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Titan Industries

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TITAN INDUSTRIES

Promoted in the mid-Eighties by the Tata Group and Tamil Nadu Industrial Development Corporation Limited (TIDCO), Titan Industries is a unique instance of how ideas can be taken from scratch and transformed into winning brands that generate value, create entire market spaces and then consistently dominate these spaces

Business divisions- Time product division

Jewellery divison

Eyewear

Precision engineering

Even as the Indian economy encountered a challenging 2011-12,

the Company recorded its best-ever performance.

In 2011-12, the Company’s sales income grew by 36.5% to

Rs. 8,970.86 crores compared with Rs. 6,570.86 crores in the previous

year. Creditably, the percentage growth of our bottom lines was

higher: profit before tax grew by 40% to Rs. 838.44 crores, while net

profit grew by 39.4% to Rs. 600.16 crores.

Even though the Indian economy grew slower in 2011-12, Titan

Industries Limited reported a stronger growth on account of a deep

understanding of consumer preferences, product differentiation,

new product launches and professional brand management

INDIAN WATCHES MARKET

Only 27% of all Indians own a watch. This statistic demonstrates the significant potential for growth, particularly as Indians become more affluent and style-conscious. The Indian watches market is estimated at around 53 million units in 2011, valued at approximately Rs. 4,500 cr. The market grew by about 14% in 2011. The catalysts for category growth includes overall economic progress, expanding upper-middle class and middle-class population, growth in India’s young earning population, rising consumerism and the spread of modern retail formats. A large proportion of the Indian watches market is occupied by the unorganized sector, which sells about 30 million watches each year, primarily at the low-end of the market. These include inexpensive watches assembled legally by small players but a large part also comprises smuggled watches and fakes. There is need for concerted and statutory action to curb some of these unscrupulous practices. The organized Indian watches market is dominated by Titan, with a market share exceeding 65%. Over the past few years, the market has witnessed the entry of several global players who are investing significantly in their respective brands. These include Timex, Seiko, Swatch Group, Casio, Citizen, Guess and Fossil, among others. Despite such intense competition, Titan successfully grew sales (including exports) to 15.6 million watches during 2011-12, compared with 13.5 million watches during the previous year. The Company’s market share in multi-brand outlets also grew to about 47% during 2011-12, a handsome gain of 2% over the previous year. The reasons include a strong portfolio of brands (Titan, Sonata, Fastrack and Xylys), which has grown even stronger; innovative marketing and advertising efforts; expansion of retail and sales network and an innovative series of new watch designs which have captivated consumers.

Outlook for 2012-13

The robustness of the Indian economy is reflected in the fact that despite challenging headwinds, the Euro-zone crisis and a substantially weaker Rupee, India’s GDP is expected to grow by about 6.5% in 2012-13. The Company’s Watches Division is optimistic of growth through continued network expansion in India, sustained investment in brands, introduction of new product collections and deeper inroads into Vietnam, Singapore, Malaysia, South Africa and Saudi Arabia. The Company expects to increase market share for Fastrack and Titan accessories. The Company’s Jewellery Division expects to introduce innovative collections and widen its network. The Company’s Eyewear Division will launch new models, progressively manufactured within to reduce costs, enhance quality, strengthen the supply chain and respond to customer needs faster. It will also focus on standardizing customer experience across stores. With a view to integrate operations and leverage opportunities, the Company appointed regional business heads effective 1st April 2012 to catalyse the growth of various divisions.

The new introduction of the Unified Loyalty Programme and the Ecommerce for internet sales will be launched in 2012-13 promising much greater satisfaction and convenience to customers.

Risks, threats and concerns

The Company’s risk mitigation initiatives helped it prosper during periods of economic turbulence. In the face of inflation and rising interest rates, consumers either reduced or deferred purchases. The Company countered this reality through the creation of new needs through the innovative launch of aesthetic products and collections. The launch of Mia and fq jewellery collections targeted working women and teenagers with success. The Company’s franchisee-led retail network expansion (lower-cost vis- à-vis direct ownership) bears risks of real estate appreciation and network attrition. The Company manages these risks through initiatives – sharing of best operating practices and necessary support – that graduate franchisees into partners. During 2011-12, the Company created the Integrated Retail Services Group (IRSG) with the responsibility to negotiate strategic real estate locations for the best rates The retail-driven franchisee approach also comprises risks arising out of malpractices (including pilferage) by business associates and employees. In view of this, the Company makes comprehensive checks on the background of its associates and employees coupled with ongoing surveillance, stock audits, frisking and surveillance equipment investment.

http://www.moneycontrol.com/financials/titanindustries/balance-sheet/TI01

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