Titan Industries falls on interest cost concerns

Concerns over a proposal by RBI of linking the gold leasing rate to the base rate can potentially reduce earnings by up to 10%

Titan Industries shares fell 3% on Thursday on concerns over stress on its working capital cycle and interest costs, dealers said.

Concerns over a proposal by the RBI of linking the gold leasing rate (about 3.5% at present, 180-day lease period) to the base rate (about 9-10%) can potentially reduce earnings by up to 10%, HSBC Securities says in a note.

Also, Titan opting for direct import of the metal (90-day lease period) can trigger additional working capital needs which could potentially lower financial year 2014 earnings by up to 4%, HSBC says.