Financial Daily from THE HINDU group of publicationsSunday, Dec 14, 2003

The Hindu eBooks
Corporate - OutlookTitan to ramp up production capacity — No plans to enter luxury segment at present
R.Y. Narayanan
Mr. Bhaskar Bhat, MD, Titan Industries Ltd.
Coimbatore , Dec 13
TITAN Industries Ltd (TIL), which recorded a near 20 per cent top line growth in the first half of this year compared to the corresponding period last year, is confident of maintaining the momentum throughout the current fiscal.
The company, which has a small presence in the top-end of the watch market, is not, however, thinking of taking on the Swiss brands in the luxury watch segment as of now and would continuously evaluate the options, according to Mr Bhaskar Bhat, Managing Director, TIL, Bangalore.
TIL has a production capacity of about 6.5 million units annually in its three factories in Hosur, Dehra Dun and Udhagamandalam. While the Hosur and Dehra Dun facilities have the capacity to assemble three million units each, the balance was at Udhagamandalam.
The Dehra Dun factory had already seen a 25 per cent ramp up in production capacity for which the Uttranchal Government provided several incentives. The capacity in this unit could be further scaled up to 5 million units annually. The company was planning to augment its manufacturing capacity and both Himachal Pradesh and Uttranchal Governments have offered to extend favourable terms. Since it would be only an assembly unit, he expected the investment to be around Rs 10 crore.
Mr Bhat said the company had recorded a 19 per cent top line growth and a 234 per cent growth in the bottomline in the first half of this year. He expected the sales trend to be maintained through out the current fiscal and estimated that the turnover may be in the region of Rs 900-930 crore during 2003-04 compared to the nearly Rs 800 crore achieved last year.
While stating that the growth in profitability in the first-half of this year was `extraordinary', Mr Bhat said both watches and jewellery sales had grown and there was also more effective use of the capital by the company. He credited TIL, belonging to the Tata group, with bringing in professional practices in the jewellery industry in the country that was largely unorganised.
The company, through its `Tanishq' brand has outperformed the jewellery market for the last three years because of the entry of a new clientele that appreciates quality, who `value professional and above the board practices and transparency' and those who were not wedded to their family jewellery and wanted a national presence for the jewellery outlets from whom they purchased the jewels.
He said the jewellery trade in the country had to professionalise and under-caratage and dodging taxes could not be sustained in the long run. Titan was competing on design, network, brand image and quality and it had a `reasonably robust process of developing design'. It had 15-20 vendors from whom it sourced jewels and at any time, the company had on offer 300 styles of jewellery and every quarter almost 400-500 styles were introduced in an array of items such as bangles, pendants, ear- rings, necklaces and bracelets.
Asked whether the company was planning to enter the luxury watch segment dominated by foreign, mainly Swiss, brands in the country, Mr Bhat said the company catered to mainly two segments - the mass market through its Sonata brand and Titan that catered to the middle/high end segment. Within the Titan brand, there was the `Nebula', which was a gold watch. But studies have shown that to compete effectively in the top-most end of the watch market, the watches should carry a Swiss-name tag.
He said as of now, TIL has not chosen to enter this segment, where volume was very small. But the company had not closed its eyes to this market and would continuously evaluate the options.
He said the share of watch and jewellery divisions in its sales turnover was 55 per cent and 45 per cent respectively but the potential of the jewellery division was higher since the jewellery market was bigger than the watch market.
Article E-Mail :: Comment :: Syndication
Stories in this SectionTitan Energy's special packs for defence
without the written consent of The Hindu Business Line