Titan Shines On Two ‘F’s
The onset of the festival season in India and a big push towards formalisation of the economy, prompted by demonetisation and the introduction of the Goods and Services Tax, will help Titan Company Ltd. sustain the strong growth it witnessed in the first quarter of fiscal year 2017-18.
We are on the positive side of the demonetisation and GST story, said Bhaskar Bhat, managing director of Titan, in an interview to BloombergQuint.
The jewellery and eye wear businesses operate in an unorganised sector and that often led to an un-level playing field for Titan. But the combined forces of demonetisation and GST have put the company on a equal level, Bhat added.
The benefit is of a long-term nature, a sustainable kind and therefore yes, we'll get a hockey-stick effect right now.Bhaskar Bhat, Managing Director, Titan Company
Bhat said this along with customers migrating to “safer and better brands” will push Titan's total sales in the future.
Once people come to the safe brands and good brands, why would they go away?Bhaskar Bhat, Managing Director, Titan Company Ltd.
Here are edited excerpts of the interview.
What is your expectation of this festiveseason, considering it comes on the back of some demonetisation- and GST-led disruption?
We are looking forward to a goodseason ahead. There is some uncertainty in the minds of consumers onaccount of GST, not so much because of demonetisation. It's not so much sentiment, as in they want to celebrate, but because of the varying rates of GST and all that, our research indicated areluctance on behalf of the consumers, to act immediately. But all that should change as Navratri has started and festival season is on.
I think company action also matters and we have gone forward quiteaggressively in jewellery, watches and this new category. With new products and a whole lot of promotions, we expect a good Diwali ahead.
With GST's effect sinking in, how willit impact your pricing strategy and consumer demand? Festival season willprovide a bump up but how will you sustain the strong first quarter growth?
We are on the positive side ofthe demonetisation and GST story because we have been impacted by both thesedevelopments on account of the unorganised sectors in which we operate. Whether youlook at jewellery, eye wear or watches, the industry is significantlyunorganised. A lot of cash transactions used to take place, a lot of product issmuggled, a lot of trade didn't even have VAT registrations.
The other bit is that consumers,especially in jewellery, are now wanting to migrate to safe brands, and whichbrand better than Tanishq in jewellery to migrate to. Because of the uncertainty and all this fear in the consumer's mind of producing an Aadhar card, a pancard, being captured on CCTV buying jewellery and so on, they migrate to a safehaven like Tata, Titan, Tanishq and therefore we have actually benefited from theformalisation of the economy and we'll continue to benefit. So we see a very good festive season.
But we will notkeep quiet, you will see a flurry of new products in all our categories. Especially in jewellery - we have launched a new collection that will launch with a new film coming up, and a new collection in watches - like the ladies' smart watch coming up, a newRaga coming up. New products are what that drive demand in all these categoriesand we are there.
Do you expect this benefit fromformalisation to sustain because eventually informal players will get their acttogether as their livelihood depends on it? Could this be a short to mediumterm benefit for them?
I don't see that. Our businessdepends on things other than GST. We have always invested in brands, inproduct, in design, in quality, in reasonable pricing across all ourcategories. So, in terms of consumers aspiring for our products, large part of Indianmiddle class and upper class aspire for our products and that is where the company'sstrength is.
We have had headwinds because of the unorganised sector competing withus on a non-equal playing field. Because of demonetisation and GST that has changed, so now we are on an equal ground. The benefit is of a long-termnature, a sustainable kind. Yes, we'll get a hockey-stick effectright now and it will stay at a high level in terms of total sales.
Once people come to the safe brands and good brands, why would theygo away? Of course, anything is possible because of competition and we areready for all that. But it is not just competition, what we are gearing up for in the long-term future is disruption. Every category is getting disrupted bytechnology, by new kind of players, that is more in the long term.
Based on these factors can you characterise how sales have done in the quarter underway?
We don't give any guidance or forward looking statements. But the 43 percent growth that we saw in the first quarter certainly that's not going to happen in this quarter, because there was a surge in sales in June due to GST.
We will still grow and grow better than last year. We expect, well, I can't say 15 or 20 percent, but it's a good number.
We are in a slow growth environment right now, borne out by the GDP numbers. Do you anticipate an impact on consumer sentiment if we don't see any pickup in growth, in the next quarter or two? And if yes, could you quantify it?
Of course, if growth doesn'tpickup, the company is going to get impacted. But from where I sit, I am on the board of some Tata Group companies, and they are allseeing growth better than peers. I think guys who have their acttogether, both in terms of brands and products, apart from organisingthemselves for GST, will see benefits. Yes, there are consumer goods companies, FMCGcompanies that have been affected, but that, I think, is temporary.
You did fabulously well, better than expectations, in the first quarter on strength in the jewellery business. But watch sales were up only 2 percent last quarter because of rescheduling and eyewear sales were flat. Any improvement in those categories in the quarter underway or in the months to come?
We had to reschedule only becauseof GST. That's out of the way and we are seeing good growth rate in both those businesses which you will see when we declare our quarter results. Yes, watcheshave not seen a robust growth rate but the business is going through restructuringand re-crafting. We have gone on a cost drive there and that will begin tocontribute. It's already beginning to contribute. You will see significant growth rate in eye wear, reasonable growth rate in watchesand very good growth rates in jewellery
-
Opinion | India at 38: From Innovation Overperformer to Innovation Powerhouse
India now has 453 VC-backed deep science startups, 18 of them late-stage, after 117 percent growth since 2020. Laurus Labs, at USD 9.3 billion, is the most valuable deep science company in any middle-income economy outside China.
-
Navigating Energy Crossroads: S Jaishankar's Call For Diversified Supply Chains At G20 Ministerial Meeting
As geopolitical fault lines continue to test maritime trade routes and commodity flows, Jaishankar's message remains pertinent: true economic resilience requires open markets, protected transit lines, and a genuine commitment to multilateral cooperation rather than coercion.
-
Indians Are Travelling, But Not Every Journey Is A Holiday | The Week In Whys
Pilgrims, patients and working women are the real travellers, and the system hasn't quite caught up with them.
-
Getting To Work Costs Women More | The Reason Why
It is not just about women paying more than men. It is about women paying much more in cities than in villages.
-
AI Bias In Investing Cannot Be Eliminated, But It Can Be Governed
Framing is a particularly important example as identical financial information presented in terms of gains rather than losses can lead an LLM to reach a different assessment.
-
Joining The Dots | Dark Skies, Steady Diya: Why Hope Holds This Diwali
With war, a weak rupee and foreign outflows weighing on sentiment, policymakers at the NDTV World Summit and market veterans at NDTV Profit Ignite: Diwali Edition offered the same advice: stay invested and filter out the noise.
-
The Curious Case of Equitas Small Finance Bank And A CEO Who Quit For Stock
PN Vasudevan believes persistent investor concerns over a perceived conflict of interest had become a governance overhang on Equitas Small Finance Bank's stock, even as the lender improved profitability and asset quality.
-
Talking Points This Week: AI Cash Burn, A Tiger Comeback And An India That Still Finds Its Own Path
India is not immune to higher oil or tighter global liquidity, yet its earnings base is broader, its domestic policy levers are still available.
-
Foreign Investors Own Half Of HDFC Bank and ICICI Bank. An LTCG Cut Could Matter Most Here
Foreign portfolio investors have US$115 billion parked in HDFC Bank, ICICI Bank. If the government cuts long-term capital gains tax, Jefferies says returning foreign money could land here first.
