titan industries limited 1224679601179891 8
TRANSCRIPT
-
7/30/2019 Titan Industries Limited 1224679601179891 8
1/47
1 1
TITAN INDUSTRIES LIMITED
22 MAY 2008
Delivering value by creating desirable brands
-
7/30/2019 Titan Industries Limited 1224679601179891 8
2/47
2
DisclaimerCertain statements are included in this release which contain words or phrases such as will,aim,will likely result, believe, expect, will continue, anticipate, estimate, intend, plan,contemplate, seek to, future, objective, goal, project, should, willpursue and similarexpressions or variations of these expressions that areforward-looking statements.Actual resultsmay differ materially from those suggested by the forward-looking statements due to certain risks oruncertainties associated with our expectations with respect to, but not limited to, our ability toimplement our strategy successfully, the market acceptance of and demand for our products, ourgrowth and expansion, the adequacy of our allowance for credit to franchisees, dealers anddistributors, technological changes, volatility in income, cash flow projections and our exposure tomarket and operational risks. By their nature, certain of the market risk disclosures are only
estimates and could be materially different from what may actually occur in the future. As a result,actual future gains, losses or impact on net income could materially differ from those that have beenestimated.
In addition, other factors that could cause actual results to differ materially from those estimated bythe forward-looking statements contained in this document include, but are not limited to: generaleconomic and political conditions in India and the other countries which have an impact on ourbusiness activities; inflation, unanticipated turbulence in interest rates, foreign exchange rates, the
prices of raw material including gold and diamonds, or other rates or prices; changes in Indian andforeign laws and regulations, including tax and accounting regulations; and changes in competitionand the pricing environment in India. The Company may, from time to time make additional writtenand oral forward-looking statements, including statements contained in theCompanys filings withSEBI and the Stock Exchanges and our reports to shareholders. The Company does not undertaketo update any forward-looking statements that may be made from time to time by or on behalf of theCompany, to reflect events or circumstances after the date thereof.
-
7/30/2019 Titan Industries Limited 1224679601179891 8
3/47
3
Titan Industries
A Happening Company ina Happening India !
-
7/30/2019 Titan Industries Limited 1224679601179891 8
4/47
4
Our Heritage the TATA Group
Titan is a part of the TATA Group having a turnover of about
USD 30 bn, equivalent to over 2.5% of Indias GDP and havingthe biggest market capitalization in India
The Tata group is Indias largest employer in the private sector 222,000+ employees across 85 companies
The TATA group has achieved many Firsts for India:
First private sector Steel mill
First private sector Power utility
First luxury hotel (Taj)
First Airline (now Air India) The Worlds least expensive car (Tata Nano)
Indias largest software company (TCS)
Indias largest watch & jewellery mfgr (Titan)
-
7/30/2019 Titan Industries Limited 1224679601179891 8
5/47
5
About Us
Titan is the worlds fifth largest, integrated own brand manufacturer
for watchesCommencing production in 1986-87, the Company is today theleader in the Watch & Jewellery businesses in India First & largest player in the branded jewellery segment
(Tanishq) >60% share of the organised watch market Over 90 million watches sold across 30 countries, cumulatively
Manufacturing Facilities Main Watch & Jewellery plants in Hosur near Bangalore
(Indias Silicon Plateau) Watch assembly plants at Dehradun, Baddi, and Roorkee.
ECB plant in Goa; Jewellery Plant at Dehradun Investment of US$150 million in a 450,000 sq.ft. state-of-the-
art facilityOwned by Tata: 25.17% and TIDCO: 27.88%
Professionally managed by TATA group & an independent Board
-
7/30/2019 Titan Industries Limited 1224679601179891 8
6/47
6
Recognition and Awards in many categories
The Watch Division won the coveted JRD QV (Malcolm
Baldrige) Award in 2006 and its score was affirmed in 2007. Indias most admired consumer durables company having
the most trusted brand -TITAN.
Both TITAN and TANISHQ adjudged most admired brandsfor the last 4 years.
Adjudged Retail Company of the year. Retail Asia and Media Award-Singapore, for Retailing and
preferred brands.
Selected as Asian Dynamo by BCG
Ideator Awards for Titan designers. Best Corporate Citizen Mother Teresa, Helen Keller,Rotary and Chamber of Commerce Awards.
