Titan’s Tanishq had received approval from the Director General of Foreign Trade (DGFT) to directly import gold – which would prove to be margin accretive given the lower tax outgo. However, recent RBI norms limit the maximum lease period to 90 days under this route. Further, from what we understand, Gold procurement even through MMTC domestically is also to be capped at a lease period of 90 days. We believe the regulations could impact Titan’s working capital and/or increase the administrative burden on the company as it complies with them.
After a tepid 1HFY13, management (more…)