Titan Industries

The Directors are pleased to present the Twenty fourth Annual Report
 and the Audited Statement of Accounts for the year ended 31st March,
 2008:
 
 Financial Results
 
                                                        Rs. in crores
                                           2007-2008        2006-2007
 
 Total Income                                3042.87          2139.68
 
 Less: Excise Duty                             47.35            46.22
 
 Net Income                                  2995.52          2093.46
 
 -Expenditure                                2743.35          1891.80
 
 Gross profit                                 252.17           201.66
 
 Interest                                      20.14            20.42
 
 Cash operating profit                        232.03           181.24
 
 Depreciation / Amortisation                   29.73            25.59
 
 Operating profit before exceptional items    202.30           155.65
 
 Exceptional items:
 
 Provision for doubtful loans and advances       -              24.00
 
 Profit before taxes                          202.30           131.65
 
 Income taxes - Current                        33.04            36.95
 
 -Deferred                                      7.27            (2.86)
 
 - Fringe Benefit Tax                           3.70             2.23
 
 Profit after taxes for the year              158.29            94.33
 
 Less: Income tax of earlier years              8.02             0.20
 
 Net profit                                   150.27            94.71
 
 Profit brought forward                       130.93            77.50
 
 Amount available for appropriation           281.20           171.63
 
 Appropriations:
 
 Debenture redemption reserve                   5.28             4.85
 
 Dividend paid on preference shares              -               0.39
 
 Proposed dividend on equity shares            35.51            22.20
 
 Tax on dividends                               6.04             3.83
 
 Transfer to general reserve                   15.83             9.43
 
                                               62.66            40.70
 
 Balance carried forward                      218.54           130.93
 
 The Company achieved significant growth during the financial year
 2007-08 with sales income at Rs. 3,043 crores growing by 42% from the
 previous year and Profit before taxes going up to Rs. 202.30 crores, up
 by 54% from previous year. Net profit for the year stood at Rs. 150.27
 crores as compared to Rs. 94.13 crores in the previous year. The Watch
 segment grew by 17% to a sales income of Rs. 917.58 crores, while
 Jewellery sales went up by 57% to Rs. 2,028 crores. Sales of other
 products, including Accessories and Precision Engineering business,
 rose by 53% to Rs. 95.98 crores.
 
 All brands of the Company have performed well and new introductions in
 both watches and jewellery, viz., the Octane series in gents watches,
 Raga Crystal for ladies and the Jodha-Akbar collection in Tanishq
 jewellery have had very good responses, which augur well for the
 future.
 
 The Company continued to expand its retail network and now has perhaps
 the largest reach in its category, with 234 World of Titan showrooms
 and 104 Tanishq boutiques. The retail reach of the mass - market brand
 for jewellery - GoldPlus has grown to 21 show rooms. The new Titan Eye+
 eyewear business now has fourteen stores.
 
 Exports / International Operations
 
 The Company achieved an export turnover of Rs. 138 crores during the
 year between Watches, Jewellery and Precision Engineered components.
 
 The key challenge in exports of Watches and Jewellery is identification
 of profitable business opportunities across the globe, given the
 immense competition and clutter of brands in overseas markets. The
 International Business Division achieved a sales growth of 19.70% in
 2007-08 over the previous year. While the Watch sales grew by 22%,
 Jewellery sales went up by 30% as compared to 2006-07. The turnover was
 impacted by appreciation of the Indian Rupee against US Dollar.
 
 Dividend
 
 The Directors are pleased to recommend payment of dividend on equity
 shares at an enhanced rate of 80% (Rs. 8.00 per equity share), if
 approved by the shareholders at the Annual General Meeting.
 
 Finance
 
 During the year under review, the Company raised a total of Rs. 346.80
 crores from borrowings, of which Rs. 331.35 crores were from Commercial
 banks and the balance of Rs. 15.45 crores from other sources.
 Borrowings of Rs. 336.61 crores were repaid during the year. The
 Company incurred Rs. 47.45 crores as capital expenditure in respect of
 refurbishment and expansion programmes, outlays on retail outlets,
 capital investment in Precision Engineering Division and in IT Hardware
 systems.
 
 The tightening of the monetary policy by RBI through successive hikes
 in the CRR had an adverse effect in the borrowing rates of the Company,
 with the commercial banks raising their lending rates. Given the
 current inflation rate, it is expected that this high interest rate
 regime will continue for some more time. As a result the average cost
 of borrowings for the year was 9.24% as against 8.71% in the previous
 year.
 
