BENGALURU: Titan, the maker of namesake watches and Tanishq jewellery, said it expects revenue from its new gold installment scheme (GHS), which was re-launched two years back in compliance with the new Companies Act, to grow to about Rs 1,400 crore in the next fiscal, a sign the business was slowly coming back on track.
The previous GHS was a huge success for the company contributing about 25% to the total jewellery sales until it was forced to wind it after certain rules in the Companies Act, which came into effect 1st April, 2014, terming these as public deposit schemes.
The new GHS is in “full flow,” according to an investor presentation by the company on Monday. Titan told TOI last year sales from the scheme were expected to drop to about 10% of jewellery sales. For the nine months ended December 2015, jewellery revenue was Rs 6,873 crore and GHS about Rs 687 crore, as per calculations.
Still the projected revenue of Rs 1,400 crore pales in comparison with what the company earned for the fiscal 2014-15. Out of the jewellery revenue of about Rs 9,430 crore, GHS contributed about Rs 2,360 crore. It was not immediately clear how much the projected revenue would contribute to the total jewellery sales next fiscal.
The new GHS, in spite of being compliant with interest rates, had lost steam due to regulations and Titan faced a tough time this fiscal wooing its customers back. Sluggish consumer sentiment made it a choppy year for Titan which, for reported lower-than expected numbers most of the time.
Titan also warned against the government’s move to make Permanent Account Number (PAN) mandatory for every product or service transaction exceeding Rs 200,000 adding the rules hurt its sales in the current quarter.
Similarly, the recent country-wide strike by the jewellers to oppose the proposed 1% excise duty on gold impacted business at some its stores in March. “Excise duty got levied in the budget and the industry strike hit us significantly,” the presentation said.
