NAME: AADISH JAIN

COLLEGE: JECRC UNIVERSITY

DATE: 20 JULY, 2020

EMAIL: aadishjain59@gmail.com

TITAN COMPANY LIMITED

COMPANY HISTORY AND BRIEF

Mr. Xerxes Desai (1st MD of Titan) in his early days joined Tata press as a general manager when
the company was not even profitable. Main intention of TATA group behind this press was to make it
profitable, then go public, and used the raised amount to invest in interesting projects.

On those days Mr. Mahadevan was studying Indus script during his leave and wanted to print &
publish his findings. This is how he got in touch with Tata press (or Xerxes Desai). He was the one
who suggested them a business of manufacturing premium watches.

But the application of Mr. Desai to manufacture watches was rejected by Ministry of Commerce and
Industry. As on that time only government owned companies and small scale companies were
allowed to operate in this industry. This is where Mr. Mahadevan comes back into picture. In 1979
he was appointed as Chairman & MD of TIDCO (Tamil Nadu Industry Development Corporation). In
1983-84 a fresh application was given by a joint venture between TIDCO & a little private company
namely, Questar investment whose promoter was Mr. Desai.

As a result, this venture had successfully started manufacturing watches. Later Questar investment
was taken over by Tata group and named it TITAN, where TI stands for Tata Industries and TAN
stands for Tamil Nadu.

The company has chosen to work in sectors that are largely unorganised or characterized by poor
business practices and ethics. Be it in watches, jewellery or eyewear or even the saree business, it
strives to work in these sectors to create a business model that transforms the existing business
practices into a more organised one that is characterized by value-based.

As of now Titan is the fifth largest integrated own brand watch manufacturer in the world. Over the
last three decades, Titan has expanded into underpenetrated markets and created lifestyle brands
across different product categories. Titan is widely known for transforming the watch and jewellery
industry in India and for shaping India's retail market by pioneering experiential retail.

Managing Director of TITAN: Mr. CK Venkataraman

CEO of Watch and other accessories Segment: Mrs. Suparna Mitra
CEO of Eyeware Segment: Mr. Saumen Bhaumik
CEO of Jewellery segment: Mr. Ajoy Chawla

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PRODUCTS
 In the watch segment they have brands like Fastrack ,  Sonata,  Nebula, Titan Raga, Favre
Leuba, Octane,  Zoop & Xylys -- a Swiss made catering to premium segment of the market.
Titan has acquired license for marketing & distribution of 8 brands. A new entrant in the
portfolio, Olivia Burton, targeted at millennials, also saw a good response.

 In the jewellery segment their brand Tanishq has a wide range of diamond, gold and
platinum jewellery. Under Tanishq are collections like Zoya, Caratlane, and many more.

 Titan has also ventured in the eyewear segment through their Fastrack brand. They have
also introduced brands Titan eye+ that has wide range of contact lenses, prescription
eyewear & sun glasses.
 Under traditional clothing segment, Taneira Sarees is the youngest brand of Titan.
 Fragrance business includes Skinn.
 Other accessories include belt, wallet, and bags.
 Titan Engineering & Automation Limited (a wholly owned subsidiary of Titan Company)
specializes in manufacturing aerospace components and providing assembly & testing
automation solutions.

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MARKET SHARE
 India’s nominal year-over-year expenditure growth of 12% is more than double the global
rate of 5%, making it the third largest consumer market by 2025. India’s consumer market is
expected to triple to Rs 335 lakh crore by 2028, accounting for 62% of GDP, and driven by
GDP growth, rising affluence and urbanization. (Source BCG).
 The company is looking to touch 50 million customers by 2023, generating revenue of over
Rs 50,000 crore in uniform consumer price.
 The global watch market over the last 6 years has been growing at a CAGR of 5% with the
traditional watches segment declining at -3%, while the smartwatches and bands segment,
estimated at around US$ 20 billion, growing at 84% CAGR. This disruption in the market has
led to most world watch players to decline in the last year.
 Despite short-term hiccups, the secular trend in the economy is in favor of discretionary
spending categories and a brand like Titan (especially Tanishq) is right up there at the top of
that list.

Watch and other accessories: achieved 2nd position in the wearables market in India with about
8% market share in 2019.

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Fragrance: SKINN (Rs.120 Cr brand) is already the biggest perfume brand, in volume and value
terms, across the departmental stores in India with a Market Share 9% (at present). And expecting
to achieve the target of Rs 500 Cr, 4 Mn+ consumers, 20% market share by 2023.

Taneira: Addressable market of special occasion wear expected to grow from ~₹35-40k cr to ~70k
cr by 2023. As of 31st march’20 Taneira has 12 stores in India.

