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Tanishq, the jewellery arm of Titan, anticipates its jewellery purchase scheme (called Golden Harvest) will not be a significant contributor to its revenue this fiscal.
Jewellery companies had to withdraw old schemes after they were categorised as deposit-taking ones.
Titan re-introduced the scheme under stricter government norms in November 2014.
But the introduction of a cap on collection (of money) is expected to hit Golden Harvest’s contribution towards revenue.
According to Sandeep Kulhalli, Senior Vice-President – Retail and Marketing (Jewellery), Titan, the new guidelines peg a maximum collection of 25 per cent of the company’s share capital.
“Golden Harvest was a large part of our portfolio. But that’s gone away. Although we have re-launched the programme last year, there is a constraint on how much we can collect. It’s no more a jewellery scheme. So, we now have a quota, but nowhere near the original one. Its nearly half now,” he told BusinessLine .
Sources indicate that Golden Harvest accounted for nearly 30 per cent of Titan’s jewellery portfolio.
Till June this fiscal, the jewellery revenues were down 11 per cent to ₹2,072 crore (against ₹2,325 crore in the year-ago-period), with the absence of this scheme being a major reason.
In a bid to recover lost ground, the company has taken steps to accelerate growth, that includes new promotions and lower making charges.
According to Kulhalli, the moves have borne fruit in the form of improved customer acquisition.
Better accountsTanishq, he said, was expecting growth to be back, once the new scheme starts maturing. Maturities are expected to happen around October-end.
“Since the maturities we will see much better growth rates. October onwards our maturities (conversion to sales) will come in,” he said.
Post the re-launch, quality of Golden Harvest accounts has improved.
These are large accounts with average “ticket sizes” being 50 per cent higher than what they were earlier.
The average ticket size currently stands at around ₹5,000-6,000 per instalment against ₹4,000 in the earlier cases.
“Earlier, we had a ₹500 (per instalment) enrolment limit. Now, it’s ₹2,000. This pushes up the quality of the account. Maturity values are large enough and people would like to encash it. So up-selling is more,” he explained.
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