 As on 31st March, 2008, the Company held fixed deposits of Rs. 1.73
 crores from the public, shareholders and employees. There were no
 overdue deposits other than unclaimed deposits amounting to Rs. 0.41
 crore.
 
 An amount of Rs. 5.28 crores has been transferred to the debenture
 redemption reserve in accordance with statutory requirements and the
 terms of Rights Issue.
 
 During the year under review, the Company made payments aggregating to
 Rs. 369.27 crores by way of central, state and local taxes and duties
 as against Rs. 308.97 crores in the previous year.
 
 Subsidiary and Associate Companies
 
 The Company, at the beginning of the financial year had three overseas
 subsidiaries viz. Titan International Holdings B.V, Amsterdam
 
 CTIHBV), Titan Brand Holdings N.V, Curacao (TBHNV), Netherlands
 Antilles, Titan Watch Co Ltd, Hong Kong fTWC) and one wholly owned
 domestic subsidiary, Titan Time-Products Ltd, Goa (TTPL, Goa), India,
 besides six domestic and five overseas Associate Companies.
 
 During the year, the Company took a major step towards consolidation by
 sale and mergers of the above constituent companies.  The equity
 interest in two overseas wholly owned subsidiaries of the Company viz.,
 TIHBV and TBHNV were sold during the Financial Year 2007-08 (TIHBV on
 31st December, 2007 and TBHNV on 28th March, 2008) and as a result the
 overseas Associate companies have ceased to be Associate companies.
 Titan Watch Company, Hong Kong, which was a subsidiary up to date of
 sale of TIHBV i.e.  upto 31st December, 2007, became automatically
 divested due to the sale as above.
 
 As at 31st March, 2008, the Company had 7 domestic subsidiaries and no
 overseas subsidiary.
 
 The operational highlights of these Subsidiary companies are as under:
 
 TTPL sold 8.24 million Electronic Circuit Boards in 2007-08 and made a
 net profit of Rs. 100.78 lakhs.
 
 Samrat Holdings Ltd and Questar Investments Ltd made a net profit of
 Rs. 174.81 lakhs and Rs. 18.07 lakhs respectively in 2007-08.  Titan
 Holdings Ltd made a loss of Rs. 15.39 lakhs.
 
 Tanishq (India) Ltd and Titan Mechatronics Ltd also made a net profit
 of Rs. 366.56 lakhs and Rs. 2.38 lakhs respectively. Titan Properties
 Ltd made a small loss of Rs. 1.41 lakhs.
 
 None of the subsidiary companies have declared a dividend for 2007-08.
 
 A modified Scheme of Amalgamation (u/s 391 to 394 of the Companies Act
 1956), to enable purchase of minority interest, was approved by the
 Board of Directors of the Company, at their meeting held on 27th July
 2007, subject to the required sanctions of the jurisdictional High
 Courts, wherein three domestic associate Companies viz., Samrat Holding
 Ltd, Mumbai, India, Questar Investments Ltd, Mumbai, India and Titan
 Holdings Ltd, Banglore, India were approved for amalgamation with Titan
 Industries Ltd.  The buy-out of the minority interest in the three
 domestic associate Companies was executed on 18th February 2008. The
 Scheme of Amalgamation of these three Companies shall not result in
 change in the capital structure or expansion of the equity share
 capital of Titan Industries Ltd, since as per Scheme no fresh issue of
 equity shares is proposed.
 
 As per the Scheme of Amalgamation, with appointed date as 1:04.2007,
 the cross holdings of the three merging Companies amongst themselves
 and the shareholding by Titan Industries Ltd in these companies, shall
 get cancelled and the investments held by Samrat Holdings Ltd, Titan
 Holdings Ltd and Questar Investments Ltd shall become the investments
 of Titan Industries Ltd. On the said three Companies amalgamating from
 the said date, three more domestic Associate Companies i.e. Tanishq
 (India) Ltd, Titan Properties Ltd and Titan Mechatronics Ltd shall
 become subsidiaries of Titan Industries Ltd. These three Companies
 continue as subsidiaries of Titan Industries Ltd along with Titan
 TimeProducts Ltd, Goa.
 
