material from Dubai, where the export duty is at 10 percent under the new tariff. So there is a marginal difference of duty now after the announcement. So Kalyan Jewellers per se, we don't have any impact because of the new tariff announcement... There is no negative impact, the only impact, very minimal is the three percent duty increase from Dubai, which of course it will be to the end-consumer," Kalyanaraman said.

His comments come a day after US announced a 26 percent reciprocal tariff on Indian goods, which is expected to hit India's $32 billion gems and jewellery export market. The US accounts for $11.58 billion, or 34 percent, of these exports.

Kalyan Jewellers sources 30-40 percent of its New Jersey showroom's inventory from the US, with the rest coming from Dubai.

At 2.30 pm, Kalyan Jewellers was trading at Rs 483, down 5.1 percent from the previous close. The negative sentiment comes as investors fret that the tariffs would erode price competitiveness of Indian jewellery exporters, especially against rivals like Thailand and Vietnam.

It is, however, important to separate the retail-driven names from the export-heavy ones. Not every company would be hit equally.  Retail-centric brands such as Titan and Kalyan Jewellers may fare better than those dependent on US exports, according to Siddharth Khemka, Head of Research at MOSL.

Kalyanaraman said that tariff announcement would be an advantage for the company, as it expects the gold metal loan (GML) rates to normalise in the coming months.

"GML rates were going up to 5 percent (in Q4) from 3-3.5 percent because the physical metal had been moving to the US from the UK and other parts of the world in anticipation of the tariff announcement, which was foreseen. Now that the tariff has been implemented, there is no change in bullion. This physical metal will return to where it came from, and in all likelihood, the interest will settle around 3.5 percent within a couple of months — that is the advantage," he said.

GML is an industry-wide practice that allows jewellers to borrow gold from banks for 180 days instead of purchasing it outright.