One of Chennai's most famous Jewellery houses, Nathella Sampath Jewellery Private Limited (NSJPL), has shut down all seven of its branches across Tamil Nadu after a gold-saving scheme of theirs went bust.
The crisis came after customers who signed up for a gold savings scheme found that they could not redeem the equivalent of their cash deposits in gold.
The Nathella management has admitted that they were facing a financial crunch and have asked customers to wait for two weeks.
N Prappana Kumar, Managing director of Nathella Sampath Jewellery, told The Hindu newspaper that, “we are selling our ancestral property to settle customers dues, particularly those who invested in the gold saving schemes. We are also planning to reach out through mails. We hope to settle dues in a couple of weeks."About NSJPL
NSJPL incorporated on April 3, 2007 following the amalgamation of three partnership firms namely, Nathella Sampath Jewellerie, NSC Jewellers and NSC & Co. The group was promoted by Sriman Nathella Sampathu Chetty Garu in 1928 and the retail operations commenced in 1998. The company is primarily engaged in trading of gold jewellery and gold bullion which accounted for almost 98% of the income for FY16. Seventy two percent of the company's net sales in in FY 2016 came from wholesale sale of gold jewellery (FY15: 74 %). It showed Rs 16 crore as Profit After Tax on an operating income of Rs 1428 crore following audit in FY 16. In FY 15, the profit after tax was reported as Rs 18 crore on an income of Rs 1415 crore.
Small-time gold traders in Kerala feeling the heat too
There are also reports that Kerala gold traders too are facing a crisis following demonetisation and GST.
The root cause of the crisis is the difficulty small jewellers have in availing the Input tax credit under GST. Only if they buy a kilo of gold bar (worth Rs 30 lakh) can they get the 3% input tax credit. Because of this, small-scale jewellers who are selling 100 gms and 200 gms of gold are facing the threat of having to shut down their business. These traders say that telling customers to pay Rs 900 in tax for every sovereign of gold they buy is only serving to alienate them, Asianet News has reported
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