Titan Company Limited

Ajoy Chawla

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Mihir Shah

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Mihir Shah

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Ashok Sonthalia

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Ajoy Chawla

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Ajoy Chawla

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Ajoy Chawla

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Ajoy Chawla

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Ashok Sonthalia

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Ashok Sonthalia

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So it's difficult to draw any correlation.

— Ajoy Chawla

I don't know how much volume growth has happened for the industry, very difficult to gauge because let's wait for World Gold Council to kind of release some data exactly on festive season to festive season.

— Ajoy Chawla

It has been about flat to decline since a couple of quarters.

— Mihir Shah

One other perspective here, which is that given the macros, both the price of gold as well as the middle class economic pressures, which have been around, the buyer growth challenge is not going to go away that easily, notwithstanding how the industry actually creates new innovations.

— C.K. Venkataraman

But in this particular industry, in this particular category, because of this huge stock of gold with households, we can get -- as the division has got, we can get a huge growth in times where buyer growth is a challenge through ticket size growth, where you get people to bring in their gold and actually buy more, and thereby grow by value rather than by wallet.

— C.K. Venkataraman

Venkat, just on continuation with that and Ajoy also, so if I recall correctly, the exchange gold has a bearing on the margin and will put some pressure.

— Mihir Shah

The way gold prices are going up unabated while our endeavor is to be consistent with our margin delivery, Ashok here, really it's becoming increasingly difficult to kind of project gold price trajectory and consequently, its impact on margin.

— Ashok Sonthalia

Margins will also hopefully become stable because then that whole impact of high gold prices on margins, particularly on the gross margins of studded, et cetera, will stabilize.

— Ajoy Chawla

So -- and even the pressure of making charges, et cetera, which tends to become a little more skewed when gold prices are high.

— Ajoy Chawla

So in quarter 2, we didn't see any net impact of reversal and accrual.

— Ashok Sonthalia

We understand that some of their unit economics may be under stress, but nevertheless, they are hoping for a swing and therefore, a lot more stores opening up, a lot more capital going into all of that.

— Ajoy Chawla

I think gold prices, if they continue to shoot up further, then there will be a certain -- further headwind.

— Ajoy Chawla

But at the rate gold prices have gone up, frankly, it is difficult to forecast what would happen to the margin going forward.

— Saumen Bhaumik

So just from what I understood, Saumen, you're saying that gold price could be a headwind, but that's generally a headwind for the entire industry.

— Arnab Mitra

But if gold rate dramatically changes, it is very difficult to sort of address some of these things given the inventory can't be altered immediately overnight, right?

— Saumen Bhaumik

Q

And first of all, thanks for hosting the call early in the day. So just I have only one feedback what you're seeing on the ground, what the customers are telling you in the context of the parabolic rise in gold prices on three aspects. One, what the customers, let's say, the willingness. You mentioned last time about customer buying an 18-carat or less than 22. And importantly, what the activities which you are undertaking directionally, let's say, what proportion of your inventory is non-22 in plain gold or anything like that. And then how sustainable it is. Point number two, historically, we

Ajoy Chawla

Good morning Manoj, Ajoy here. I think the first one about how are we seeing consumer behavior on the ground. I mean, there's been a certain holdback which consumers had during the meteoric rise of gold. But then when they didn't see it come down and continue to remain high during festive, a lot of fence-sitters jumped in. Having said that, that was mostly to do with people in the mid- to higher price bands. In the lower price bands, there continues to be sluggishness in terms of number of buyers and -- especially for gold jewellery. Your point on how is the response to 18-carat jewellery. It

Q

So my question, again, is on the buyer growth. It has been about flat to decline since a couple of quarters. Can you highlight steps taken by you, which are materially different from your past steps, to bring back buyer growth apart from the normal activation, marketing mix or the 18 carat that you're trying to do? Any other material steps you think that will bring back buyer growth? So that's one. And any quantitative range for October festive or October sales that you can share will be very helpful. So that's my first question.

Ajoy Chawla

So on buyer growth, we've done a lot more work in terms of populating price points in the sub INR1 lakh if I look at Tanishq and Mia as well has done a lot of work. We've been doing a lot more introductions in lower caratages, certainly 14 carat offering in the stores has gone up. Third piece is that to really stimulate buyer growth, we unleashed a very powerful gold exchange campaign, not just an offer. Offer was, of course, there, which was a never before offer. But we provided a very strong emotional hook to customers saying how when you exchange gold or unlock your lockers, it's good for y

Q

Just wanted to look beyond the near term a little bit. While current gold prices are where they are, as this trajectory starts to become a little more benign, would love to hear your thoughts on how do you see growth and margin behaving and whether the historical levels that we have seen in jewellery, are they even achievable because maybe the competitive intensity has changed? So would love your thoughts on how do you see both growth at the sales front and margin behaving once all this whole elevated level goes off.

