Expect H2 to be better than H1: Titan

In an interview to CNBC-TV18, S Subramanian, chief financial officer, Titan says he expects the second half to be better than the first half.

Below is the edited transcript of his interview with CNBC-TV18s Latha Venkatesh and Gautam Broker. Q: The government is planning to introduce steps to curb gold imports. How will that affect the company? Do you see any kind of a dent on volumes at this point? A: Gold imports have fallen off, in any case, without government having to do much because the rupee has devalued significantly against the dollar. That has made gold far more expensive that it was a year back. Gold prices are hovering around 30-35% over what it was a year back. We have clearly seen a sharp decline in gold imports. That is not because of the rate of the gold, but it is also the economy. So, consumption of gold has clearly declined. How much more will the government really need to do? I am not very sure. The 4% customs duty is also maybe contributing to some extent, maybe not so much. But clearly there is a decline in volumes, thanks to the higher gold rate and also the fact that the wedding season was very lean in the first two quarters. So, we need to see how next two quarters pan out. Q: How has demand been so far? Have you seen any kind of a pick-up in buying? The festive season is approaching, do you see volumes being subdued on a year-on-year basis? A: I think there is a pick-up now. We had a very lean marriage season for the first two quarters. A lot is dependent on Q3 for us because the festive season is coming in. This year Diwali is quite late. That means essentially any purchases, which would be done for the season as such, is going to be happening well in Q3 only, October-December quarter. Therefore, a lot of hope is on this quarter. Q: Can you give us some more details on the business outlook for the second half? A: I would think the H2 for us should be definitely much better than H1 in terms of growth. First of all, it’s a festive season. Second, the marriage season is expected to be strong. One good sign we are seeing that the rupee has stopped its devaluation. It has started appreciating a little, which is to some extent improving the gold rates; bringing it down a little, even though internationally gold rates are now inching up to USD 1,800 per ounce rate. But the rupee strengthening is helping some sentiment here from the customers’ perspective. It seems to be little bit affordable now. Therefore, we expect the second half to be better than the first half. Q: Could you give us some colour on your sales mix. Are you seeing a shift towards high value items? A: Our diamond ratio is expected to be better this year. That’s the way it looks now. Volumes have dropped for plain gold jewellery, thanks to very high gold rate. So, it’s a combination of people aspiring for more diamond jewellery and also the plain gold jewellery segment has declined a little, atleast in volume terms. Therefore, we expect a better studded ratio this year.