President of India Award for best employer of the physicallychallenged.
-
7/30/2019 Titan Industries Limited 1224679601179891 8
7/47
7
Our businesses
Watches
Jewellery
International Business
Precision Engineering
Currently
Marketing
our Products in
26 countrieswith a larger
footprint in the
Middle East and
Asia-Pacificregions
Prescription Eyewear
-
7/30/2019 Titan Industries Limited 1224679601179891 8
8/47
8
Our Brands
TITAN
SONATA
FASTRACK
XYLYS
TANISHQ
GOLD PLUS
TITAN EYE+
-
7/30/2019 Titan Industries Limited 1224679601179891 8
9/47
9
2007-08 Highlights
Businesses
Watch volume crosses 10M Jewellery turnover crosses Rs 2000 cr.
Brands Brand GoldPlus crossed Rs 200 Crore mark
Brand Sonata touched 5 million watches
Brand Fastrack crossed 1 million watchesRetailing World of Titan stores crossed 225
Tanishq boutiques crossed 100
International
Watches launched in PakistanNew Businesses Gold Plus outlets reached 22 (from 10)
Titan Eye+ outlets reached 10 (from 1)
Titan the worlds fifth largest own brand mfr.
-
7/30/2019 Titan Industries Limited 1224679601179891 8
10/47
10
THE THREE YEAR JOURNEYINCOME
655
784
919
0
200
400
600
800
1000
IncomeinR
s.
Cr.
2005-06 2006-07 2007-08
Year
Watches
17%
1481
2136
3041
0
800
1600
2400
3200
IncomeinR
s.
Cr.
2005-06 2006-07 2007-08
Year
Company
42%57%
791
1292
2028
0
600
1200
1800
2400
IncomeinR
s.
Cr.
2005-06 2006-07 2007-08
Year
Jewellery
-
7/30/2019 Titan Industries Limited 1224679601179891 8
11/47
11
THE THREE YEAR JOURNEYCAPITAL EMPLOYED
328338
327
0
100
200
300
400
inRs.C
r.
2005-06 2006-07 2007-08
Year
Watches
137
186
299
0
50
100
150
200
250
300
inRs.
Cr
.
2005-06 2006-07 2007-08
Year
Jewellery
525
592
719
0
100
200
300
400
500
600
700
inRs.C
r.
2005-06 2006-07 2007-08
Year
Company
-
7/30/2019 Titan Industries Limited 1224679601179891 8
12/47
12
THE THREE YEAR JOURNEYCOMPANY PROFITABILITY
87
132
202
0
50
100
150
200
250
inRs.C
r.
2005-06 2006-07 2007-08
Year
PBT
74
94
150
0
50
100
150
200
250
inRs.
Cr
.
2005-06 2006-07 2007-08
Year
PAT
-
7/30/2019 Titan Industries Limited 1224679601179891 8
13/47
13
Market Capitalisation (Rs. Cr.)
218500
1018
3530
44005300
0
1000
2000
3000
4000
5000
2002-
03
2003-
04
2004-
05
2005-
06
2006-
07
May-08
Market Cap.
CrossedBillion $
-
7/30/2019 Titan Industries Limited 1224679601179891 8
14/47
14
Jewellery Division - Q3 08 Performance
The Jewellery business had turned in mixed results for the Third Quarter, as
under :Rupees in Crores
Quarter Quarter Nine months Nine monthsended ended ended ended31.12.07 31.12.06 31.12.07 31.12.06
Net Sales from segment 591.41 366.51 1496.66 951.65
Profit before interest & taxes 23.15 40.16 81.60 67.68
While the performance for the nine-month period had been good, with salesgrowth of 57% and PBIT growth of almost 21%, the performance for theQuarter (Oct-Dec 07) had seen a drop of Rs 17 crores in PBIT.
