Wednesday, January 6, 2010

Titan to triple topline in five years

India’s biggest watch and jewellery retailer, Titan Industries, is looking to triple its topline from Rs 4,600 crore this fiscal to Rs 14,000 crore over the next five years. Bangalore-based watch and jewellery arm of the Tata Group, which did not alter its expansion plans during recession, plans to strengthen its presence in the wedding jewellery market and divert focus to smaller international watch markets such as Vietnam, Oman and Qatar.

“We did not project ambitious sales growth this fiscal due to rise in gold prices which impacted our volumes. But the next five years presents a big opportunity as we project our revenues to grow from Rs 4,600 crore to Rs 14,000 crore,” said Titan Industries MD Bhaskar Bhat.

These views were expressed before the company went into its silent period. Titan Industries has built up a portfolio of strong lifestyle brands, including the top-end jewellery brand Tanishq, fashion accessories brand Fastrack and the watch brand Xylys.

Titan, which has been selling Tommy Hilfiger and Hugo Boss range of watches in India, drew up its five-year plan in April 2009. It launched three formats including lifestyle accessories chain Fastrack, high-end diamond jewellery boutique Zoya and pure-play watch retail format Helios, which is being ramped up to 50 outlets by FY13.

Over the next five years, the topline growth will still be led by Tanishq, with the division expected to contribute Rs 10,000 crore. Diverting focus from the US market—where it closed two Tanishq stores while navigating recessionary pressures—Tanishq will adopt a highly design-led, diamond-robust and large store intensive strategy.

“The opportunity is still very large in India as the jewellery market is expected to grow from Rs 80,000 crore to around Rs 1,25, 000 crore by 2014-15. We don’t want to renew attention on international markets yet, “ Mr Bhat added.

Tanishq, which has been offering relatively low-ticket value products for convenient every-day wear, is slowly edging into the wedding jewellery market. An additional 50-store rollout plan, driven by a number of large-format (15, 000 sq ft) stores, will see it compete in a market that is heavily skewed towards plain gold designs that are often made-to-order for brides.

The watchmaker is, however, switching gears in its international strategy for watches. It has zeroed in on newer smaller markets such as Vietnam, Oman and Qatar as opposed to existing market Dubai, which underperformed this year. The company intends to aggressively invest in advertising while growing its distribution presence beyond traditional watch stores within these markets. The Middle East, South East Asian and African countries together account for 10 per cent of the watch division’s turnover.

Even in India, Titan harvested growth from selective markets where the sales grew. Together with significant overhead cost cutting, Titan will see a reasonably good bottomline this fiscal, Mr Bhat said. In fact, this improved profitability is also a function of its revamped mass-market strategy that saw Sonata watches undertake a major stock correction in April. This was done to balancing out inefficiencies in the brand’s distribution system.

“Once the investment by the trade was brought down, with sales remaining the same, profitability improved. After that, we focused on consolidating the business,” Mr Bhat added.


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