Eyewear: Expecting Value growth 20% - 1,000 Cr (UCP turnover) in 2019-20. This segment has
shown a significant customer growth from 2.4 million in FY2018 to 3.5 million in FY2019 and
occupied more than 13% market share and expecting to achieve 30-35% market share by 2024.

Jewellery: expect to achieve 8% market share by FY21.

SWOT ANALYSIS
STRENGTH

 Leveraging Robotic Process Automation for significant productivity enhancements with

control & agility.
 Well leveraged Digital platforms.
 Company with low debt and zero promoter pledge.
 Expertise of design, manufacturing, quality, and branding is what Titan is known for and
customers admire it for.
 Being a dominant player across categories in which they are present coupled with state-of-
the art manufacturing facilities as well as possessing an extensive Pan India network
provides us sustainable competitive advantage. They possess widespread reach through
EBO, MBO, and Ecommerce and as of now titan has been able to foray the market of about
300 towns.
 800+ new time products every year.
 Exceptional fragrances at a very attractive price point.
 New age and modern channels like Large Format Stores (LFS) and E-commerce continued
to be the growth drivers for the category. These were leveraged well by all the brands.
 Customized lenses with 3D visual mapping in Eyeware segment.
 Exceptional customer experience and after sales service.

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  Strong Brand identity.

WEAKNESS

 Rural India does not form a substantial part of customer base.

 Low inventory turnover ratio
 Customer sentiment pointing to reduced spends on discretionary items might impact demand
for most of the Company’s products. The drop in sales is also expected to impact store
profitability in the near term. Company expects normalcy to be achieved only after a quarter.

OPPORTUNITY

 Opportunity to tap markets of rural India which is still unorganized

 RSI indicating price strength
 Substantial reduction in holiday travel can lead to a wallet share gain for discretionary item

THREAT

 Great competition peers of organized as well as unorganized sectors

 Subdued demand of non-essential products
 Stock having PE greater than industry average
 High volatility on gold prices

PESTLE ANALYSIS
POLITICAL

 This increase in duty has been served across various products that are imported, further
enhancing the company's opportunity to capture the market.

ECONOMICAL

 The growth of GDP over the next few years will determine how the company expands. The
interest rates and loan repayment capacity of the consumer will determine the purchasing
power of the consumer.
 fragile consumer sentiments and demand (economic slowdown) since the beginning of
FY19 coupled with lockdown & future uncertainties due to coronavirus pandemic has put a
dent on consumption of non-essentials (discretionary) items.

SOCIAL

 The company has evolved with the changing trends. To accommodate the youth, new
brands were launched, which to date have very little competition eg. Fasttrack. To
accommodate the premium customers, titan raga was introduced. To satisfy the needs of the
tech-savvy and health-conscious-conscious, smart bands have been launched. The new
segment of perfumes has already created its fan base. Though relatively new, the Skinn

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 range of perfumes by Titan was launched to capture the middle class with its affordable
range and quality product. The need to grow and keep its customers satisfied is the
motivation that the company uses to stay ahead in the game.

TECHNOLOGICAL

 The company has recently launched the implementation of Schneider electrics IoT platform
across its Tanishq retail stores to manage their data efficiently in energy and cost-saving
manner. Titan also uses various social media platforms to promote its various campaigns, to
attract the maximum audience. It also has an online presence through its websites like
Caratlane. Online presence helps the company expand its audience, beyond conventional
stores.
 Other factors mentioned in technology and innovation part of report.

LEGAL

 Titan is also subject to various labor laws and minimum wage laws. It also must consider the
various discrimination laws that protect its employees against any sort of discrimination.
There are various health and safety laws that the company needs to follow. The company’s
policy of ethical conduct encompasses all these laws that need to be followed.

ENVIRONAMENTAL

 The company has introduced various clean and green technology in its operations and
promotes ‘reduce, reuse, recycle’. Titan has assigned a character to their sustainability
activities.
  In efforts towards the conservation of water, the company has undertaken a 100% recycle of
trade effluence. The treated water is used in various processes like gardening and no water
is released outside of the premises. 

PEER & COMPETITOR REVIEW

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  Competitors in watch segment:
1. Timex
2. Casio
3. Citizen
4. Omega
5. Tag Heuer
6. Xiaomi Mi

 Competitors in jewellery segment:

1. Vaibhav Global
2. Pc Jewellers
3. Rajesh Exports
4. Kalyan jewelers

 Competitors in Eyewear segment

1. Lenskart

 Competitors in Fragrance segment

1. Calvin Klein
2. Victoria’s secret
3. Wildstone
4. Engage
5. Fogg

SHAREHOLDING PATTERN

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FUTURE EXPANSION PROJECTS
 Further expansion of the retail footprint across middle India and a focused e-commerce
channel play will continue to be opportunities that the Division will address.