-
7/30/2019 Titan Industries Limited 1224679601179891 8
15/47
15
Jewellery Division - Q308 Performance
To summarise, the fall in PBIT of the Jewellery Division in Q308
relative to Q307 is explained by
the increase in the Gold price which resulted in- reduced sales relative to budget, resulting in higher closing stocks- inflation of the value of sales- reduced margins due to unchanged making charges
- reduced margins due to increased sales under exchange schemes- a deficit from hedging operations, primarily due to Gold price volatility- a deficit from application of Accounting Standard AS 11 due to highclosing stocks
increased overheads of Rs 13 crores
The Company took steps to mitigate these factors in future, and, in spite ofthe further rise in the Gold price, which crossed US$ 1030 per ounce inMarch 2008, the performance of the Jewellery Division in 2007-08 has beensustained.
-
7/30/2019 Titan Industries Limited 1224679601179891 8
16/47
16
I Watch Business
-
7/30/2019 Titan Industries Limited 1224679601179891 8
17/47
17
The Watch Market & Industry in India
India is an under-penetrated market for watchesonly 27 % of Indians own a watch
Total estimated market as of 2007 Volume ~ 42 mn
units & Value: Rs 2700 Crores (USD 675 Mn)
Vast proportion of the Indian market is below Rs 500~ 68% (85% by volume)
Market has been split into: Low end, Mass market,Premium,Luxury
-
7/30/2019 Titan Industries Limited 1224679601179891 8
18/47
18
TITAN Citizen
Timex
Watch Market Map
Rs 500 1000 2000 4000 5000 30,000 +
Formal / Classic
Fashion/Sporty
Sonata,HMT,Maxima
Espirit, Swatch FossilGiordano, DKNY,Carrera
Tommy Hilfiger
Raymond WeilTissot
Omega,Rado,Longines
Tag HeuerHugo BossC Dior
Price
Fastrack
XYLYS
10000
Nebula
-
7/30/2019 Titan Industries Limited 1224679601179891 8
19/47
19
* Significant growth over the past three years* Rs. 880 Crores Sales during the latest financial year
(over Rs 1000 crores at retail prices)
Profits
Consistent growth* PBT (2005/06) - Rs. 90 Crores* PBT (2006/07) - Rs. 96 Crores* PBT (2007/08) - Rs. 121 Crores
ROCE
ROCE exceeds Cost of Funds* ROCE (2005/06) - 50%* ROCE (2006/07) - 50%* ROCE (2007/08) - 56%
Revenues
ROCE
OUR WATCH BUSINESS OVERVIEW
-
7/30/2019 Titan Industries Limited 1224679601179891 8
20/47
21
II Jewellery Business
-
7/30/2019 Titan Industries Limited 1224679601179891 8
21/47
22
Jewellery Market & Industry highlights
Size of market: Rs 75,000 crores (~ US$ 19 billion)
Urban market is about 38% of this base
Branded jewellery is less than 5% of the overall market
Importance of jewellery to Indian consumers
Gold is seen as auspicious, an investment, for adornment.
Product mix: largely plain gold 22kt, with gem set
jewellery constituting less than 10% of the market
Players
Market
Key players: Fragmented market, mainly retailer driven.
Most retailers are unorganised and stand alone
Absence of hallmarking
Tanishq - the first branded jewellery player (1996)
Increased investment by industry bodies (DTC, PGI, WGC)is spurring rapid growth of the branded jewellery market inIndia
-
7/30/2019 Titan Industries Limited 1224679601179891 8
22/47
23
TANISHQ TODAY A BRIEF OVERVIEW
Strongest and most aspirational brand in the jewellery category Awarded most admired brand and Retailer of the year byImages Fashion
Enjoys a market share of over 40% in branded jewellery
Network Indias only national jewellery retailer 106 stores in 70 towns prime high street locations Many of these stores are run by franchisees
Customer
Base
Over 1.5 million customers shopped at Tanishq last year
Brand
-
7/30/2019 Titan Industries Limited 1224679601179891 8
23/47
24
Rapid growth of 40% p.a. over the past three years Rs. 1800 crores during the latest financial year 60% of the Companys revenues
Profits
Impressive turnaround
PBT (2005/06) - Rs. 35 crores PBT (2006/07) - Rs. 77 crores PBT (2007/08) - Rs. 101 crores
ROCE
ROCE exceeds Cost of Funds ROCE (2005/06) - 34% ROCE (2006/07) - 61% ROCE (2007/08) - 60%
Revenues
TANISHQ TODAY A BRIEF OVERVIEW
-
7/30/2019 Titan Industries Limited 1224679601179891 8
24/47
25
Gold Plus :Size of the opportunity
Semi-urban and rural market estimated to be as much as
50% of the total : Over Rs 30,000 crs.