Ajoy Chawla

I think growth certainly will continue to be good. In fact, we continue to be a high-growth business, even compared to historically, we have grown pretty well, and the CAGR continues to trend upwards. Let's see where we end ultimately with quarter 3, but I think growth certainly. And if gold prices stabilize, in fact, we think growth prospects improve because more buyers will come into the market. Margins will also hopefully become stable because then that whole impact of high gold prices on margins, particularly on the gross margins of studded, et cetera, will stabilize. So -- and even the pr

Q

Congratulations on strong execution despite a high base. Sir, I wanted to check, there has been an increase of INR 9,500 crores in consolidated inventory, which is a significant number. So how should we see this? Is this purely basis the rising gold price on existing inventory? Or there is a component of higher stocking in anticipation of a strong festive plus new store additions as well in this.

Ashok Sonthalia

So it is a combination of both because as business is growing, to that extent, inventory has to go up. But on -- it is largely driven by gold price, if you look at the overall number. Certain kg amount with the expansion of business, expansion of the store has to go up. There is nothing to talk about. It is not out of our normal turn or normal trajectory or number of days. It is the rate of gold which has impacted substantially this number and the scale of business. And also I think, you're right, there is also a earlier season start this year. So there were some amount of seasonal upstocking,

Q

Congratulations on a good quarter. So I have just one question, and that is on TEAL, the Titan Engineering Automation -- Automotive business. So does this business have any synergies with the consumer businesses that we have? If yes, if you could elaborate them? And if not, is there any reason why we are not demerging it and/or listing it out separately?

C.K. Venkataraman

Sridhar, shall I take this? Yes, sure. Yes. So no, there is no real synergy between TEAL and the consumer businesses. Titan TEAL is global tech manufacturing B2B business, whereas the rest of Titan is becoming global but B2C. There is no synergy. It was born 20 years back, and we have scaled it substantially, realizing that even within the sort of neighborhood of a very large B2C successful company, there is a place for it. And by adequately staffing that company, adequately creating the right capability for the Board which manages -- which governs TEAL, we have created a kind of planetary sys

Q

And firstly, Venkat, thanks for your insights, we will miss them, and I look forward for many more. Best wishes for the rest of the team. So my questions, first on jewellery. I mean, just given the unprecedented gold prices, can you throw a little more light on how trends differ regionally within India? And obviously, given your increasing global scale also in other markets, are we seeing sort of clear differentiation in trends? That would be sort of an interesting insight. And second, on the watch business, you've made a sort of concerted effort on the analog watches side. We've seen new laun

Ajoy Chawla

So on trends regionally, if you are asking geographically, we have gained share in East and South -- or rather we continue to gain share in East and South driven by our regionalization strategy, which is becoming sharper and better by every quarter, even as we invest more. We think this playbook can be extended to other states as well, and we are planning so in the near future as we go forward. In terms of North and West, we were a little concerned about how Bombay, Delhi consumer sentiment is, and it was a little sluggish. But I think a lot of the work that we put in as well as maybe some imp

Q

On the competition in jewellery, are you seeing any difference in behavior from jewelers who might be owning own inventory versus those who are like using gold on lease because some of them might be sitting on large inventory gains and might be willing to operate at lower margins and can be more aggressive? That's my question number one. And second one is, can you update us on the consumer response to LGDs? With income pressures, is that something which consumer is looking at more closely? And how large is the solitaire and high-value studded jewellery business for you? And are the trends ther

Ajoy Chawla

So first question, yes, when jewelers see inventory gains on gold, unprecedented inventory gains on gold, they tend to use it effectively by reducing making charges or passing on significant offers. And certainly, therefore, it becomes a competitive intensity going up. And therefore, we have to deal with it as it comes. On the studded side, you talked about the LGD. I think the market in LGDs has, of course, been developing slowly and steadily with many players coming in. We understand that -- and they are expanding as well. We understand that some of their unit economics may be under stress,

Q

I had a couple of questions. First was actually on CaratLane where your margins have expanded 250 bps to 10%. I wanted to understand, do you see -- I know there's some seasonality in CaratLane margins, but on a year-on-year basis, do you think this trajectory of margin expansion is sustainable and what has driven it? That was my first question. Second is generally consolidated jewellery EBIT growth has been running much higher than the Tanishq EBIT growth, CaratLane as well as International. So should one expect that broad trend to continue? Anything on international, which was lumpy in terms

Ajoy Chawla

Saumen, you could answer the first. On the margin front, I think there are multiple things that we have done in terms of dealing with variation, the share of gold in the overall product. So therefore, we saw the improvement between quarter 1 and quarter 2 compared to last year. But at the rate gold prices have gone up, frankly, it is difficult to forecast what would happen to the margin going forward. On the international front, there are two factors. One is the size of the international business and its share to total Titan jewellery is climbing substantially, even though it's small, but clim

Q

I have just one question with regards to the reversion of the hedging gain. So if I get it clearly, the 50 bps gain that you have done in the Q1, that's kind of reversed in Q2. Is that the right understanding?

Ashok Sonthalia

No, I think last time also, we spoke that it will gradually reverse over Q2, Q3. And also simultaneously, we said new hedges can again have a compensating effect. So in quarter 2, actually, there is no net impact on account of reversal and further accrual.

