Expect New Government to Review Gold Restrictions: Bhaskar Bhat

Titan shares extended gains after the jewellery maker beat Street expectations in the March quarter. Profits rose 11.3 per cent jump to Rs 206 crore, ahead of analyst estimates of Rs 175 crore. Bhaskar Bhat, managing director at Titan Company Limited spoke to NDTV's Prashant Nair about the March quarter and the company's plans ahead. (Watch full interview)

Here is an edited transcript of the interview.

On performance in last quarter

We did better in the fourth quarter compared to the third quarter. Although expectation were high in the third quarter due to festive season but challenges remain same as it was in the second and third quarter. Mainly the upper middle class was not ready to spend on jewellery as there was no incentive to spend. Gold prices remain almost stable in the quarter due to which investment demand is low. Although volume growth was difficult in the watch segment but demand for watches in Rs 4000 plus range was high which drove our overall watch volume. Innovative advertisement and schemes paid up during this quarter. Eye-ware business which is the third largest lifestyle product for Titan did remarkably well this quarter. Our focus on same store sales growth paid off. First quarter of this year is expected to be good but not better as compared to the first quarter of the FY14 where we did extremely well in jewellery business due to price drop in gold internationally.

On guidance for next quarter

We don't provide any guidance, especially in the jewellery business it is not possible to give any guidance on sales volume because of multiple effect of regulatory impact. It is difficult to estimate jewellery sale volume as regulatory restrictions has led to difference in gold prices. Our effort is really to grow the total portfolio which is diamond jewellery and plain gold jewellery. The reason why we have grown is due to several new product introductions. Muted coin sales indicate that the investment sentiment is not very robust now. New product launches in studded jewellery/ diamond jewellery segment drove our volume growth. We gave flat 15 per cent discount in this category and we expect to continue that in this quarter as well.

On suspension of Golden Harvest scheme

Golden Harvest is a scheme where customers pay money in advance to buy jewellery. Customers give us a particular amount every month for eleven month and at the end of twelfth month they can buy jewellery worth 12 times of their monthly contribution. In the dispensation of the companies act there are certain rules regarding taking deposits from customers. We are awaiting for some regulatory clarification on these due to which we have suspended these schemes. The scheme used to contribute 20 per cent to our jewellery sales. We don't expect all these business to go out as these customers are all our existing customers. But it may so happen that they may go to some other category. Although there is some risk of business but it is something good that we are doing, we are complying with the regulatory rules. But our cash flow will be affected due to discontinuation of the scheme, we may have to resort to external source for our cash requirement.

On expectation of regulatory relaxation from new government

We expect the new government to review all the three restrictions that it has put to curb the CAD (Current Account Deficit) as we have already over achieved our targeted CAD level. The government is also aware of the smuggling which the restrictions on gold import has created, so we think government will give a relook to this restrictions.