A three-fold growth in five years. That?s what jewellery and watch maker Titan?s aiming for. The Bangalore-headquartered firm that ended 2009-10 on a high note with a 22% growth in revenues at Rs 4,678 crore believes each of its three businesses?jewellery, watches and eyewear?will chip in equally to help achieve the target. ?We still have jewellery to grow, eyewear, which we?ve just started and several new segments within watches that are yet to mature?, is how managing director Bhaskar Bhat (pictured) puts it, adding that it could be a few more years before Titan even looks at any other business, if at all it does.

Bhat points out that Titan is looking at plays adjacent to jewellery and watches that are profitable and could end up as Rs 50-100 crore opportunities. ?That may not be significant for a Rs 5,000-crore company, but we would nevertheless like to incubate some brands that can become our luxury plays in a couple of years,? he observes. What Bhat is referring to are the new brands in Titan?s portfolio?Zoya in jewellery and Helios in watches. Indeed, even as it consolidates its presence in the premium space, Titan is making a quiet move into the luxury segment. Zoya, for instance, is a high-end store that will make differentiated diamond jewellery and compete with designers. And with Helios, Titan has forayed into high-end, multi-brand watch retailing.

Clearly, though, these will be small, niche businesses for many years to come, it?s the premium jewellery space that will drive

Titan?s growth in the near future. Jewellery today brings in the biggest chunk of Titan?s revenues and at approximately Rs 3,500 crore, it?s three-fourths the total turnover. While soaring gold prices hurt Titan?s volumes in 2009, jewellery volumes bounced back in the three months to March 2010, rising 50%, even as gold prices remained stable between Rs 1,630 and Rs 1,680 a gram. Anand Ramanathan, who tracks the FMCG and retail spaces at KPMG, believes that Titan?s strength has always been in that, as it is able to enter a category and grow it enough to make it relevant. ?They?ve done it in branded jewellery and now they?re doing it in eyewear,? he says. Adds Pinaki Ranjan Mishra, partner, Ernst & Young, ?The brand already has strong equity; so, it?s just a question of leveraging it by increasing the reach.? While not wanting to scare away mid-market customers, by taking care to see that its stores remain friendly, Titan is polishing its premium image, spending more on its brands. ?Premium advertising does attract walk-ins, but when new customers come in, they realise that Tanishq has a whole range to offer. The fact is that people are spending money on jewellery and the premium space is still vacant,? explains Bhat, who asserts that Tanishq is competitive and prices are comparable with those of competitors.

Bhat believes that over time, Tanishq would have an edge over them because the caratage cannot be questioned and because of a national presence. Of course, organised competition is coming up; Reliance has forayed into jewellery. But Ernst & Young?s Mishra believes that the combination of trust and availability that Titan offers will be hard to beat. ?The trust quotient is high and they have the reach and so, all they need to do is to focus on designs,? he observes. Also Vijay Chugh, director, research, at Ambit Capital, believes that despite prices of gold having risen, demand is likely to remain inelastic because consumers will increasingly view purchases as investments. ?Besides, the market remains by and large unorganised and is hardly saturated, there?s room for more players,? he says. Indeed, while imports of gold imports may have come down, jewellery sales in India are estimated to have grown because customers have also exchanged jewellery. Industry experts say jewellery sales should grow at least by about 10% annually in value, though volumes may grow at a slightly lower pace in the 5-7% band.

For its part, Titan has a two-pronged strategy to consolidate its presence in the organised jewellery market. For one, there?s a strong focus on studded jewellery, especially diamonds, which today fetches just under a third of total revenues. The plan is to take the share of studded jewellery to 40% in the next four years or so, assuming the jewellery business itself will grow by an annual 20-25%. Also, Titan is yet to become a big player in the wedding jewellery space, which is the biggest chunk of the market. Bhat concedes that there?s more individual, rather than family, buying in stores and moreover, that Tanishq is not a strong wedding jewellery player. ?But we?re showcasing more of our wedding jewellery now, especially diamonds,? he says. As KPMG?s Ramanathan points out, ?When Tanishq was first launched, the brand didn?t cater so much to the traditional jewellery market. It had a more western image but that didn?t quite work. But there?s been some learning along the way, and to their credit, they?ve made the right changes so that they?re now catering for the right segments.?

Although gold jewellery accounts for the larger share of the market, it?s a relatively lower margin business, which is one reason why Titan isn?t really devoting too much management time to the Gold Plus chain of stores that caters to the mid-market segment. ?The brand is profitable, but we?re not adding to our chain of nine stores just yet because we want to save our resources for the other brands,? explains Bhat. For Gold Plus, Titan had pursued a franchisee model, which it kicked off about four years back with stores in Erode in Tamil Nadu and Ratlam in Madhya Pradesh.

Titan, of course, plans to expand the reach of its other products and the number of stores will double in five years from close to 540 stores right now. That, according to Ambit Capital?s Chugh, reflects the company?s confidence. ?They?re clearly committing more capital to the business because not only are they talking of rolling out more stores, they?re talking of bigger stores,? he observes. Since Titan wants to be seen as a serious jeweller, it will continue to sell through its own exclusive Tanishq and Gold Plus stores. Moreover, it doesn?t intend to disturb its distribution strategy for watches and will sell through a combination of its own stores?World of Titan and large format stores. ?About 7-8% of our turnover from watches comes from the shop-in-shop route and after the downturn, these have come back with a bang. Most of the new stores are coming up in the smaller towns, since they?re responding better to lifestyle products, given the media explosion. About a third of Titan?s revenues already comes from smaller towns and since the growth in smaller towns is faster, the business from these towns will contribute even more to the top line in the future.

As Ernst & Young?s Mishra points out, this is good news for Titan. ?In the smaller towns, the gold market is very large and moreover, there aren?t too many trustworthy jewellers. So, trust would be an important factor and that?s where a trusted branded player like Titan can do well.?

It?s not only for jewellery that Titan?s looking at smaller towns; the watches business, too, is expected to clock higher growth in these markets. Having moved up the price curve, Titan now straddles the market across segments with Sonata?which competes against the grey market?Fastrack, Titan and Xylus. Titan is also looking to grow marketshare in some Asian countries, especially for the top-end brands. ?Our marketshare in Asia is low, but we?re profitable and we?re hoping to treble export revenues from the present Rs 100 crore. The idea is to further penetrate countries like Malaysia and Thailand where we already have a presence,? observes Bhat. Clearly, Titan?s not content staying small.