CK Venkataraman, MD, Titan, says that when it comes to Tanishq, what is emerging is that we need to up our game in terms of the standards, the innovations, and the excellence that we play for us to continue to keep growing at the rate at which we have grown for a long time. It is a good situation to be in. It will pull out everything that we have in terms of our capabilities and strengths. So, we are looking forward to the exciting times that are around us and, ..
Though Q1 was not a blowout quarter for the jewelry market per se, demand was impacted by fewer wedding days and volatility in gold prices. Are things looking up now?
CK Venkataraman: Yes, July has certainly been better. Even Q1 had two parts to it. For the first half till Akshaya Tritiya, growth YoY was good. But after that, the balance of the quarter was when the challenge came, where multiple things like extreme heat, gold prices, election excitement, plus ..
How much has the sale or uptick in July come largely because of the import duty cut?
CK Venkataraman: No, not, because we typically have what is called a festival of diamonds that started around the 10th of July this year. We started seeing better growth even before the Budget came. But of course, the Budget helped the gold jewelry business because that is where the impact of the budget was. So, right through July things were better.
Are you maintaining the guidance on the jewelry EBIT margin in the band of 12-13% that you had earlier indicated?
CK Venkataraman: I would not like to say anything on that, but our overall confidence about the industry's prospects, and the positioning of Tanishq, with its strong value proposition, continues to be strong for the year, in the medium term, in the long term. Nothing changes from that point of view, that is what I would say.
But there are, let us say, multiple factors at play now. Early evidence of rural recovery is there, two-wheelers, and FMCG companies. Early evidence of good monsoon, will translate into better uptake and better crops that are there. The inflation base effect has kicked in. These are factors that perhaps did not exist same time last year or a quarter or two quarters ago. Could they be tailwinds for you?
CK Venkataraman: At the same time, a lot of brands are in ..
What is certainly emerging is that we need to up our game in terms of the standards, the innovations, and the excellence that we play for us to continue to keep growing at the rate at which we have grown for a long time. It is a good situation to be in. It will pull out everything that we have in terms of our capabilities and strengths. So, we are looking forward to the exciting times that are around us and, in a way, increasing in multiple ways.
You did not answer my question. Will it get better or these tailwinds do not matter?
CK Venkataraman: I thought I had answered that. Some of these are not tailwinds for the Tanishq brand and the kind of customers we have. If you are talking about the rural and the monsoon-related thing, which has a relatively lower bearing on the Tanishq brand, that is all I meant.
With every large category we look at factors like market share gain, penetration levels, organised versus unorganised mix. For a Tanishq jewelry buyer, how is the big picture stacked up in terms of market share, penetration level, organised versus unorganised, the headline numbers?
CK Venkataraman: You are talking about Tanishq the brand, right?
Look, within the jewelry market, there is a market share for Tanishq. How much have you penetrated there? I mean, the factors which you look at in terms of deciding the consumer.
CK Venkataraman: We look at the whole market. We do not look at the organised sector market because it is way too large to not consider it. For example, we have expanded substantially in towns like Raxaul, Madhubani, Sitamarhi, which are towns in Bihar, where none of the organised se ..
But we have gone there in the last two or three years and made our presence felt and it is because we are looking at the whole market of Rs 600,000 crore marketplace because jewelry is not really like other categories, it is a store of value, there is a lot of trust factor sitting in it, there is a lot of opportunity to still improve the overall quality in all the aspects that customers seek and therefore, we look at it as a total market where our share today maybe 8% to 9% and there is a reason ..
Going forward, where is it do you think the big growth kicker is going to come in from? Is it going to continue to be tier I, where you have a large presence or do you think growth will come in from smaller store additions that you have been making in tier II and III cities?
CK Venkataraman: It is everywhere, the jewelry market is so large that this Friday we are reopening our flagship store in Chandigarh Sector 17, a much bigger store in the same place that ..
For example, we opened a store in Solan, not far from Chandigarh, a couple of years back. We opened in Mandi in Himachal, in Hoshiarpur in Punjab. So, both Mandi or Hoshiarpur, as well as the most upscale part of Chandigarh are both drivers of growth because our market shares are still not very large, even in those cities where we are already present.
What is the current store count and what is the store addition that you are looking at by the end of the fiscal?
CK Venkataraman: I do not have the exact number to share, but the total store count has exceeded 3,000 as we speak, including CaratLane and we would be looking at around 300 stores for the current fiscal across all brands if my memory serves me right.
A lot of your old-time investors are of the view that it is too early. We are not judging it, but we have to watch the diamond space, considering that lab-grown diamonds are now occupying mind space and also becoming a fashion mainstay. How disruptive is that for your diamond business?
CK Venkataraman: I had a longish kind of response to this last week on the call but let me just repeat this for some perspective on this. If you look at the American jewelry ma ..
The buyers of this kind of diamond jewelry in the US are males and the rock plays a celebratory role in relationships. Indian diamond jewelry consists of much smaller diamonds. It is more about necklaces, jhumkas, bangles and all that, where much smaller diamonds are used. The people who are buying the jewelry are mostly women, and families, and therefore, this motivation of the male buying something to show off is simply not there, that is one.
The second is that the American diamond market is characterised by a very high penetration of diamond jewelry, maybe as high as 80-90% of the people in America own diamond jewelry, and therefore, the headroom for growth is very low.
In India, penetration is much lower, in the teens at best, and every woman and every family is waiting for the time when their affluence gives them a chance to acquire the diamond jewelry that they have been wanting for a long time. Therefore, we expect the I ..
Of course, third is the store of value aspect of it, which is not at all a marked thing in the West. And when I buy diamond jewelry, I want the value in that to be sort of protected in some sense and continuing spiralling drop of the LGD prices is a little against that need as well. So, we expect this to play out in a very different way in India and it is also the industry's responsibility not to sort of aggravate this problem. The American jewelers have brought their own LGD into their stores a ..
Now, while the mainstay for Titan jewelry business is Tanishq, you also have Mia and some other brands, which cater to a different class and clientele. Would you be looking at venturing into the artificial diamond space with a completely different brand but run by Titan, not in the Tanishq store, but maybe somewhere else?
CK Venkataraman: Actually, those are the kinds of things that are likely to happen, like I said, unlike what the American jewelers did in t ..
Source Name : Economic Times