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Titan Company Ltd is set to re-aunch its revamped Golden Harvest Scheme (GHS) next week, which has seen lukewarm demand in October. The company is also evaluating its tie-up with NBFC players to expand the scope of its schemes, which is currently limited to 25 per cent of its net worth. Titan had discontinued GHS in July this year, after the new Companies Act termed the gold deposit scheme as a public deposit scheme.
The new Act put a limit on the returns offered by the companies to deposit holders to 12 per cent and capped the total amount of deposits to 25 per cent of their net worth. This will be in compliance with the provisions new Companies Act.
“We have a limit on how much we can accept from customers. So, we had withdrawn our gold deposit scheme and now we are re-launching it with new features,” Bhaskar Bhat, managing director, Titan Company told Business Standard. He said the revised version of GHS will have a minimum monthly installment of Rs 5,000 a month as against Rs 1,000 a month earlier and 12 per cent annualised returns. Bhat, however, denied any move to tie up with NBFC players.
C K Venkataraman, CEO, jewellery division of Titan, said the company has made changes in its revamped GHS conforming to new regulations. “It is not going to be a complete revamp of the scheme. It will be similar to the previous scheme with new limits on the monthly deposits,” he said.
Tanishq, the jewellery division of Titan, had two gold deposit schemes, Golden Harvest and Swarna Nidhi, for many years. The Golden Harvest was the most sought after scheme, as through this, a customer had to pay equated sums for 11 months, after which the company contributed a month’s worth of deposit; the customer could buy gold worth 12 months of deposits. Tanishq had stopped enrolling new customers from April this year and had urged customers to reclaim their cash or purchase jewellery equivalent to that amount.
The scheme contributed 54 per cent to total sales during the second quarter of this year. The jewellery business recorded a growth of 64.8 per cent in Q2 over last year. It had an income of Rs 2,929.38 crore this year in Q2 as compared to Rs 1,777.39 crore last year.
Commenting on the sudden fall in prices of gold, Bhat said it will not have any adverse impact on Titan’s business. “We have hedged our gold and the current price fall will not affect margins. We purchase and sell every day. As we have done hedging it will not impact us. In fact, the price fall will be attractive for consumers,” he said.
Titan normally maintains an inventory level sufficient enough for four-five months, Venkataraman added.
“Current volatility is not very high and it will not have any major impact on the margins of Titan. If the volatility is above 10 per cent, it will have an impact on their margins. Also, the international hedging will come into play from now on, which will take care of their margins,” said Abneesh Roy, an analyst with Edelweiss Securities Limited.