 Pursuant to the restructuring efforts, the Company will have no
 overseas subsidiary or associate but only four domestic subsidiaries as
 under:
 
 Titan Time Products Ltd, Goa Tanishq (India) Ltd, Bangalore Titan
 Mechatronics Ltd, Hosur Titan Properties Ltd, Hosur
 
 As per Sec. 212{1) of the Companies Act, 1956, the Company is required
 to attach to its Accounts the Directors Report, Balance Sheet and
 Profit and Loss Account of each of these subsidiaries. As the
 consolidated accounts present a complete picture of the financial
 results of the Company and its subsidiaries, the Company had applied to
 the Central Government seeking exemption from attaching the documents
 referred to in Sec 212(1). Approval for the same has been granted.
 Accordingly, the Annual Report of the Company does not contain the
 individual financial statements of these subsidiaries, but contains the
 audited consolidated financial statements of the Company and its
 subsidiaries. The Annual Accounts of these subsidiary companies, along
 with the related information, is available for inspection at the
 Companys registered office and copies shall be provided on request.
 The statement pursuant to the approval under Section 212(8) of the
 Companies Act, 1956, is annexed together with the Annual Accounts of
 the Company.
 
 Consolidated Financial Statements
 
 The Consolidated Financial Statements of the Company prepared as per
 Accounting Standards AS 21 and AS 23, consolidating the Companys
 accounts with its subsidiaries and associates, has also been included
 as part of this Annual Report.
 
 Outlook for 2008-09
 
 The Companys performance during last year (2007-08) was the best ever.
 The Company is working towards sustaining this momentum in the current
 year also. The watch division is pursuing rapid profitable growth
 through sharp positioning and focus through its major brands. Constant
 exploration of new consumer segments, introduction of innovative new
 products which would fuel consumer demand, and the rapid growth of our
 retail network would certainly drive this growth.
 
 The Jewellery Division continues to set for itself ambitious growth
 targets, through various initiatives including launching of new
 collections, scaling up network strength and area, improving the
 walk-ins, and improving the merchandising at the stores.
 
 The International Business Division of the Company has now been
 restructured and merged with the domestic Watch Business and domestic
 Jewellery Business Divisions, which Divisions are taking over charge of
 oversight of exports also. The Company will continue its efforts to
 explore entry into new markets besides growing in the existing markets.
 
 The launch of Tanishq Jewellery in the USA as a pilot project is
 underway and the Company will be setting up two Tanishq stores - one in
 Chicago and another in New Jersey during the current year.
 
 The Precision Engineering Division of the Company will be targeting a
 significant top line growth and achieve a break even in terms of
 profitability.
 
 The Companys new business vertical, Prescription Eyewear which was
 launched last year under the brand name Titan Eye+ is planning to scale
 up the number of retail outlets and currently has 14 stores which is
 targeted to grow to over 80 stores as per a national roll out plan in
 the current year.
 
 Corporate Sustainability:
 
 Titan Industries has a clearly defined policy on Corporate
 Sustainability. The approach of its policy continues to be at three
 levels, the first one being at the Group level where it works closely
 with the Tata Council for Community Initiatives, the nodal apex body
 for facilitating Tata Group initiatives.
 
 At the Company level, key initiatives have been:
 
 - Engaged 330 rural women through self help group and provided them
 opportunities for various outsourced activities in
 manufacturing/assembling of Watches, Jewellery and Precision Engineered
 products.
 
 - Over 600 needy students in the disciplines of Vocational, Medicine &
 Engineering have benefited from Titan Scholarship program.
 
 - The Jewellery Division started the concept of Karigar Park by
 providing equipment, material and training to Karigars so that they can
 work directly under the supervision of the Division and earn money on
 job-work without any exploitation. At present there are more than 400
 Karigars working on six Parks.
 
 - The Company has established a Basic Training Centre to impart
 technical skills to youth from lower economic background to make them
 employable. Currently 96 students are studying in the centre.
 
 At the individual level, Titan volunteers comprising the Community
 Development Forum have taken up comprehensive vision care program in
 and around Hosur with a leading Super Specialty Eye Hospital in
 Bangalore. Eye camps are being conducted and an eye care clinic has
 been opened in Hosur to cater to the needy and poor.
 
 - Other programs include programs for skill development for rural
 women, infrastructure improvement in villages and creating awareness on
 hygiene and clean environment.
 
 The Company is proactive in its approach towards the Environment and is
 compliant with statutory and regulatory requirements.  The Watch,
 Jewellery as well as the Precision Engineering Divisions are certified
 under ISO 14000:2004 Environment Management System Standards and under
 ISO 9001:2000, Quality Management Systems Standards.
 
 Titan Industries is a signatory to the 10 principles of the Global
 Compact with its Communications on Progress (CoP) duly posted on the
 UN Global Compact website.
 