Highly value conscious consumers, buying traditionaljewellery
Very fragmented industry with under-karatage stillprevalent in many parts of the country
A new business model and a new brand to exploit this
opportunity
Sales of Rs 95 crs in 2006-07 and Rs 200 crs in 2007-08
-
7/30/2019 Titan Industries Limited 1224679601179891 8
25/47
26
III INTERNATIONAL
OPERATIONS
-
7/30/2019 Titan Industries Limited 1224679601179891 8
26/47
27
INTERNATIONAL BUSINESS
One ofIndias first companies to market a consumerbrand overseas.
Now present in 26 countries outside India
Among the top 3 brands in some Asian countriesSelling 650k watches annually with increasingpresence in jewellery.
Total export sales of over Rs 130 crores in 2007-08
(up from Rs 115 crores in 2006-07).
-
7/30/2019 Titan Industries Limited 1224679601179891 8
27/47
28
IV Precision Engineering Business
-
7/30/2019 Titan Industries Limited 1224679601179891 8
28/47
29
Precision Engineering Business
RationaleLeveraging Engineering capabilitiesB2B business balances risk of B2C businesses
The OpportunityIndia growing as a manufacturing base for precision productsacross industries
Cost pressures and offset requirements guarantee a long termopportunity
High cost of switching for customersLarge & growing market: The global market for precisionengineering products addressable by Titan is Rs.135,000 cr.
-
7/30/2019 Titan Industries Limited 1224679601179891 8
29/47
30
Current position: 3 segments 3 streams
Automotive
Aerospace
Medical
Precisioncomponents
Dash boardinstruments
Sub systems
Market SizeRs 135,000 Cr.
AutomationSolutions
Market SizeRs 575 Cr.
Domestic &International
Market.
DomesticMarketOnly
TSMGStudy
-
7/30/2019 Titan Industries Limited 1224679601179891 8
30/47
31
Precision Engineering Business
The Customers
Eaton, US
Hamilton Sunstrand, US
Microtechnica, Italy
Pratt & Witney, US
Schlumberger, USFord, UK
Bosch, India
Timken, India
Lucas, India
Visteon, US / IndiaTyco Electronics, India
Stanadyne, India
Tata Motors, India
Turbo Energy, India
-
7/30/2019 Titan Industries Limited 1224679601179891 8
31/47
32
THE EYE WEAR BUSINESS
Started in 2004-05 by marketing Sunglasses under theFastrack brand
Targeted the youth segment
Achieved a sales turnover of over Rs 25 crores in 2006-07and Rs 40 crores in 2007-08
Pilot project for Prescription Eyewear started in Q4 2006-07
10 Titan Eye+ outlets as on 31 March 2008
-
7/30/2019 Titan Industries Limited 1224679601179891 8
32/47
33
THE EYEWEAR MARKET AN UNTAPPED OPPORTUNITY
Growth: Market has been growing in double digits ~ 15-20% per annum andlikely to sustain
Demand drivers: Urbanization, literacy, Penetration of TV & computers, Pooreye health due to lifestyles/ improper diet, etc.
Margins: Overall mark ups of up to 300% exist between landed cost & retailprice!
Incidence:30% of population typically needs correction in vision ~ 300 mn
Users: 84mn users which is about 25% of those who need the correctionConsumers change their glasses / frames once in 3 to 4 years on an average
Market size:25-35 million units per annum
Rs 1500-1800 crs per annumComparable to the watch industry
Repeat purchase is a regular feature from adolescence to old age.Customer lifetime value is very high
Almost everyone over 40 yrs needs correction.
