Demand in current quarter to be better than Q1: Titan

S Subramanian, CFO, Titan, says that Titan is doing better compared to the industry. Though we are unhappy with the 21% decline in gold volumes but it is better than the market where volumes are down 38%. At all India level, there has been a decline in demand for last three quarters.

There is combination of factors like high cost of gold, macro economic situation, high inflation, lower pay hikes and slow GDP growth resulting in sluggish demand. Subramanian expects this quarter to be slightly better than the first quarter. Below is the edited transcript of his interview to CNBC-TV18. Q: Do you expect jewellery demand decline to follow industry trends or for Titan to do better than the kind of slip that we are seeing in overall industry declines?
A: Titan is doing better compared to the industry. Though we are unhappy with the 21% decline in gold volumes but it is better than the market where volumes are down 38%. At all India level, there has been a decline in demand for last three quarters. In the first quarter, there has been a significant decline. This has not been an extraordinary quarter because we did not have any major festivals. We expect volumes to improve in coming Q3 and Q4. Q: The World Gold Council is not painting a very rosy picture of the second half of the year either. What are your expectations looking at trends on the ground?
A: I agree with the World Gold Council to certain extend. From the rupee perspective, gold at Rs 30,000 is extremely high and expensive. I don't see a major shift in demand unless something happens to the rupee. Therefore, volumes are expected to be lower. We expect some revival and demand to pent-up in the Q3 due to festival like Dassera, Diwali and Christmas falling in the same quarter.  Q: But for the current quarter, the first quarter trends will continue?
A: It will be slightly better because we had Akshaya Tritiya in the first quarter . So April was a very good month but May and June was bad for the whole industry. July was better than May and June. Overall, it might be slightly better than the Q1. Q: What are the factors for sluggishness demand? Do you think it is a cyclical patch or is it only dependent on the level of prices?
A: There is combination of factors like high cost of gold, macro economic situation, high inflation, lower pay hikes and slow GDP growth resulting in sluggish demand. The mood in the country is not very buoyant. There will be sluggish demand till people are comfortable to spend more. At this point of time tightening up of process is happening. Q: The watches segment grew under 14-15% in the quarter gone by. Are trends reasonable or there is any king of sluggishness in that market too?
A: The growth of 14% was great in a quarter where things were generally quite bad. Now we are hopefully seen some revival.  Positively, the monsoon is not as bad as we though it was and that might spur rural demand at some point in time. So if that happens, things would be better than what it was in Q1.