The government has hinted at a stricter import regime due to rupee depreciation and this could mean higher import duty on gold.

Bhaskar Bhat, MD of Titan, assessed the impact in a chat with CNBC-TV18 on Friday.

“10 percent itself is a very high duty and whatever impact it had to have, it is essentially not so much in the price of gold because Indian market seems to accept prices with the 10 percent duty. It is only the attractiveness for the smuggling in gold which will impact us because of the unorganised trade being attracted by that low price. So arbitrage etc. However, post effects of demonetisation and regulation thereafter goods and services tax (GST) and all that, the formalisation of the economy, both consumers as well as the trade itself is beginning to change. So we do feel, yes there will be an impact, no doubt because price will go up, smuggling will increase but the migration of customers from the unorganized to organised is where we are benefiting from and will continue to benefit,” Bhat said.

Speaking about the gold exchange, Bhat said, “It varies. As of now it is a little over 30 percent. It has grown in the past one year, ever since we made it more attractive, we had made it zero exchange charge for gold from other jewelers as well. It is a very important step we have taken – one is, it is customer friendly and second is, it is what even the country needs to do, we need to get gold, which is lying with customers in their lockers back into circulation rather than import more gold. That is one of the reasons why the government is very correctly focused on gold which is it comes into the country and goes into lockers which is not good, so frequency of usage or the exchange schemes makes it come back into circulation. It is working well for us.”

“Our fundamental business model is one of the brand attracting customers through design and brand experience and so on. So it is the adornment piece which attracts them to us so 1-2 percent rise in price – people have been used to this and they have been paying the higher price for gold. Therefore, that to me will not affect us significantly at all,” said Bhat.

“We continue to be bullish on jewelry growth because of the migration we are seeing of customers into our brand. Our targets have not changed. Our own market feedback does tell us that there is a weakness in the wedding season, the dates are few, but that is the nature of the year. There might be more wedding dates in January and so on. Our dependence on wedding sales is not that high, yes it is increasing but we do see sentiment is not negative at all, it is quite aligned and we will not stop from new product introduction and retail expansion,” he added.

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