-
7/30/2019 Titan Industries Limited 1224679601179891 8
33/47
34
OUR BUSINESS PROPOSITION
Product / Service Offering:
- Eye checking, Optometry
- Range of frames - Titan & licensed brands
- Range ofBranded Lenses
- Sunglasses Titan, Fastrack & licensed brands
- Contact Lenses, Accessories
To enter as a retail brand Chain of Stand Alone Stores
-
7/30/2019 Titan Industries Limited 1224679601179891 8
34/47
35
WHERE WILL WE PLAY IN THE VALUE CHAIN
Frame andlens blank
manu-facturing
Wholesaledistribution
Lensfinishing
andassembly
RETAIL,SERVICE
Designand
Marketing
Mfg is not yet adesirable option
Focus on strengths and high margin areas:DESIGN, RETAIL, SERVICE & MARKETING
Tie up withreputed lensbrands & labs
O U T S O U R C E
-
7/30/2019 Titan Industries Limited 1224679601179891 8
35/47
36
Long term initiatives
Restructuring
IBD demerged
Retail Infrastructure Service Group
Network expansion Store development
Retail Training
-
7/30/2019 Titan Industries Limited 1224679601179891 8
36/47
37
Long term initiatives
Restructuring
Business Development Group
Scouting for new business opportunities
Identifying new geographies
Acquisitions
Separating Precision Engineering
-
7/30/2019 Titan Industries Limited 1224679601179891 8
37/47
38
Way Forward
-
7/30/2019 Titan Industries Limited 1224679601179891 8
38/47
39
2008-09
Turnover to grow by over 33% over previous year, tocross Rs 4,000 crores
Two important programmes launched:
CustomerFirst which seeks to enhance consumerexperience at every interface with the company
War on Waste that will improve productivity acrossthe Company
-
7/30/2019 Titan Industries Limited 1224679601179891 8
39/47
40
Seize the Opportunity !Organised RetailingThe
New BuzzOur retail network comprising of
106 Tanishq stores
236 World of Titan stores22 Goldplus stores14 Sonata stores
117 Timezones and
135 Watch Care Centres
accounted for over Rs 2300 crsof sales in 2007-08 making usIndias largest speciality retailer
-
7/30/2019 Titan Industries Limited 1224679601179891 8
40/47
41
Seize the opportunity ! Retailing Expansion 2007 08
WORLD OF TITAN
TANISHQ
GOLD PLUS
TITAN EYE+
207 TO 236
88 TO 106
10 TO 22
1 TO 10
-
7/30/2019 Titan Industries Limited 1224679601179891 8
41/47
42
So what kind of company?
Wh k diff ?
-
7/30/2019 Titan Industries Limited 1224679601179891 8
42/47
43
What makes us different ?
PioneerBreaker of rules
Leader in two businesses:premium and mass market
Manufacturer,designer,brand owner,marketer ,
retailer and after-sales service providerUnique culture
First company to dare to challenge the Swiss
B2C and B2B player
In four businessesOne of the Jewels of the Tata Group
-
7/30/2019 Titan Industries Limited 1224679601179891 8
43/47
44
Titan Industries
A Happening Company ina Happening India !
-
7/30/2019 Titan Industries Limited 1224679601179891 8
44/47
45
By 2009, More than a billion $ company
2136
3000+
4000+
5000+
0
1000
2000
3000
4000
5000
6000
2007 2008 2009 2010
Income in
Rs Croresi2136
3000+
4000+
5000+
0
1000
2000
3000
4000
5000
6000
2007 2008 2009 2010
Income in
Rs Croresi
-
7/30/2019 Titan Industries Limited 1224679601179891 8
45/47
46
Multiple Businesses, Brands and Geographies
WatchesJewellery
Sun glassesPrecision parts
WatchesJewellery
Sun glassesEyewear
Precision parts
PRODUCTS
TITANSONATAFASTRACKTANISHQ
TITAN
SONATAFASTRACKTANISHQ
XYLYSGOLD PLUS
TITAN EYE +
BRANDS
300 STORES
IN INDIAAND
PRESENCEIN 26
COUNTRIES
450 STORESIN INDIA
ANDPRESENCE
IN 37COUNTRIES
GEOGRAPHIES
7 SBUs
7 PLANTSWITH3500
PEOPLE
10 SBUs9 PLANTS
WITH4500
PEOPLE
UNITS
-
7/30/2019 Titan Industries Limited 1224679601179891 8
46/47
47 47
Further informationis available on www.titanworld.com
-
7/30/2019 Titan Industries Limited 1224679601179891 8
47/47
THANK YOU