We believe in delivering value by creating brands: Bhaskar Bhat

Interview with Managing Director, Titan Industries

From watches to jewellery to backpacks, Titan Industries has for the past 12 years under Managing Director Bhaskar Bhat stepped into segments that have been highly unorganised and brought in an element of high brand recall, thus sculpting consumer trends. In a conversation with Raghuvir Badrinath, Bhaskar Bhat explains how he intends to keep the company perfectly tuned.

The past year has been tough for many sectors, more so for consumer facing ones. How did you manage?
It was tough during the first six months, as there was wide-ranging pessimism which had an impact on our margins. Volumes dropped, but the trend is reversing. Consumer sentiment is turning positive, with the stock markets picking up and the overall sales trend is encouraging. However, we may not be able to grow to the target levels which we had for the fiscal.

The gold industry has been facing obstacles in the past few weeks from the RBI and the government. The increase in duty on gold imports must be unsettling your business, given the fact that Tanishq brings in a chunky 80 per cent of the revenues?

We are looking at all options on how we can work in the emerging environment and we may have to live with lower margins, going forward. However, to offset the drop to an extent, we are expanding the studded jewellery business, which currently accounts for around 25 per cent of the revenues of Tanishq. We are working on a roadmap to increase that share to around 40 per cent over a period of time, and hopefully this will insulate us from the vagaries.

The watches business too has seen falling volumes and costs escalating across the value chain. Titan has been innovating, but the going will surely be tough?
On the basis of volume, we saw an increase of 4 per cent on an yearly basis during the end of the third quarter, but the operating margins dipped 46 bps due to excise hike and high material costs. We work closely with Seiko in sourcing some of the key parts such as Movements and we will continue to bring down costs by taking up aggressive backward integration efforts, including a new cases factory which we are setting up in Coimbatore.

What new business segment will Titan enter next?
We always believe in delivering value by creating brands and for the past 25 years, we have been walking that talk. We are looking at how we can add value to the kids segment with the 'Zoop' brand. Under the 'Raaga' brand of watches for ladies, we see potential to extend that into newer categories such as sarees. Many such potential segments are being ideated and we should be firming up a new segment, most probably in two-quarters.

Last year Titan Industries acquired the Swiss-heritage watch brand Favre-Leuba. What is Titan's strategy in terms of premiumisation of its offerings?

It is certainly a segment which we are always looking at. Xylys, the Swiss-made watch, Nebula - the gold watch - are all part of that effort. We are working on the positioning of Favre-Leuba, which will be among the costliest offerings from us and one which will be priced upwards of '50,000. It was a brand which has a good heritage, a good recall in India and it came at a good price. We can actively work on that and create value. There is a clear space in India where one can look at retailing luxury watches similar to the premium watch retailing which we are doing with the 'Helios' chain of stores.