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Potential Of Saree Business Far Bigger Than Watch Business, Says Titan’s Bhaskar Bhat

Bhat steps down after a 17-year stint as MD when the company became India’s largest branded jewellery maker.

Bhaskar Bhat. (Source: Titan) 
Bhaskar Bhat. (Source: Titan) 

Titan Company Ltd. will have a new managing director from tomorrow as its incumbent, Bhaskar Bhat, steps down after a 17-year stint during which the company became India’s largest branded jewellery maker.

The company’s shares have been a mega wealth creator for investors under his watch, jumping nearly 329 times compared with the NSE Nifty’s nine-fold gain in the same period. That also makes Titan the second-most valued company of the Tata Group behind Tata Consultancy Services Ltd.

Potential Of Saree Business Far Bigger Than Watch Business, Says Titan’s Bhaskar Bhat

“It’s been a very exciting journey, personally and professionally and over the years in this company, thanks to India, which has brought us fantastic opportunities,” Bhat, who has been associated with the Tata Group’s watches project since 1983, told BloombergQuint in an interaction.

Bhat said Titan will soon achieve leadership in the fragrance and saree business segments. “The potential size of the saree business is far bigger than the watch business.” The Rs 24,000-crore market size for the woman’s garment, according to Bhat, is around thrice that for watches. The company, he said, has charted its journey till 2023 when it expects to generate Rs 50-53,000 crore in revenue.

The outgoing executive also said there won’t be any hiccups in leadership transition. “We have been preparing ourselves for the past two-and-half years,” he said, adding: “In fact, CK Venkatraman (Bhat’s successor and current chief executive of the jewellery business) was identified (to succeed) in January.”

That will be the case with every position in the company that would fall vacant in the next 15 months—including chief executives of the watches and eyewear businesses, he said. The successors have been with the company for at least 20 years, he said, who are going through a “systematic leadership development programme”.

“Yes, when they take over the bigger job, there will be some learning in the initial period but there is a whole ecosystem which is also helping to run those businesses.”

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Watch The Interview With Titan Company’s Managing Director Bhaskar Bhat

Read edited excerpts of the conversation with Bhaskar Bhat

In terms of years, it’s just been two decades that you have been at Titan. But in the journey of Titan, it probably would seem like the end of an era for you...

Well, I have been in this company since inception, in fact I joined the project before Titan company was formed, Titan Watches Ltd. was the name of the company. I joined before, in 1983 when it was still theTata watch project. So to that extent, my association with this project which has become a company has been longer than the company itself.

Can you talk about your journey with Titan?

It’s been a very, very exciting journey, personally and professionally and over the years this company, thanks to the phenomenon called India, which has grown in stature, prosperity, population and has broughtus fantastic opportunities. As the Indian market changed and segments emerged, we kept discovering newer and newer ways of serving the Indian, largely middle and upper-middle class through our product starting with watches and then starting with jewellery and then eyewear, fragrances, accessories and now our latest venture into silk sarees under the brand name ‘Taneira’.

From a Rs 250-crore market-cap company to a company closer to Rs 1 lakh crore, and the kind of diversification you have done, the prominence you have in jewellery business, how has it been in terms of the course you have chartered. Are you leaving Titan at a position you would have wanted it to be in?

Well, market cap is what, as a company, we haven’t actively pursued. It has happened. The company’s objectives have been very different. Essentially to grow, explore, create among its stakeholders a sense of belonging and create a wholesome company which stands for all values of Tata Group. We’re a joint-venture between Tamil Nadu Industrial Corporation and the Tata Group. We the highest standards of governance, keep the customer at the centre, people, orientation and more recently, becoming more and more new age by embracing newer technologies like digital, omi channel and as we go forward AI, IoT (internet of things) wearables. Company has to be in constant state of progress and even as it concentrates and grows its core businesses,to us exploration is excitement and that’s what keeps people attracted, not just employees but people who supply to us, our vendor partners, franchise partners and all our business associates are excited by not just the growth or not just the watch and jewellery business, but by the multiple activities we carry out across the businesses.

Is diversification going to be the mantra for the future as well?

