Also read: Gold duty hike will raise domestic prices: Shree Ganesh
Talking to CNBC-TV18, he says that the company is not affected by the restrictions on gold import as any import of gold on consignment basis shall now be permissible only to meet the needs of exporters of gold jewellery, while others can import gold only on 100 percent cash basis, unlike using all letter of credit (LC) benefits earlier.
He says that the dip in domestic demand is temporary as it is off-season right now.
Below is the edited transcript of his interview with CNBC-TV18
Q: What we understand now is that there is a huge problem of importing gold because of a cash crunch, since money has to be paid upfront. Can you just explain what exactly is the gold import problem, is it severe and therefore do you expect your sales to suffer?
A: Basically if you talk about Shree Ganesh and peers who are exporters, there is no restriction on the exports of jewellery.
Q: How much is your export percentage compared to the domestic sales?
A: Ours is 85 vis-à-vis 15 percent. Domestic is 15 percent and export is 85 percent. So for us there is no restriction, there is no bar. Yes, domestically, the gold which was being dumped that has come to a halt, now you have to import gold domestically.
For domestic consumption you have to pay upfront. Hence, people may have to put a lot of cash. So that is what is normal right now. Markets have reacted but unfortunately if you talk about the stock and the stock is coming down there is an overreaction of the market.
We assume that all the export houses are suffering because of the price of gold coming down or because of the restriction imposed by government, it is not so.
Q: The other point here is that a lot of experts have also been saying when the first fall in gold prices came, India saw that as an opportunity to buy big time and that is why you had a lot of companies like yours reporting good sales with prices falling. The concern now is that with continuous fall in gold prices, people may step back and we have seen some anecdotal evidence of also falling gold sales in physical market, in the last 10-15 days what kind of trend have you seen in terms of jewellery purchase?
A: The domestic demand is basically towards the celebrations that happen, like marriages and other thing. Now these two months there are no marriages. So it is very seasonal. So it is off-season right now.
Q: If you compare like to like, you have seen previous June and July, is it looking less now because gold is looking less of an investment buy?
A: Not at all. I think the demand has been steady. There is no problem in sales.
Q: How much inventory are you holding in terms of gold?
A: No, we do not hold anything. Everything is on unfixed basis for our company. So we at Shree Ganesh and people like us do not hold gold as balance in our portfolio. It is just a pass through.
Q: Are you saying that your topline will not be impacted at all on a year-on-year basis in this quarter; we will not see a significant drop?
A: No, you will not see. In fact, every year our growth story it is not the first time gold has been so volatile. Gold was USD 800 per ounce, then it went to USD 1900 per ounce and now it is coming back to USD 1200-1300 per ounce. So there is hardly any change. For us, it is just a pass through. If you talk about domestic gold, it has not become cheaper because rupee has depreciated against dollar. It is now running at 60/USD.
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