 Awards and Recognitions:
 
 Titan Industries Ltd was adjudged one of the Worlds 50 Domestic
 Dynamos by Boston Consulting Group in a survey of the top 50 fastest
 growing domestic companies countering multi national majors in their
 respective domestic markets through innovative products and marketing
 thus continuing to grow at an accelerated pace despite international
 competition.
 
 The Company also continued to be recognised for its product and retail
 brands and its innovations as under:
 
 Won the Top Retailer 2007 Asia Pacific - Bronze Award
 
 Won Marico Erehwon Innovations for India Award for the slimmest watch -
 Titan Edge
 
 Titan the brand won Images Fashion Award for the Most Admired Brand
 for the year 2007-08 for the 7th consecutive year.
 
 Titan Industries Ltd won the Images Fashion Award for the Retailer of
 the Year.
 
 Titan Brand was ranked first amongst the consumer durables category in
 a survey by Economic Times.  
 
 Corporate Governance
 
 A separate report on Corporate Governance forms part of the Annual
 Report along with Auditors Certificate on Compliance.  Directors Mr. N
 N Tata, Mr. T K Balaji and Dr. C G Krishnadas Nair retire by rotation
 and are eligible for re-appointment.
 
 Mr. Shaktikanta Das, IAS, Secretary to the Government of Tamilnadu,
 Industries Department and a nominee of Tamilnadu Industrial Development
 Corporation Ltd (TIDCO) who was appointed as Chairman & Director of the
 Company on 5th June, 2006 resigned with effect from 5th December, 2007.
 The Directors wish to record their gratitude and appreciation for the
 wise counsel and contribution by Mr. Shaktikanta Das during his tenure
 as a Director of the Company.
 
 Mr. M F Farooqui, IAS, Secretary to the Government of Tamilnadu,
 Industries Department and a nominee of Tamilnadu Industrial Development
 Corporation Ltd fJIDCO) was appointed as Chairman and Additional
 Director of the Company with effect from 5th December, 2007. Members
 attention is drawn to item no. 6 of the Notice for his appointment as a
 Director of the Company.
 
 Mr. Sunil Paliwal, IAS, Executive Director, Tamilnadu Industrial
 Development Corporation Ltd, and nominee of TIDCO, who was appointed as
 a Director on 26th February, 2007, resigned with effect from 29th
 October, 2007. The Directors wish to record their gratitude and
 appreciation for the wise counsel and contribution by Mr. Sunil Paliwal
 during his tenure as a Director of the Company.
 
 Mr. Kumar Jayant, IAS, Executive Director, Tamilnadu Industrial
 Development Corporation Ltd and a nominee of TIDCO, was appointed as an
 Additional Director, with effect from 29th October, 2007. Members
 attention is drawn to item no. 7 of the Notice for his appointment as a
 Director of the Company.
 
 Directors Responsibility Statement
 
 Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
 based on the representations received from the operating management
 confirm that:
 
 1.  in the preparation of the annual accounts, the applicable
 accounting standards have been followed and that there are no material
 departures;
 
 2.  they have in the selection of the accounting policies, consulted
 the statutory auditors and have applied them consistently and made
 judgments and estimates that are reasonable and prudent so as to give a
 true and fair view of the state of affairs of the Company at the end of
 the financial year and of the profit of the Company for that period;
 
 3.  they have taken proper and sufficient care, to the best of their
 knowledge and ability, for the maintenance of adequate accounting
 records in accordance with the provisions of the Companies Act, 1956,
 for safeguarding the assets of the Company and for preventing and
 detecting fraud and other irregularities;
 
 4.  they have prepared the annual accounts on a going concern basis.
 
 Acknowledgements
 
 Your Directors wish to place on record their appreciation of the
 support which the Company has received from its promoters, lenders, 
 business associates including distributors, vendors and customers, the
 press and the employees of the Company.
 
 Particulars of Employees
 
 Information required to be provided under Section 217(2A) of the
 Companies Act, 1956, read with the Companies (Particulars of Employees)
 Rules, 1975, forms part of this report.
 
 Annexures
 
 Required information as per Section 217(1)(e) and 217(2A) of the
 Companies Act,1956, are annexed.
 
 Auditors
 
 Members will be requested at the Annual General Meeting to appoint
 auditors for the current year and pass resolutions per item no. 9 of
 the Notice.
 
                                 On behalf of the Board of Directors,
 
 
                                                        M F Farooqui
 Bangalore, 20th June 2008                                  Chairman