Budget 2016: Need ind-friendly policies, clarity on GST, says PC Jeweller

Reduction in customs duty for gold will reduce working capital of the industry players, but will not impact the selling price, says Sanjeev Bhatia, CFO, PC Jeweller. As far as Budget is concerned, the industry seeks clarity in effective rate of the Goods and Services Tax (GST) and industry-friendly policies from the government, Bhatia tells CNBC-TV18. On the company's performance, he says the fourth quarter (Q4) is at par with Q3 but for the full-year, it is dependent on gold prices. He further says rupee depreciation will help improve its export business. Below is the verbatim transcript of Sanjeev Bhatia’s interview with Mangalam Maloo & Reema Tendulkar on CNBC-TV18.Mangalam: There are expectations that the customs duty on gold may be reduced from the current 10 percent. Is this likely to impact your margins? How would this affect your business?A: The custom duty reduction would obviously lead to a reduction in the working capital requirements. However, from the consumer view point I am not very sure how much impact it would make, how much actual impact it will make on the street price of the gold. Custom duty is only one component, the exchange rate movement and the gold price denominated in USD troy ounce they are the major components, so let us see. Reema: Leaving customs duty aside what are your expectations from the Budget? What would you like to see in the Budget? A: We would like to see some more industry friendly polices like specially in the case of GST we are still very much confused, what will be the effective tax rates. Since jewellery is a very high value commodity even one or two percentage increase or decrease can make a huge lot of differences. So, it will be great if we can get some clarification on the potential tax rates which are coming on these things. So, from the Budget as such not necessarily but as on date our biggest this thing remains the GST and its potential impact.Mangalam: Coming down to GST itself any specific changes that you may want to see because you did speak about some tax rates coming about?A: As on date there is nothing is clear. There are various view points coming from various sources and what is the actual government thinking nobody knows. So, rather than taking any demand or any this thing we will be very happy if there is a clarity as such so that it can be debated upon and any objections can be given. However, this state of confusion has to go. Reema: Quarter three has been particularly strong for your company. Can you sustain this momentum in Q4 and FY17?A: Q3 is always better than any other quarters because of the festive season. So, Q4 should be more or less equal to that then it will be an achievement. So, because Q4 is also good but normally at par with Q3 only, nothing substantially beyond it.If you look at overall FY17 then a lot would depend on where the gold prices actual stabilise to because what the consumers don’t like is more of volatility in a gold prices. If the gold prices stabilises at specific level then the growth rate would be higher vis-à-vis if the gold prices keep on their volatility so that will be most crucial question. Watch video for full interview