We were just trying to get a sense of short-term trigger at play when it comes to Gitanjali. Gold prices are coming off their highs, is that something thats being factored in?

I presume the gold prices have started coming down and this is certainly helping the demand in gold. The Southern market is doing extremely well in the gold at this moment. The normal buying season is January and February.

In which part of the jewellery business are you seeing traction? Would it be the diamonds and the precious stones or is it just pure gold jewellery thats still seeing robust demand?

No, generally the diamond jewellery has performed extremely well over the last one year because the gold prices were very volatile, so there is an established market of nearly 150,000 to 200,000 crores in India.

So there is a great shift from gold to diamond when the prices of gold were very volatile. Of course the Indian heart certainly wants to buy as much gold as possible. When the gold prices are down, it is always attractive. The gold prices are off for the last couple of weeks by Rs 2000, people will wait for a little while but they certainly will go now for gold buying because the prices are off at the moment from the peak.

Diamonds have lower margin in any case and now with gold prices looking as they are, is there some pressure coming in on margins on that front too?

The rough diamond prices have increased and thats certainly putting a pressure. So we are increasing the prices of diamond jewellery this year. Last year, there was a growth as far as the prices are concerned in gold jewellery by nearly 20-25% due to the price of gold.

The whole year diamonds remained flat or a little bit lower. So now it is time that diamond jewellery will go up by 15-20% over next six months or so because diamonds are scarce at the moment. Diamonds are not enough.

A lot of mines stopped last year. So for them to get back to business is going to take another six months and at the moment, there is shortage of diamonds you can see in many places.

How does your higher advertising spend take away from your margin picture right now? What is the picture looking like going ahead?

The gross margins are quite comfortable and as we grow, we are on the development stages still.

We are still coming up with more brands and the branding business. Gitanjali is the leader in the branded jewellery business and as we grow - like our brand Gili is growing as it was a first brand 15 years before. So the profit margins are improving there.

So as the brand grows, it is a whole 5-10 year story about each brand but as they grow, the gross margins are quite interesting - more than 30% as such as the GP- But with the spends and everything of course, in the branded jewellery, we make about 6-7%.

What are your expectations from the budget?

Expectations from the budget as far as the diamond and jewellery industry is concerned, we would like to have the stimulus going on as far as the interest rates are concerned because Indian interest rates are even with the stimulus. It is no way in comparison with the world rates. World rates are about 3-4%. Against that, our minimum rate is 7-8%.

There is a lack of availability of dollar. So they should continue the stimulus. Second demand is that we need to have outsourcing from the special economic zones because there are not enough workers outside and in special economic zones. Further, due to seasonality of the business, there is a lot of spare capacity. So this is the second demand that we have asked for and easier availability of gold to every single manufacturer.

These are the three things that we are hoping for. Apart from the direct tax code - they should not implement that here.