Titan Co forays into lifestyle space; eyes fragrances

Breaking away from its watch, jewellery and eye wear products, Titan is now emerging into other lifestyle segments. In an interview to CNBC-TV18, Bhaskar Bhat, managing director, Titan Company speaks about the company’s change in logo and re-branding.

“Today the company has become more of a lifestyle company and a retailer. This new name and logo with a star captures the spirit of Titan and the manner in which Titan is written for the corporate is now different from the brand Titan which is for watches and eyewear,” says Bhat. Also read: FMCG stocks impacted by slowdown
On his expectation from the yellow metal’s business, Bhat adds that despite gold being costlier, the company’s EBIT margin will not drop.  Below is the edited transcript of Bhat’s interview to CNBC-TV18. Q: What is the reason for the change in logo and branding, is there going to be a change in marketing strategy as well?
A: This is change of the name of company and corporate logo. For long the company name and brand name for watches and eyewear has been the same. Today the company has gone beyond watches and jewellery and into eyewear and many other categories. It has become more a lifestyle company and a retailer.
Hence, to capture all that we have brought a great deal of value to our customers and to our share holders and employees. Really this new name and logo with a star captures the spirit of Titan and the manner in which Titan is written for the corporate is now different from the brand Titan which is for watches and eyewear. So, it is really going to inspire us for the next 25 years. Q: There were some amount of changes in the memorandum of association which had taken place where you all did mention that you all would like to diversify into different streams of revenues such as solar or food and beverages etc, many be even kitchen appliances. Is that the way forward for Titan and possibly in line with the company’s name change as well?
A: Yes. The name change really captures the future journey for the company. We have succeeded in three lifestyle categories- watches, jewellery, eyewear and accessories. Our competence in transforming categories and impacting industries through design, retailing, manufacturing excellence and generally challenging the status quo through innovation is what we have excelled at.
There are still many lifestyle categories which are underserved, underpenetrated or unorganized and we bring value to those sectors and we are exploring in that space, lifestyle space where consumers really are now spending lot of money and are looking for value in terms of quality, design, access which is retailing and so on.
There are such categories that we are exploring and some of them are up for launch very shortly one of them being fragrances. Q: What is your non-jewellery, non-watch segment, how much is it as a percentage share in revenues and is there a goal as to what you would want it to expand to say in next two-four years?
A: The individual categories that we are exploring, in each of those, whether it is watches, eyewear or accessories, we expect to master those categories which means we will bring value to the customers through quality, design, retailing and branding.
Therefore the idea is in that category, in that industry we will create significant impact. Now, if that industry itself turns out to be not as big as some of the other industry, it really doesn’t bother us. The proportion of jewellery for example has grown quite significantly and that is because the industry size is very large. So, it is to create value for customers and shareholders and all are stake holders in the ecosystem which is what this whole journey is about.
Watches today is an Rs 8000 crore industry, jewellery is Rs 200,000 crore, eyewear is smaller in the space in which we operate, it is about Rs 2500 crore. However, in each of those creating significant impact is what our journey is all about and as we enter and bring innovation and bring value to that industry, the industry itself ends up growing. For example the Helios initiative in watches, it is added to our revenue although it is a multibrand retailing of watches. Q: What might be your margins this year on jewellery? You were doing about 10.5 percent as EBITDA margins in jewellery. Will that reduce now because you have to take more loans, perhaps pay upfront for gold as well gold is costlier? Will that in any way affect revenues and margins?
A: There is a significant uncertainty in the market place not so much at the consumer level, it is really at the backend which is buying of gold, funding of gold etc. So, there are many initiatives the company has taken to ensure that supplies continue. The Indian consumers’ desire to own jewellery is quite unabated. It is growing and the fall in price helps, the rising prices will continue to help in the turnover. Therefore, our focus has really been on the consumers to bring them value through great product, great design.
Therefore, even if the margin drops because the proportion of plain gold jewellery rises in their total jewellery business which will impact the margin and then borrowing cost impact, the EBIT margin will not drop. The profit before tax (PBT) might drop but EBIT will not drop. The quantum of profits we make certainly will be much higher than the previous year. Q: Is it fair to assume that your volume growth in the jewellery segment will not be affected and do you have any preliminary estimates of what the festive season targets would be?
A: The volume grew significantly in Q1. It continues to grow in Q2 but not at that rate. Now custom duties have gone up quite significantly, it will affect to some extent organised sector sales but we will continue to grow in value terms. In terms of volumes, atleast on plain gold side it is not very clear that total volume growth might still be in single digits by the end of the year in terms of gram.