Gold prices may fall, jewellery market will be impacted: Titan

The Indian jewellery market will be the worst hit with the ban on Rs 500 and Rs 1000 currency notes, says S Subramaniam, CFO of Titan Company. This is due to the preference of shoppers to pay amounts over Rs 2 lakh in cash.There is expected to be a slowdown in the market and a short term disruption due to the ban and the US elections with a Donald Trump win likely.Below is the verbatim transcript of S Subramaniam’s interview to Anuj Singhal, Latha Venkatesh & Sonia Shenoy on CNBC-TV18. Latha: Would you say that your business will go up or do you think you are just a relative beneficiary? A: Very early to say, it is great move. I think it is fantastic for economy, fantastic for organised players in the jewellery industry. However, I would think there could be some short-term disruptions because there is going to be a liquidity squeeze as such. Even for people to convert their cash deposits, etc is going to take some time. So, it is likely that we might find a slowdown in the market definitely for about few weeks if not more. However, hopefully, beyond that it should start recovering. Of course all bank transactions are perfectly fine. The only issue we find is that when cash transactions happens a lot of them happen because people don’t have credit card limits for more than say Rs 2-3 lakh. So, for the high value items people do always tend to bring cash. As we mentioned last time even during the festive season we had absolutely zero problems on pan card. Latha: For a company like Titan there will be a lot of people buying with cards, so while you tell us what is your non cash percentage also tell us a macro impact? If all the jewellery shops will not be able to have I mean the non listed ones who are used to only serving the cash customers will not have so many people coming to them because simply those notes don’t exists. Do you think gold prices go down in India? A: Gold prices are going to be determined on International gold rate largely. There has been over the last few months a discount in the local gold market because of the demand situation. So, that is possible that might happen. I agree with you that the overall jewellery market will get impacted because a lot of transactions happen in cash.