We should not get dogmatic about this, about mantras. What I was trying to say is the diversification or exploration, as I call it, unearthing newer and newer opportunities has come naturally to titan and thatwill be kept alive as an impulse but identifying businesses which are attractive and sizeable is a second filter in a way that we will apply as we go forward because India is still full of opportunity, while I can’t say the opportunities are endless, we haveour sand box or titan hexagon, it has to belong to that hexagon which is lifestyle products, products or services which are new age or adorn the customer and therefore design becomes an important part of that product category where design is a significant valueadd to the customer which is amenable to branding a category. Those are some of the elements we consider. The sector has to be either unorganised or underserved or underpenetrated, we enter only those kinds of categories and there are many such categories stillin the personal lifestyle space.

Which sectors do you think are upcoming diversification targets for Titan?

There is nothing called next. If I were to take the eyewear business, it is still small although its 11 years old, it has to be grown and the potential is still very large. It’s neither core nor large but it’s important for us. So the job is of a kind. But if I take fragrances which came after the eyewear, it still hit the scales, so the opportunity is very large. But the newest which is the silk saree, is less than two years old so, we don’t want to hurry into the next category, just because it’s a habit, therefore we have explored many categories like footwear, bags which is underpenetrated but that doesn’t mean we are going to get into those categories on Monday morning. We have to grow the current categories, get significant mind and market share and thereafter look for new categories. But exploration is continuous, we still have wearables which is neither underpenetrated nor underserved but still is emerging category, it’s in a way an extension of watches and accessory business. We are the second largest wearables company in the country as of last year, and that’s waiting to grow in this company and country. So we have many things on the plate.

Let’s talk about the businesses that have the potential to grow. Anything in terms of strategy?

I think each category deserves its own strategy. The company’s overall strategy is multiple categories in the personal lifestyle space. But if I were to differentiate between eyewear, fragrances and sarees, just for the sake of it, fragrances isn’t at present amenable to the kind of retailing strategy we followed in jewellery and eyewear. Jewellery and eyewear are predominantly retail-led businesses where you need a store to do the eye check-up or to display the jewellery in the case of jewellery business. Whereas perfumes, primarily is distribution business, driven by brand. So the ‘Skinn’ brand is developing products suitable for the Indian consumer at a price which is reasonable compared with foreign brands people are buying, that’s the strategy but exceptional product quality, superior bottle and packaging design and very attractive advertising but distributed and not retailed. Whereas silk sarees is a completely different ball game, where design plays a very important part, as does merchandise and authenticity. We have retailing as the only form of reaching out to the customers apart from a very little (in the) online (space). So that is completely retail and fragrances are completely distribution if I were to differentiate.

In silk sarees it’s about sourcing right, about authenticity, it’s about multiple clusters being represented in the store under one roof, and exceptional and differentiated retailing practices where we use display where unlike most saree shops where the browsing is very different, it is glass counter kind of a format whereas ours is an open format. So there are many things in the execution of the strategy and not just that the category is interesting therefore so youenter it.

We would have our exclusive stores and we already have in Bengaluru, Delhi, Hyderabad, and we will expand very soon. Each business has its own strategy—that’s the point.

One or two segments that probably would start to get market share and revenue share for Titan slightly bigger than what it is today?

Watches is still at about 13-14 percent but the category size, industry size is only that much whereas the industry size of jewellery is much bigger, let me differentiate. I am not so concerned about the relative size of each business. Each business has to lead in that category. Achieving mindshare before market share and I think we are the influencers there, although the market share there is about 12 percent whereas jewellery it’s even lower about 5-6 percent and watches it is over 40 percent. But in all three categories we are leaders. Therefore, even in fragrance and sarees, we will achieve leadership very shortly. The potential size of the saree business is far bigger than the watch business. I am talking about the total industry size in India.

Therefore the potential to grow, the opportunity to grow is very high and that will kick in with percentage contribution to the total. But jewellery is a Rs 2,50,000 crore market whereas sarees is about, if we take special occasion wear, it’s about 25,000 crore market. Watches is in the ballpark of Rs 8,000 crore, around one-third of sarees. That proportion will always remain, largely but each of them is individually driven through a structure in this company where the CEO of these businesses has an end-to-end responsibility. I am not too worried about the jewellery business; it happens to be big. It was 83 percent last year but the excitement of creating categories and pursuing those two leadership in their own categories is a strategy within that. But across a company, the thing that binds them all together has this loyalty base. We have large assets, about 13 million members and growing every month, and therefore that’s the greatest potential of being able to cross-sell—a jewellery buyer buying an eyewear or eyewear buyer lured to watches—that’s the way we have conceived the knitting together of these businesses.