The possibility of permitting exchange of gold ETF units for purchase of ornaments at the Tanishq showrooms owned by Titan Industries Ltd (TIL), will be taken to the notice of the authorities of TIL for consideration, thereby bridging a major lacunae the investors in gold ETF face now, according to a senior executive of TIL.

He said the jewellery division, which clocked sales of about Rs 5,500 crore during the last financial year, is expected to notch up sales of Rs 6,500 crore during the current year. The company plans to add 15-20 showrooms in the current fiscal to the 127 showrooms it already has, including the second showroom it opened in Coimbatore on recently.

Speaking to Business Line on the sidelines of the opening of the second franchise showroom in the city, Mr C.K. Venkataraman, Chief Operating Officer-Jewellery, Titan Industries Ltd, Bangalore, said 22 carat gold prices have gone up by Rs 300/gram in the past ten days due to global uncertainty, which was reminiscent of what occurred about three years back when investments from various asset classes were pulled out for investment in gold as it was felt to be a safe bet.

He said the fact that Tanishq has emerged as the biggest jewellery brand in the country with a 5 per cent market share of the Rs 1 lakh crore jewellery market in the country was proof that people were warming up to the organised branded jewellery segment with nation-wide sales outlets. The company, in the last 10 years, has grown from a Rs 500 crore company to a Rs 5,000 crore plus company, logging an annual growth of 40 per cent. He was confident of continuing the growth momentum since Tanishq backed by Tata's name for quality was able capitalise on the evolving consumer preferences and was no longer a niche but a mass player.

He said the company had a two-pronged strategy of having own showrooms and also adopted franchise model to power its growth. Out of the 127 Tanishq showrooms now in operation, about 25-30 were company owned while the rest were franchise operations. Going forward, the company has decided to open large format showrooms of the size of 10,000 sq ft plus on its own offering good customer experience. Already three such showrooms were in operation — in Chennai, Mumbai and Pune and opening such outlets in tier II cities would also be considered depending on business potential.

Mr Venkataraman said in addition to the Golden Harvest Scheme under which customers make monthly contributions to which the Tanishq makes a bonus contribution at the end of the term, it has just launched Swarnanidhi Scheme under which customers could accumulate gold in weight that could be used for purchase of ornaments at the end of the term, thus insulating them from fluctuation in gold prices.

When pointed out that investors in gold ETFs do not have now the facility of exchanging their ETF investment value for ornaments with jewellers directly and whether Tanishq was willing to consider transfer of ETF units for ornament purchase, he said the Swarnanidhi scheme worked on a similar concept as investors accumulated gold over a term period and just as in gold ETFs, the investment value was protected.

Mr Venkataraman, conceding that the basket of gold ETFs offered a wider investment option, said he would take the idea of directly allowing exchange of gold ETF investments for jewellery purchase from Tanishq to his company for consideration since this would help in pushing up the business further. He pointed out that in the first quarter of current fiscal, the TIL's jewellery business had registered an income growth of 71.9 per cent contributing Rs 1,633.74 crore to TIL's income in Q1 (total income Rs 2,047.93 crore), compared with Rs 950.54 crore in Q 1 of last FY (TIL's total income Rs 1,260.24 crore in Q1 of 2010-11).

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