Company of the Year: Titan Company wins gold for outstanding performance

Even as India Inc struggled with the two Covid waves in 2021-22, the jewellery-to-watches maker posted strong growth and continued adding stores

The fiscal year 2021-22 was impacted as much as the first year of the pandemic, as the country dealt with two Covid-19 waves that also saw lockdowns across states. But trouble for the retail industry in particular didn’t end there; the third wave, which didn’t last as long but still managed to eat into almost a month of the fourth quarter of the fiscal, coupled with geopolitical conflicts that began in February 2022, caused gold and commodity prices to soar, impacting consumer sentiment.

While all this was reason enough for retail companies to see muted a financial performance, it did not deter Titan Company from posting strong revenue and profit growth in 2021-22.

It closed the year with revenues from operations rising by a substantial 33.05 per cent to Rs 28,799 crore, while profit after tax was Rs 2,198 crore, up a staggering 125.7 per cent over 2020-21. While profit growth was among the best in the industry, Titan’s profit after tax for 2021-22 was much higher than the combined profit of Rs 1,425 crore reported by 11 other players in the gems and jewellery sector, according to Capitaline data.

The jewellery business, which is also the biggest contributor to the company’s top line, saw revenues from operations surge 33.9 per cent year on year (YoY) to Rs 19,427 crore, while watch revenues grew 52.9 per cent to Rs 1,804 crore, and revenue from the eyewear business also grew 34.4 per cent YoY to Rs 293 crore in 2021-22.

In the jewellery business, the company’s growth in 2021-22 in the more profitable studded category was significantly higher, leading to better gross margins and higher overall profitability. Also, CaratLane (an online jewellery brand, which is being extended offline) sustained good top-line and bottom-line growth. The omnichannel approach, technology capability, innovative product lines, and the new-age employee culture have combined well for the business.

Despite external challenges triggered by the two Covid-19 waves that impacted consumer sentiment in April-May 2021 and again in January 2022, the watches business witnessed a recovery. Consumption and retail bounced back during the festival quarter, and even in February 2022 the watches & wearables division (W&W division) witnessed good retail growth across both ground and online channels.

The premiumisation journey, which started several years ago, continued to deliver good results, as seen in the performance of premium brands like Titan, international brands like Tommy Hilfiger, as well as premium retailing channels like Titan World and Helios. The W&W division improved its market share in large-format stores like Shoppers Stop and Lifestyle in 2021-22.

The focus on digitisation also continued during the year, following the big boost seen during the Covid-19 pandemic. The online sales of the W&W division were at 19 per cent of total sales. E-commerce channels — both external marketplace and brand e-commerce — continued to gain traction, riding on the rising digital wave.

In the eyewear business, the momentum picked up significantly at the beginning of the July-September quarter, and thereafter the eyecare division performed strongly, with a complete transformation. Growth reached pre-pandemic levels.

The division also opened its first Fastrack prescription eyecare store to address the growing youth segment. This division’s supply chain scaled up during the year, with lens production crossing one million for the first time. Frame production also peaked at 400,000 units.

The Indian Dress Wear division (IDW division) took rapid strides forward in all areas of its business during the year, despite disruptions owing to Covid-19 in the first and the fourth quarters. Overall, sales of the IDW division grew by 55 per cent in FY22.

The gains also have their roots in the humanitarian approach that Titan followed during Covid, as is the pratice of Tata Group companies.

“Going back in time to the first quarter of FY21, because in a way it began at that time, we put the stakeholders first, instead of getting worried about the losses that we were going to make — which we did make — and how to reduce or minimise the losses of the first quarter,” C K Venkatraman, Titan Company’s managing director, told Business Standard.

During the pandemic the company provided loans and grants to its partners, and support to its employees. It provided transit homes for kaarigars (workers) and then, as the year passed, it provided employees and their families vaccines in their homes.

“The whole idea was to support our employees and our partners. We refer to ourselves as a very large family of 50,000 people, who include all these segments and, in a way, they rallied behind the company over the next several quarters,” Venkatraman said.

While the company earns the bulk of its revenue from its jewellery brand Tanishq, this worked in its favour when the Diwali quarter saw a pick-up in sentiment, as consumers came back to shop. Also, the share of the wallet, which typically goes towards spending on weddings at five-star hotels and inviting more guests at such festivities, was diverted to jewellery, said Venkataraman. Also, as consumers were not able to travel, the money saved was diverted towards high-ticket goods like jewellery and other consumer products.

The company expects to see its ethnic wear business, which houses the Taneira brand, and its bags, which it sells under the brand IRTH, grow over the years. Venkatraman expects that Titan will make a mark in these categories as well, the way it has done in the jewellery space.

Titan is also betting big on the growth of its international business, as it expects to open more stores overseas. In all, in 2021-22, Titan added 269 new stores across various brands, taking the total store count to 2,178 at the end of the year.

While the world is moving towards omnichannel retailing, the company expects that brick-and-mortar stores will continue to dominate even five years on, as customers want the whole experience when they shop for jewellery, owing to the large spends involved.

“Five years out, I see no change in the thrust of the company in terms of stores, because it has just become a more holistic 360-degree kind of experience, what’s called omnichannel,” Venkatraman said. “Even a brand like CaratLane, which was substantially an online business in 2016, when we acquired it, has got so many stores today, and is planning many more in the future.”