"We believe that we might be better placed as we have very good rapport with our banks", he told CNBC-TV18. Gold demand during festive season may also be less as people will be using their reserves from gold, he adds.
Also read: India's gold guzzling still high, spurs neighbours to act
Below is the edited transcript of his interview to CNBC-TV18.
Q: The government is likely to notify a further hike in import duty both on silver and gold, another 2 percent on gold and 4 percent on silver taking it all the way up to 10 percent. Your quick reaction on that.
A: I haven't heard this. I am hearing it from you. There have been rumors about this sometime back, but the reaction is such that I don't see a 2 percent increase in gold import duty making any major dent in the total imports. People just take it as an increase in price and that is what has been happening.
Unfortunately, what is also happening possibly is smuggling is going up, at least anecdotally; we are seeing more and more press reports about increased smuggling. If that is the case, 10 percent duty difference between gold prices in India and outside India; the arbitrage opportunities are very large.
It is also a fact that after July 22 Reserve Bank of India's (RBIs) notification on gold imports, imports have almost pretty much stopped.
Q: Perhaps moving from 6 percent to 8 percent may not be as you said consumers may take that in their stride but coupled that with the fact that you already have that RBI notification which is in place. What is it going to mean for companies like yours?
A: The issue is about supply constraint. As of now, I don't think any bank is importing gold. They are waiting and watching because there have to be by the rules which have to be framed by the customs authorities without which they are not able to import gold.
It is expected that these might come out in the next two to three weeks. However, I clearly see this 20:80 ratio of exports to imports curbing supply in some way. We believe that we might be better placed as we have very good rapport with our banks.
The quantity import should hopefully not get affected but certainly there is going to be a supply constraint at some point.
Q: We are ahead of the festive season, the wedding season is expected to kick-off as well do you see this impacting demand?
A: It is possible; it is quite likely that that might happen because it has been quite sometime since gold imports have happened. So, I would assume people are using their reserves that they have at this point in time.
Of course most of us have stopped selling gold coins and bars. That part which used to go for that consumption is now going into jewellery, but unless import starts again there might be some supply issues by the end of this month onwards.
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