Under the scheme, Joyalukkas will supply one-gram gold rings to 4.41 lakh newborn babies delivered in government hospitals across the state from June 22 to the end of the current financial year.
Making 4.41 lakh gold rings may sound like a massive order for most jewellers, but for Kerala-based Joyalukkas and Kalyan Jewellers, it is a chance to combine economies of scale, brand visibility and public welfare.
The two jewellers have pipped a crop of regional rivals to emerge as the lowest bidder (L1) for the Tamil Nadu government’s ₹755-crore welfare initiative: Thai Maman Thanga Mothiram Thittam.
The State government said in a statement that once Joyalukkas bid the lowest, the other 10 participating companies were asked to indicate their acceptance by comparing their prices with the quotation submitted by the lowest bidder, as is the norm, and Kalyan Jewellers was the only company that agreed to match the quoted price.
Thereafter, work orders were issued in a 70:30 ratio to the selected lowest bidders, Joyalukkas and Kalyan Jewellers, to provide 1,28,499 rings for the first four months, the statement added.
The cost of gold will be borne by the government of Tamil Nadu at the prevailing market rate.
Asked about the economics of the bid, Joy Alukkas, CMD of the Joyalukkas Group, told businessline that the decision to participate went beyond the commercial aspect, and the company was happy to contribute its capabilities toward a scheme with a strong social purpose.
“We see this as an opportunity to create long-term value while leveraging our brand strength, retail experience and established customer base,” he added.
Industry stakeholders said that the financial hit to the companies may not be much given the benefits of the scale of production, especially as the rings are expected to be standardised and involve limited design work. On the other hand, the contract could provide them with significant brand visibility and reach across Tamil Nadu, the source added.
However, others felt that the financial losses could be much higher, as manufacturing cost is roughly 3-4 per cent of the gold cost, but it will help the company in brand recognition and goodwill, and they will likely offset costs from their inventory since gold prices have gone up in the past few days.
“The State is a key market for us, and we see potential to further strengthen our presence and serve customers,” Alukkas said.
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