With the government proposing to limit cash transactions to only Rs 2 lakh from Rs 3 lakhs that was announced in the Budget, the jewellery industry which has one of the highest cash transactions has come into the limelight again.
Speaking to CNBC-TV18, Bhaskar Bhat, MD of Titan Company said the proportion of cash transactions is coming down significantly and government's focus on digitisation and capping of cash transaction will benefit the company, he added.
The level of cash transactions were at 40 percent before demonetisation, may now stabilise around 20-25 percent, he said.
Business wise the fourth quarter so far has played out well and so a target of 15 percent topline growth for FY17 is achievable, said Bhat.
Below is the verbatim transcript of the interview.
Anuj: A bit of a dichotomy here because one would have thought that this move should help at least companies like Titan where you have most of the transactions taking place by card or cheque but your thoughts on whether this move will benefit you going forward from here?
A: It will benefit us. Our proportion of cash transactions is coming down consistently and more than that the consumers who were not buying from Tanishq earlier are now veering towards us having realised that cash transactions are going to be more and more difficult but even those who bring cash bring the PAN card and so on. So we have a significantly larger proportion of those customers who deal less in cash and more by card.
Latha: Any number you can give us?
A: We were at something like 40 percent cash before the demonetisation. That has come consistently down. It is coming down month-on-month. It will stabilise to about 20-25 percent. However, with this limit going down, it will further come down.
Our average prices are at about Rs 65,000-70,000, so we are significantly below Rs 2 lakh even in our ticket size.
Anuj: A lot of customers are moving to Titan and Tanishq. Is that giving you elbow room to increase your margins also?
A: Margin improvement has been a constant journey. It is not because of this cash or non-cash, it is primarily because of the product mix, our journey has been strongly towards a greater proportion of diamond jewellery and that is higher margin than plain gold jewellery but even in plain gold jewellery, we are moving towards higher margin with newer and newer collections like Divyam and Shubham and all that. So that will help margin improvement anyway.
Latha: How is Q4 revenues vis-à-vis Q3, is there improvement?
A: Q3 was a fabulous quarter because it was festival season and wedding season. It got dampened for about four weeks post demonetisation but we came back faster. So we hold our 15 percent topline growth which we had been talking earlier and Q4 has played out well.
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