 The Division stays on course in executing the strategy that it charted for itself couple of years
back. It will continue to consolidate its leadership position in the segments that it operates in.
Efforts and investments will continue to enhance capability in the wearables space, to create
a winning portfolio of smart products. It will also continue to invest to further strengthen the
portfolio of powerful in-house brands and at the same time look for opportunities to
strengthen the Licensed Brands portfolio through relevant additions. An aggressive push for
volume growth will remain at the core of its strategy.
 For Titan, high-contributing Middle East markets continued to decline while younger markets
like the Philippines, Thailand and the US stayed on the plan to deliver impressive retail
growths on the back of several sales & marketing initiatives. Future plans will continue the
journey of reducing dependence on Middle East markets and continue with investments in
newer consumer bases (locals, across Middle East), markets (US, EU) and channels (e-
commerce).

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TECHNOLOGY UPGRADATION AND INNOVATION

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FINANCIALS

During the year, the Company had opted for lower tax rate of 25.17% by foregoing the tax benefits
mainly in the tax free zones. With the declaration of the COVID-19 as a pandemic in mid-March
2020, the performance of various Divisions were affected due to store closures consequent upon
declaration of national lockdown by the Government. Jewellery and Eyewear revenue declined
whereas Watches & Wearables Division grew marginally by 2%. Lower sales and mark to market
deposit pertaining to gold hedging transactions with Multi Commodity Exchange of India Limited
resulted in substantial gross short term borrowing as at the end of the year. The year witnessed
aggressive expansion of the Company’s retail network. As on 31st March 2020, the Company had
1,739 stores, with over 2.27 million square feet of retail space delivering a retail turnover of over `
20,000 crore

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SEGMENT WISE PERFORMANCE

KEY RATIOS:

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IMPACT OF COVID-19 ON BUSINESS AND CURRENT STATUS
 The Company’s operations were hit substantially from 17th March 2020 till the 1st week of
May 2020, when lockdown was gradually lifted. Corporate offices, regional offices, retail
operations and manufacturing facilities were fully shut during the period, leading to zero
sales, thereby, negative operating cash flows.
 Jewellery segment, biggest contributor in revenue (80% of total) severely affected by
pandemic as almost all the sales related to Akshaya Tritiya (26th April) was lost except for
some online sales. The wedding season is also normally quite strong in the months of April
and May and this year almost all weddings in this period have been postponed. Revenue in
May and June months were at slightly below 20% and around 70% compared to the
corresponding months of the previous year.
 Customer sentiment pointing to reduced spends on discretionary items might impact demand
for most of the Company’s products. The drop in sales is also expected to impact store
profitability in the near term. Company expects normalcy to be achieved only after a 3 rd
quarter.
 TEAL did very well in the quarter with decent order bookings and recorded a revenue decline
of only ~19% in Q1’21. The Company received orders for supplying components from
ventilators and medical devices capable of detecting TB & Covid-19. The aerospace
business is however expected to get hit due to the demand situation as the year progresses.
 Company has strong balance sheet, adequate banking limits, and ability to issue
Commercial Papers as they continues to enjoy the highest rating in both short term (A1 +)
and long term (AAA) borrowings by CRISIL and Brickworks. The Company has also
successfully issued Rs 1,000 crore of Commercial Papers during April and May at extremely
attractive rates to meet the funding requirements.
 Eyewear segment’s revenue in May and June months were at 15% and 35% compared to
the corresponding months of the previous year. In watches and wearables segment revenue
in May and June months were at 5% and marginally over 20% compared to the
corresponding months of the previous year.
 As at the end of June 2020, the Company has re-opened around 83% of its stores across all
businesses. While 83% of our stores have opened, as per the regulation of local
administration, some stores can be opened only on alternative days and some towns have
restrictions on the store timings and stores in new containment areas get temporarily closed.

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  Watches and wearables segment update

TECHNICALS

 Stock has broken out from the range of 1027-945 along with good volume.

 MACD is showing bullishness

 One should look for buying opportunity (swing trading) with SL near 1027 and target near
1100.

FINANCIALS, VALUATION, AND ROI

https://docs.google.com/spreadsheets/d/1PUGYahVVZFm5Ibr6xdKPhufgfWe8U2uZBIPubj
5jCB8/edit?usp=sharing

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CONCLUSION
 Along with fragile consumer sentiments and demand (economic slowdown) since the
beginning of FY19 coupled with lockdown & future uncertainties due to coronavirus
pandemic has put a dent on consumption of non-essentials (discretionary) items. These
factors will lead to weak financials for coming quarters. Travelling out and shopping in stores
likely to also come under some pressure on account of worries of safety. Most products still
in the touch-and-feel category, so pure on-line is likely to be a challenge
 But this major is likely to exhibit future market share gains due to strong fundamentals so
one should look for long term investment on further downfall.

HIRING MANAGER

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