Tanishq, the gold jewellery division of Titan Company Ltd, has pulled the plug on its gold deposit schemes. As a result, the company is expected to record outflow of sales of about Rs 1,000 crore by the end of August.
The company's move was necessitated by the new Companies Act, which termed these as public-deposit schemes. The Act limits the returns companies offer deposit holders to 12 per cent and caps the total amount of deposits to 25 per cent of their net worth.
Tanishq has been operating two gold deposit schemes-- Golden Harvest and Swarna Nidhi - for many years. The Golden Harvest scheme was the most sought after, as through this, a customer had to pay equated sums for 11 months, after which the company contributed a month's worth of deposit; the customer could buy gold worth 12 months of deposits.
GOING FOR GOLD
Tanishq is expected to record outflow of sales of about Rs 1,000 crore by the end of August
Tanishq has been operating two gold deposit schemes, Golden Harvest and Swarna Nidhi
The Golden Harvest scheme was the most sought after, as through this, a customer had to pay equated sums for 11 months, after which the company contributed a month's worth of deposit
Bhaskar Bhat, managing director, Titan Company, told Business Standard Tanishq had stopped enrolling new customers on April 20 and had urged customers to reclaim their cash or purchase jewellery equivalent to that amount. "There was resistance from customers, as they wanted to complete the scheme. But now, as the Ministry of Corporate Affairs has clearly stated our scheme will be under public deposits, we are forced to close the scheme. We have given customers time till the end of August. If they do not opt for purchase of jewellery, we will send them cheques to close the payment," he added.
According to information, while Tanishq will not pay an extra month's worth of cash or jewellery under the 11+1 scheme, a customer can avail of 75 per cent of a monthly deposit from the company, if she/he opts for jewellery, and half a month's deposit if he/she opts for cash. "If a customer has made six monthly payments, what we are offering, in addition to the six months' worth of jewellery, is 75 per cent of the seventh-month payment from our side.
If they opt for cash, half the seventh-month payout from our side will be added and paid back to the customers," a senior Tanishq dealer told Business Standard.