)
Speaking to reporters on the sidelines of opening Titan’s largest watch store in South India in Chennai, Bhaskar Bhat, managing director of Titan Company Ltd, said: “We have signed the JV, but the operations have not started. They already have around 18 stores under an existing arrangement which will be taken into the JV with the JV kickstarting in January, 2015”.
ALSO READ: Tanishq to open 30 new store in FY15
He said, while the 51:49 JV is mainly for Montblanc to operate its single brand retail in India, this would be a new and rich experience for the Titan Company which has no products in the segment in which Montblanc operates.The operations will start once the stores shift out of the existing tie-up of Montblanc with the distributor. In the beginning itself, the JV would be of a size of around Rs 80-100 crore. He added, the name of the JV firm is being finalised.
ALSO READ: Tata firms sell assets to avoid knocking on parent's door
According to recent reports, the writing instruments brand belongs to the Richemont Group that clocked Euro 10 billion in revenues last year and owns several companies in the luxury goods space such as Cartier, Van Cleef & Arpels, Piaget, Vacheron Constantin, Jaeger-LeCoultre, IWC and Panerai.
ALSO READ: Titan: Jewellers to gain from improved return ratios, growth prospects
Commenting on the other businesses of Titan, he said the company is planning a capex of Rs 250 crore during the present year. Of this, around Rs 150 crore would be for increasing the manufacturing capacity in various product categories, including precision engineering facility in Hosur, a jewellery facility expansion in North India, expansion relating to watches and in eyewear for which the place for expansion has not been finalised. The company’s capex is categorised into manufacturing and retail.
The company would also be looking at growing its recently-added categories such as perfume brand Skinn. The products have been accepted well and there is a good opportunity in the segment, said Bhat.
He added the company has also started selling Helmets.
Golden Harvest
The discontinued Golden Harvest scheme would have an impact of around 10-15 per cent on Titan’s jewellery business and the company is looking at clarity from the Centre and RBI on taking advance from the customer.
Speaking to reporters, Bhaskar Bhat, managing director of Titan Company, said almost 25 per cent of the company’s jewellery business was from the Golden Harvest Scheme, a customer advance scheme of Titan’s jewellery division Tanishq.
However, in an internal study conducted by the company, it found that while around 10-15 per cent of this impacted business would return as the customers would buy paying cash, while around 10-15 per cent would be felt on the company’s jewellery business.
ALSO READ: Gold import rule easing yet to impact availability
However, he added the company is not planning to rearrange the scheme and has stopped the scheme as it does not want to break the law by any means. According to the new Company Act, 2013, the schemes of the nature with a duration of 12 months would be considered a deposit and cannot pay over 12.5 per cent return.
When asked if the company could launch the scheme for a shorter period, Bhat said that even then there are chances that some customers would not purchase even after the term is over and it would be an issue for the company to maintain their money as per the new regulation. Almost 79 per cent of the turnover of the company is from jewellery.
ALSO READ: Jewellery shares rally as RBI eases gold import rules
Under the Golden Harvest scheme, the customer needs to pay a fixed amount every month with Tanishq for 11 months. The 12th month installment is paid by Tanishq. Hence, the customer can buy for more than what they pay. Under the scheme, the minimum installment value is Rs 500 and it can increase it to any amount as long as it is in multiples of Rs 500, according to Tanishq website.
