Withdrawal of Golden Harvest scheme impacted sales: Titan

Titan Company disappointed market with its tepid numbers in the first quarter (Q1) of FY16 owing to decline in revenues. Speaking about the lacklustre performance, Bhaskar Bhat, MD, Titan said withdrawal of Golden Harvest scheme by the government which had contributed 30 percent to Titan’s jewellery sales earlier. Its flagship brand Tanishq had seen a sharp decline in Q4 of previous quarter as well. Below is the transcript of Bhaskar Bhat’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. Latha: Misses street expectations on several counts, revenue down 6.3 percent, if you can just take is through the demand position itself? A: The revenue decline was expected, I don’t know what the market expected because the biggest impact has been the Golden Harvest scheme in jewellery which was withdrawn last year and as a result a significant part of the revenue which the jewellery division about 25 percent we couldn’t get back, this is because of government regulation. Now, without the Golden Harvest we have grown quite significantly but that doesn’t matter as far as investors are concerned because the number has declined as a company. Watches have grown and as I said jewellery without the Golden Harvest has grown and so has the eyewear division including the precision engineering division has grown. So, all businesses have grown. However, to get back to the point about sentiment, it has been quite weak. We could have done much better had the sentiment been better and the reasons are several. One of them is of course a particularly inauspicious period during this year and June has been hit by that. However, let us say that happens every four years and we should be prepared and so on but overall bad quarter as you rightly pointed out. It has been a long time since we have seen a decline in sale but a significant part of that is because of the Golden Harvest. Sonia: Ad expenses as a percentage of revenues, we couldn’t really get the numbers. From an average of close to 5 percent this time what could we expect in the quarters to come? A: I was suggesting that there is no need increase the ad spend as a percentage of revenue, what needs to be done is to raise the revenue. So, we are not saving our budgets or raising the ad spends instead what we are seeing on the ground is you need constant introduction of new products. So either by way of design or by way of technology especially in the lifestyle businesses, watches and jewellery and to some extent eyewear – it is a rapid introduction of newer and newer designs that gets customers in. The good news is in both the categories pricing is not still an issue, people are willing to pay higher prices so margins have improved both in watches and jewellery.