Titan Industries, the market leader in the watches segment, posted a strong 47 per cent growth in net profit in the third quarter. The Tata Group company, among the top five in market capitalisation, is set to further strengthen its presence in the gold retailing and watches segment. In an interview with Raghuvir Badrinath & Debasis Mohapatra, managing director Bhaskar Bhat shares his optimism for the year head. Edited excerpts:
The last quarter was healthy. What are the signs you are getting from the market?
The economy is driving the growth, people are confident about the future and they are spending on impulse purchase items. We are witnessing both volume and value growth in tandem, which was not the case during 2007-2009. Volume growth was difficult to come by, but now it is a healthy mix. Given these factors, the growth rate of our businesses has been pretty fast, which gives me confidence. The number of our World of Titan franchines has exceeded 300. We have added 40 outlets in the current financial year and plan to add another 20.
With the Budget season starting next week, there are apprehensions about hardening of interest rates and inflation. How do you see the two factors altering your plan?
India has responded pretty well and, to an extent, is insulated from global developments. The domestic consumption has driven growth. From the cost side, we will have to see how we should manage this factor. For the last 12 months, we did not increase prices. However, after the Budget, we will have to take a call on that.
Titan’s gold jewellery business is storming ahead despite the prices peaking. Do you think the business will hit a plateau?
If you see the price of gold, it has been high for a long time, but that has not dampened demand. Despite a 19 per cent rise in the price of gold in the third quarter, compared with the same period last year, Tanishq has recorded a high sales growth of close to 50 per cent in both plain and studded jewellery. Despite being the largest organised player in this segment, we account for just five per cent of the jewellery market. The migration of consumers from traditional and small jewellers to Tanishq is based on the trust of the Tata brand. There is also good headroom for growth. Adding to the glitter is the rise in our diamond jewellery business, while Gold Plus at the other end of the spectrum is also making money.
You have been trying to make a presence in mature global markets — both with its watches & jewellery business. But it is not exactly taking off. Do you think you will take a relook at this?
We are present across 27 markets in West Asia and Southeast Asia, besides a few other markets. In West Asia, there is some uncertainty in three to four markets because of factors beyond our control. Saudi Arabia is doing well and the Asian markets are looking up. The watches business in overseas markets grew by 15 per cent.
On the jewellery front, we had entered the US market before the economic meltdown happened and since then, we have wound it up. We are not revisiting those plans in the near future. The domestic consumption in India is driving both our businesses, with as much as 95 per cent of revenues coming from India.
The company has expanded its portfolio to eyewear and lifestyle accessories. How are these businesses shaping up?
We are becoming a lifestyle company. The Fastrack brand is taking this forward. Our eyewear business is maturing, though we are still not a national player in a pure sense. We have recently started making our lenses. We have 137 outlets for the eyewear business and it is on a consolidation mode. Within this market, there is enough opportunity as we are witnessing people migrating from the unorganised sector. The new businesses are still in the investment mode and we expect them to break even by 2013.
Your share price is trading at a higher multiple of 56, with a price range of around Rs 3,200 per share. Will you look at a stock split in the near future?
You should ask the market regarding the share price. As for stock split, we are not looking at it as of now.