Platinum prices have come off sharply in the past few months, dipping below gold for the first time in a long time.
CNBC-TV18's Anuj Singhal and Sonia Shenoy spoke with PC Jeweller CFO Sanjeev Bhatia to discussed whether the firm had seen platinum demand had result meaningfully following the development.
Bhatia also discussed the firm's business plans.
Below is the transcript of the interview on CNBC-TV18.
Sonia: Is that what you are observing as well that the demand for platinum jewellery has gone up and does PC Jeweller do a lot of platinum jewellery?
A: As a retailer we have to keep what the customer wants. However, as far as I know in India, gold still remains the king. Especially if you start moving out of the metros, the demand for platinum still remains confined to a very elite or niche group of customers who have travelled abroad, who already have enough of gold or diamond jewellery and they want to try something in addition.
So, if we compare with few years back, yes the demand has grown but it still remains a very niche element for a very selective set of customers.
When you say that the price of platinum and gold have nearly converged, you are very right but platinum as on date has certain operational issues. Gold and diamond are very much – every artisan can manufacture these items. Platinum does not allow itself for any modification or any manipulation at our end.
So, if a customer wants to change the size or modify the design or something we are helpless. So, the customer in a sense has limited range: whatever is in front of them and if the size fits them. This is one of the operational issues in connection with platinum.
Anuj: What about the overall demand scenario right now? Post Budget have you seen any kind of increased buying activity. Now that we head into the wedding season, do you expect it to be good one compared to last year or do you think demand is still a bit sluggish?
A: February was a bit sluggish because there were rumours of a duty cut and everybody was trying to postpone their purchase perhaps in anticipation that the duty may be cut and the prices reduced further.
However, now the position is clear and we are seeing whatever pent-up demand was there for February coming forth in March. With the onset of navratras and wedding season, people are coming back to the stores and we are seeing good footfalls.
Sonia: When you say good footfalls in which segment are you hoping to see the growth pick up – will it be in your gold jewellery segment itself or do you think your diamond jewellery segment can also grow? What are the growth targets that you are looking at in the next couple of quarters?
A: It is always a mixture between diamond and gold. We currently have ratio of slightly more than 30 percent for diamonds and 70 percent still remains gold. What we are seeing in Tier-II and Tier-I locations, people still prefer to buy more of gold vis-à-vis diamond jewellery.
So, going forward I feel this percentage would remain more or less stable. Regarding our growth targets, we continue to expand in unbanked cities like Bhagalpur, Durgapur, Siliguri where branded jewellery has not yet penetrated. So we plan to continue our expansion in such areas where the percentage of unorganised jewellery is very high.
Anuj: You had a good quarter in Q3. In fact, your sales went up 40 percent, profits went up nearly 40 percent as well, your export revenues nearly doubled what kind of growth run rate you think you can maintain going forward?
A: In retail it is very difficult to predict growth from quarter-to-quarter basis. I would be happier [to evaluate] on annual basis because quarter-to-quarter, month-to-month the demand can fluctuate like it happened in the month of February.
We have been growing at the rate of 20-25 percent per annum for past three to five years. I am confident that we should be able to maintain similar growth rate for the coming years as well. I don't think there is any doubt about that.
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