Bhaskar Bhat, MD, Titan Company Ltd.
The Titan Company, which started off as a watches business, is transforming itself into a more diverse platform with jewellery, handloom, and fragrance verticals being added to it over the years. Jewellery, however, seems to be its biggest bet, accounting for 75 per cent of the total revenue of the company. Bhaskar Bhat
, MD, Titan Company
Ltd, who is also a Tata Sons
board member, talks to Samreen Ahmad
and Debasis Mohapatra
about the benefits of being compliant with regulations and expansion plans of the firm. Excerpts:
Do you feel that that Titan will be in an advantageous position due to incidents such as the Nirav Modi scam?
We being who we are follow all regulations to the tee, but the competition being who they are, don’t. We therefore ended up with a non-level playing field which has been the nature of the beast for a long time because of the unorganised play in this industry. When demonetisation happened and the cash got sucked out, jewellery sector was hit as it has been the second largest consumer of cash after real estate. So all this ended up with the rest of the industry which was encouraging these practices, getting affected quite badly. The Nirav Modi
incident is a result of their behaviour, including avoiding paying taxes to hiding your transactions. After such an incident, even those who are compliant are suffering. So, today even if Titan goes to the bank for loan, it will be reluctant. However, we have benefitted because of the migration of customers which has happened after scams like these.
Do you think, this migration of customers is sustainable?
Tanishq was always a desirable brand. It was because of the practices of these (unorganised) players they were able to offer lower prices, more flexibility in dealing with cash transactions thus attracting customers. However, customers are now afraid that they will also be targetted if they buy from stores which are known for malpractices.
Are you confident of achieving the target of Rs 400 billion in revenues from your jewellery business by 2023? Is that feasible given your current growth rate?
We do feel confident of achieving that goal. We are in the perfect position to realise that ambition because we still have a low market share of 4.5 per cent in the overall jewellery sector in the country. We will continue to grow at 15-25 per cent year on year to achieve that goal. We are becoming stronger in the wedding jewellery business where we have less than 4.5 per cent market share. However, it is growing faster than our overall jewellery business.
In the last 10 years, the contribution of different verticals to the revenue has not changed much. Do you think, it's a risk factor to your business due to over-dependence on fewer verticals?
There are no reasons why this ratio should change. These are independent businesses. You can ask why is TCS
giving 90 per cent of Tata Sons
profits. That's the nature of the beast. Why is JLR contributing so much to Tata Motors profits? If it's a problem, then I can address those problems. But, I don’t see it as a problem. Businesses are growing in their own ways. In Titan case, all these businesses are not related. If eye wear is suffering on account of jewellery’s growth, then I can understand. But, as this is not the case here and all businesses are independent units with own team, own manufacturing, own brands; this issue doesn't matter.
In the wake up rise in oil prices, rupee depreciation and concern for high current account deficit (CAD), do you feel curb on gold import likely in the near future?
We hope that gold is not targeted. See, the customs duty collected from gold import is very attractive to the government and it's a very large amount. So, the government has to weigh all the factors before imposing curbs. I am not able to say how government will react but I think, they may not go all the way to curb imports. Because finally, gold is a very big contributor to the exchequer.
Watches segment faces a lot of competition from other players. How are you dealing with this?
Since watch is an accessory, the competition is very high as the segment competes with bags, apparels and footwear. We have about 65 per cent market share in this segment. To grow market share is difficult but to grow the market is our desire. We have launched the Kolkata edition which captures the sentiment of the city and has created a big buzz. Such innovations are being triggered to increase the size of the market. Our smart watches also have been a big success. Between Sonata, Fastrack, Xylus and Raga, we will be coming up with eight to 10 new collections this year.
The youngest brand from Titan's stable is Taneira, through which the company has forayed into sarees. Will you throw some light on the growth plans in this new vertical?
After Bengaluru, we will be expanding to more cities, including Delhi and Chennai. We will be opening 5-6 new stores by the end of the year. As our model is very asset light, our investment will be around Rs 50 million per store. Our price points under this brand is very reasonable with authentic brands under one roof. As far as procurement is concerned, we are doing it from various clusters.
In the eyewear segment, the Q4FY18 numbers had seen a bit of pressure. What is your outlook on this segment?
Eyewear business has been a little slow to take off but we believe that it is the place to be. It is in this segment where the demand is growing because there is a lack of good testing facilities and peoples’ awareness about eye care is driving growth. We have set a target of 10 million customers per annum in five years from around two million as of now. This market is hugely underserved. We already have lens manufacturing facilities in Mumbai, Kolkata, Delhi and Gurgaon and around 450 eyewear stores across India. The first frames manufacturing facility also came up in Karnataka this year.
You believe on an omnichannel presence. Under this strategy, how much e-commerce route is contributing as of now? Also, have all your physical stores attained breakeven levels?
E-commerce is growing and it now contributes around 10 per cent of the business for watches. We have a reasonably good online strategy. Customers are wanting to browse online and buy offline. We have a strong retail network to execute our omnichannel strategy. As far as our physical stores are concerned, all our stores under jewellery and watches segment are profitable. But in the eyewear segment, about 25 per cent of the stores are yet to break even.