Q

Two questions. First is, Ajoy, when you mentioned high-value studded, if you could just define is it above, say, INR 5 lakh? What is the definition of that? And if you could just give the contribution of that and the solitaire portion in your studded? The second one is that we are looking at a large share of store rehashing, around 70. I'm guessing all of it is Tanishq. So can you quantify if that leads to quite a substantial increase in the store productivity? What are the reasons for it? Maybe it's an increase in the area? And if that could also be an incremental trigger over the next 6 mont

Ajoy Chawla

So on high-value studded, historically, we've defined it as above INR 2 lakhs, and for consistency, we've kept it at that level across the years. So in Quarter 2, it was contributing around 14% of the overall business, and that was 1 percentage point higher than last year Quarter 2. Of course, Quarter 2 also has The Festival of Diamonds. So to that extent, the contribution in this period goes up relative to other quarters. But I think we will see a Y-o-Y benefit for the year as well. Solitaire currently contributes to about -- I'm trying to just do a math here. So it's about 4% of the total --

Q

My first question was, Ajoy, you gave a good flavor on how the demand trends have been like- for-like festive and also the ongoing wedding calendar. I just want to get some clarification because last year in Q3 and Q4, we saw a surge in gold coin and bar demand. Just want to hear from you how that trend has been this time around.

Ajoy Chawla

It continues unabated. And it looks like the appetite for gold coins and bullion is very high. Naturally so, given the gold price is going up. So it's leading, it's continuing to lead. And as we see now, the contribution of gold coin has certainly gone up significantly over the last several years. Just a follow-up here. Is it aligned versus your expectation? Or is it just trending in a similar pattern, similar to what we have been seeing in the last 12 months? It's continuing to climb in contribution. It's trending up and both buyer, KG, value, everything growing much faster than what we might

Q

One small question. Ajoy, you mentioned that buyer growth has been weak and buyer growth has been weak for a while because gold price has been rallying really hard. I'm just linking it to think from a studded angle as well because studded maybe a considered purchase but it's many times a converted purchase. So is it that as the buyer growth builds up, you would see much more tailwind for studded growth, which has been also lackluster for a while, although it has gone up this quarter a bit from the last one? So is there a buyer growth deterrent for that growth, number one? And given your INR 1

Ajoy Chawla

Sure. So I think, just to put things in perspective, since we're talking all over on buyer. Buyer growth overall has been minus 2% for the quarter. Gold was minus 11%, largely driven by the sub INR 1 lakh. Studded was plus 3%. So I think this gives a perspective that studded is actually doing much better than gold. I'm keeping coins aside. Coins was a much higher number. So -- and studded buyer growth has been trending in the positive territory and leading the gold jewellery buyer group consistently over the last 5, 6 quarters now. It is not a one-off in this quarter. The sub INR 1 lakh introd

Q

Two quick questions on jewellery -- one on jewellery, one on eyewear. So on jewellery, while the gold price till end of September has -- had only one direction, in the last 3 weeks, it has changed direction a little bit, right? And the correction has been as sort of fast as the ramp-up was. In this slide, how has this impacted your inventory planning, sales planning, both from supply of gold, physical supply of gold, as well as the kind of SKUs that you are planning to supply? Do you think it's at a place where it changes or it's more of the same? And second was on eyewear. I think that one of

Ajoy Chawla

So gold prices have moderated by about 6% or thereabouts in the last 10 days post the Diwali festive season. And we are happy because I think customers are also happy about it. And those who are still waiting to buy in for wedding jewellery, they'll come in. Our planning doesn't change dramatically. We try to ensure a good optimal product mix and with a good -- across category price bands, we try to ensure. So we are not seeing any significant changes in inventory planning. Bullion buying, yes, it was a little bit under pressure in the October first couple of weeks, there were some bullion sho

Q

My question is on jewellery EBIT growth. Now you started the year with a certain expectation of jewellery sales growth. And given rising gold prices, you're likely to be much ahead of that expectation. How should we think about EBIT growth from the same context? At the beginning of the year, you were expecting EBIT growth to be at least in line with revenue growth in jewellery, if not better. So do you still think that, that thesis plays out? On a percentage margin basis, things could be a little different. But should you be delivering better EBIT growth than what you are expecting at the begi

Ashok Sonthalia

Jay, like I don't think that -- so the pressure on margin or headwind on margin continues. While we are trying to compensate, offset through various levers, et cetera, but over the last 6 months, also gold prices were where they and now where are they, while there is a minor correction, but we don't know going forward which direction they would go. So I would expect EBIT growth, absolute amount growth might be slightly slower than the revenue growth for the full year. That is understandable, but it will still be better than what you were expecting before this maybe 3, 4 months back, right? So

Q

Thank you very much. We are signing off from this call, and I'm signing off from these calls. It's been a fabulous -- I've lost count, maybe 50th or 60th call over the last 12, 15 years. And each one of you has been a pillar of support for the company, always constructive in your approach and very probing often, keeping us on our feet and helping us to perform better and better over the years, over the decades. Thank you so much. God bless.

Management