In an interview to CNBC-TV18, Sanjeev Bhatia, chief financial officer, PC Jeweller shares his views on the current gold demand in the country and his outlook for the precious metal.
Below is the transcript of Sanjeev Bhatia’s interview with Latha Venkatesh & Reema Tendulkar on CNBC-TV18.
Q: How is the demand for jewellery been in this festival season is it better than last year’s?
A: Frankly the festival season is yet to start now from Janmashtami, Raksha Bandhan and now Ganesh Chaturthi will be coming so we are at the start of the festive season. I am very confident that with the stable gold prices the customers are much more interested in buying more jewellery. From the companies view point also we are bringing in new collection, new varieties so as to entice customers.Reema: There were some statements which came from the Mumbai Jewellers Association where they said that demand for gold is come down because of weak monsoon. Two straight years of weak monsoon and now some dealers are suggesting that they are struggling to clear stocks as the demand is yet to pick up. Would there be any truth to that?
A: The demand for gold has to be divided into two segments – it is an investment demand and it is a jewellery demand. So if I talk purely from the investment demand that has obviously gone because nobody is anticipating any price increase in gold. I am not very sure that people would like to invest in gold.
You will also appreciate that with the improvement in financial inclusions with more of Jan-Dhan accounts in rural area so a structural change has started happening in the Indian economy because now people have got the alternative of financial investments also in front of them. So, now gold as an investment asset would be losing its charm to a very large extent.
However, jewellery as such is a different this thing. Jewellery, the weddings keep on happening and you are culturally and mentally are tuned. Jewellery remains most important component of any wedding expenditure.
Latha: If you are looking at the year to date sales for instance April 1 to September 10 and comparing it with a previous year then what would you say? Is it a 10 percent rise or 5 percent rise in demand?
A: I think it would be somewhere between 10-15 percent increase.
Reema: Considering that next quarter is going to be the strongest what is your expectations of sales in the festive season?
A: As I said before with the relatively stable gold prices we are very confident. Sales would be much higher in Q3.
Latha: Of how much?
A: It is not possible to put figure on the same. If you just ask me to quantify something around 15 is a very reasonable figure which one would expect.
Latha: Do you expect further pressure on your margins?
A: I don’t think there are any pressures on our margins. The margins are stable. We are only expecting an improvement in the margins. Margins are not under any pressure.
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