Rakesh Jhunjhunwala's nine questions for Titan on Q3 concall

After Titan Company reported better-than-expected earnings in the third quarter, veteran investor Rakesh Jhunjhunwala spoke to the management on an analyst conference call and asked about how the company had dealt with demonetisation as well as its plans going forward.Below is the transcript of the conversation between Rakesh Jhunjhunwala and the Titan management.RJ: When will margins in the watches segment rise?A: It is a journey, which has started over a year back and quarter-on-quarter we are improving. You are right, we should be aiming for much higher margins but work is going on on both sides. One is cost compression, all of it has not kicked in yet. There is a lot of work that is going on on that front.Apart from that, the premiumisation journey continues. The only thing affecting that business is volume growth is not coming easily plus we have managed to bring down inventory quite well. At the same time, the closing of unprofitable stores, all this is kicking in by way of margins.You are right - we are not at 14-15 percent margin, which we used to achieve if that is your question.RJ: 10 percent margin is not a brand’s margin. Is there a central division for Fastrack?A: The brand is managed together but they align with each other as far as advertising is concerned. The accessories that is backpack, wallets and watches are with the watches and accessories division and sunglasses are managed by the eyewear. That is the structure.RJ: You are planning to launch new products under Fastrack?A: We are looking at new categories, but we will pilot them only if there is a sizeable opportunity.RJ: How has January sales been for the company as a whole?A: We have had one of the best months for eyewear without schemes and jewellery and watches have closed their schemes. RJ: How has jewellery & watches done?A: Jewellery has done well. We are seeing the benefits both of demonetisation, which has affected the others and our bounce back has been much better. So migration of customers is happening I believe. Apart from the fact that initiatives are in place and now wedding season has again recommenced.RJ: I hope that increase in dividend is more than improvement in performance.A: 50 percent is what our payout ratio has been in the last few years.RJ: Your promoter also wants additional dividend.A: We will take your point, we will take it to the board. We have done this in the past as well but general agreement is that it should be about 30 percent.RJ: Whose agreement? A: There are 12 people on our board.RJ: Your promoter has publicly said that the dividend income is not adequate.A: Point taken.