Diamond jewellery a wiser choice to gold: Titan

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » RELATED NEWS India gold edges lower as strong rupee weighs India gold edges lower as strong rupee weighs India gold edges lower as strong rupee weighs ALSO READ See latest News about Titan Ind See previous management interviews See what other Experts & Brokerages are saying about Titan Ind Titan Ind BSE | NSE 08/02/12 Are Mutual Funds betting on Titan Ind?

In an interview with CNBC-TV18, Bhaskar Bhat, Managing Director of Titan , spoke about the impact of rising gold prices.

Here is a verbatim transcript of an exclusive interview with Bhaskar Bhat on CNBC-TV18. Also watch the accompanying video.

Q: What are the concerns with the jewellery demand at the moment? Have high gold prices hit that?

A: Yes, there is certainly an impact on the grammage sales during this period because of the very high price. It is gone upto USD 1,175 troy ounce despite the strengthening of the rupee. The per gram rate is quite high for plain gold jewellery. The customers are planning their purchase to match with the real need which is either the wedding dates or certain festive occasions. Gold is bought even for auspicious reasons. Therefore, the sale is getting bunched up.

 Volume sales are impacted in the plain gold section. There is a benefit in a very indirect manner for diamond jewellery, where the gold content is lower. We are seeing a trend towards a larger growth in diamond jewellery. It is because of the price of gold. Diamond jewellery has become more accessible now because the prices have come down. Companies like Tanishq have made diamond jewellery more accessible by dropping price points.

Q: Your performance in the watches segment has not been all that exciting. How are you looking at the coming two quarters?

A: Quite way back in the past, it was in the second quarter. It affected our April to September performance. July, August and part of September sales growth were difficult to achieve. Thereafter, October-November has been very good in the watches segment also. Hence, we do see growth coming back into that business. It will be driven by a new product introduction. The growth is better in the October-November period.

Q: Are you looking to expand or are you on line with expansion whether it is Titan stores or Tanishq stores?

A:  All those are online. The Tanishq large format store in Chennai was opened a few months back. The second and the third ones are on their way in Calcutta and Mumbai. The world of Titan is also on target. We have also introduced Fast track retail stores.

Q: What about margins? How are you looking at margins shaping up at 10%?

A: The company is making about 6-6.5% as a whole. Across for a whole year, if you see last year's performance, it will be around that figure for this year too. The growth on that would be challenging but we are trying to achieve a reasonably good profit margin for the current year too. This means that the PBT growing faster than the topline.