Titan considers Rs 165 cr spread

Titan Industries plans to raise Rs 165 crore through a mix of debt and equity to fund its expansion. The company, which is scripting a turnaround, is planning to use the funds to finance its foray into new businesses, substantial expansion of facilities in existing businesses and fund working capital requirement.

The company has outlined two possible growth scenarios "" normal growth and aspirational growth "" for five years. Under the normal growth, Titan is targetting a turnover of Rs 1,870 crore by 2009-10 (Rs 1,082 crore in 2004-05).

Time products are estimated to contribute Rs 835 crore (Rs 601 crore), jewellery Rs 885 crore (Rs 535 crore) and precision engineering coming in with Rs 100 crore (Rs 20 crore).

According to the 'aspirational' scenario, backed by "ambitions and aspirations" Titan by 2009-10 is targetting a top line of close to Rs 4,000 crore, which might see time products contributing Rs 1,300 crore, jewellery a major Rs 2,100 crore and precision engineering Rs 490 crore. The company said under this scenario the net profit will be in the range of Rs 300 crore.

The company has stated that in case, it decides to infuse capital through equity, the issue will be structured in a manner such that additional equity issued would not be more than 20 per cent of the existing paid-up capital of Rs 82 crore. Titan has a debt of Rs 318 crore which is nearly twice shareholders' funds.

The company is planning to expand its precision engineering business into the medical sector from the current focus on the automotive sector, enter the mass market jewellery and the eyewear segment as part of its diversification plans.

As part of the diversificiation, Titan appears to be focusing particularly on precision engineering business. A long-term strategy has been devised for this with the help of Tata Strategic Management Group.

Titan has said the challenge is to scale up rapidly and earn a bigger share of the opportunity in the manufacturing outsourcing boom. The division is exploiting every possible source, including customer resources, to enhance its capabilities.