 "Caratlane will make us leaders online: Bhaskar Bhat")
With the Caratlane acquisition, you now have your own e-commerce portal. Why has it not taken off?
That is going on its own. We have to keep improving the business. Caratlane is a pure jeweller in the online space. It would take us a few years to reach the level of sophistication in terms of technology. This, for us, is very good. We have two brands —leaders in their respective places, both offline and online.
When will you place the Tanishq brand on Caratlane?
Tanishq will not be on Caratlane, but Miya will be.
How much does the online business contribute to the overall business for Titan?
E-commerce is less than 1.5 per cent turnover of the company. In watches, it is higher, at around five per cent.
Will this change with the Caratlane integration?
Our business from online jewellery is Rs 20-30 crore. The acquisition will bring more turnover. In the jewellery business, whether you are online or offline, you have to do Rs 300-400 crore in three years. This is a vast market. When you are bringing the novelty that Caratlane brings, hitting the Rs 400-500 crore mark is not a problem.
Are watch sales stagnant?
We have been growing in single digits but there was a decline last year. One reason for our lower growth is that we strategically vacated the lower price points in brand Titan, which did not translate into higher value growth or higher volume growth for our Sonata brand. That shows the power of branding because people still want the Titan watch at Rs 1,800, not a Sonata watch at Rs 1,600. Sonata is a big volume brand but it could not pick up the slack left behind by Titan. We launched smart watches towards the end of last year. These haven’t taken off in India, though they are sought after in terms of curiosity.
Have you priced yourself out of the market?
We are at Rs 15,000-19,000, lower than rest. It’s because we source the components and make our own movements. We have positioned our watch as a stylish smart watch, not just a smart watch as a device on your wrist.
Do you see yourself as the largest seller of watches?
We don’t see that as a reason for the decline. The most important reason for the decline is sentiment. Last year, people were hard-pressed for money. Generally, the economy was not doing well (and) incomes were not rising. Then, the watch is not the important product you want to buy. Today, it is an accessory. It is a higher order fulfilment; we’re seeing very good traction at higher price points.
You had talked about reviewing the watch business...
The category is going through a change. It is a 30-year business; it has got cost structures which need to be re-looked and that’s one reason for the voluntary retirement scheme we announced for our employees.
The business has changed from being manufactured inhouse to a combination of inhouse and outsourced manufactured and back to some integration with a plant in Coimbatore for exports. The employee costs over the years have gone up and there is productivity and automation. It is a profitable business with high gross margins. But, when you don’t grow, you can end up with lesser profits.
We were at a healthy margin of 12 per cent , which has dropped to 10 per cent. Getting back to that would be the first step and that also has happened because of low growth. We should be able to get back to that growth.
Will you launch more smart watches?
There will be two more launches during the year - much like Juxt. One in the next four weeks and another later this year.
Was your jewellery business hit last year?
A lot of things came into play last year. The mandatory requirement to quote Permanent Account Number for high-value purchases and the imposition of excise duty led to protests and forced closure of stores. We lost a fair amount of business in March and April. Those things went against us last year and, as a result, we grew barely 6-7 per cent.
Where do you see Titan three years from now?
The company would, by and large, remain the same. Jewellery is still a dominant business, followed by watches and eyewear. Maybe we might launch one more business. Not three years, but we will be visible as a significant player in five years.
Do you require a five-year period to build this as a separate business?
Compared to our size, at Rs 11,000 crore, anything substantial should be Rs 500-1,000 crore. Doing Rs 50-100 crore is not a problem. Even watches is a Rs 2,000 crore business.
Everyone is talking about Uberisation of traditional business? Is your business vulnerable?
Anything you don’t need to have a touch and feel can be disrupted by e-commerce. Particularly, if the product is of small value. There is a certain desire to go out and buy in products like jewellery, which people would like to touch before buying. However, Caratlane's experience has been good . It has invested a lot in technology. Eyewear needs prescription, while sun glasses could get disrupted.
If the economy grows well, how will things change?
Dramatically. The economy is already seeing changes. Our products are in the heart of the aspiring Indian customer - upper middle class and middle class, who look for trusted brands, quality and after sales service. We will not be the first port of call for a wealthy Indian, globalised Indian, or they don't bat an eyelid to spend Rs 40,000-50,000 to buy a Montblanc pen. For them, Titan is not aspirational, it is respectable. They probably will not feel insulted wearing a Titan watch. Even for them, we have products like Edge, Raga. The premium price point products in Xylus and Nebula are doing well.