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GST, demonetisation to help increase jewellery sales by 25% in FY18: Titan

Reforms to hurt family firms that currently control nearly 70% of the $30-bn gold jewellery trade

Reuters  |  Mumbai 

gold, jewellery

India's biggest-listed jeweller Titan Co expects sales to leap more than a quarter in the current financial year as tighter rules on cash flows and a new sales tax hurt the mom-and-pop firms that dominate the business, a senior company official told Reuters. Both "demonetisation" - removing higher currency bills from circulation - and a new national goods and services tax (GST) are expected to have a marked impact on the industry in India, the world's second-biggest consumer of the precious metal. Family firms control nearly 70 per cent of the $30 billion trade, but many cash transactions are believed to take place outside the taxman's purview. Greater transparency in the economy and higher tax receipts are key policy goals for India's government. "Events like and implementation of the Goods and Services Tax are helping us to increase market share as the industry is getting organised," said Subbu Subramaniam, Chief Financial Officer of Titan, predicting sales growth of more than 25 per cent in the 12 months through March. Titan last week reported a 71 per cent surge in net profit in the July-September quarter.

In the first half of 2017/18, the company's sale surged 47 per cent to 61 billion rupees ($941 million), the company said in a statement last week. The company's shares surged 19 per cent on Monday after touching a record high of 824.65 rupees. They have more than doubled this year up to Monday's close. India this year set the sales tax on at 3 per cent - a level industry players said was low enough to avoid curbing sales while at the same time steering customers to larger players abiding by tax laws and away from cash deals of questionable legal status. Subramaniam said Titan plans to open 15 stores in the second half of the fiscal year, on top of its existing 268 stores, to extend its geographical reach. Reflecting Titan's growth prospects, Deutsche Bank on Monday raised the retailer's price target to 900 rupees from 625 rupees, and forecast company's earnings will double by 2018/19 from last year's base. ($1 = 64.8300 Indian rupees)

First Published: Tue, November 07 2017. 14:10 IST