titan industries limited 1224679601179891 8

7/30/2019 Titan Industries Limited 1224679601179891 8

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TITAN INDUSTRIES LIMITED

22 MAY 2008

Delivering value by creating desirable brands


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DisclaimerCertain statements are included in this release which contain words or phrases such as will,aim,will likely result, believe, expect, will continue, anticipate, estimate, intend, plan,contemplate, seek to, future, objective, goal, project, should, willpursue and similarexpressions or variations of these expressions that areforward-looking statements.Actual resultsmay differ materially from those suggested by the forward-looking statements due to certain risks oruncertainties associated with our expectations with respect to, but not limited to, our ability toimplement our strategy successfully, the market acceptance of and demand for our products, ourgrowth and expansion, the adequacy of our allowance for credit to franchisees, dealers anddistributors, technological changes, volatility in income, cash flow projections and our exposure tomarket and operational risks. By their nature, certain of the market risk disclosures are only

estimates and could be materially different from what may actually occur in the future. As a result,actual future gains, losses or impact on net income could materially differ from those that have beenestimated.

In addition, other factors that could cause actual results to differ materially from those estimated bythe forward-looking statements contained in this document include, but are not limited to: generaleconomic and political conditions in India and the other countries which have an impact on ourbusiness activities; inflation, unanticipated turbulence in interest rates, foreign exchange rates, the

prices of raw material including gold and diamonds, or other rates or prices; changes in Indian andforeign laws and regulations, including tax and accounting regulations; and changes in competitionand the pricing environment in India. The Company may, from time to time make additional writtenand oral forward-looking statements, including statements contained in theCompanys filings withSEBI and the Stock Exchanges and our reports to shareholders. The Company does not undertaketo update any forward-looking statements that may be made from time to time by or on behalf of theCompany, to reflect events or circumstances after the date thereof.


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Titan Industries

A Happening Company ina Happening India !


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Our Heritage the TATA Group

Titan is a part of the TATA Group having a turnover of about

USD 30 bn, equivalent to over 2.5% of Indias GDP and havingthe biggest market capitalization in India

The Tata group is Indias largest employer in the private sector 222,000+ employees across 85 companies

The TATA group has achieved many Firsts for India:

First private sector Steel mill

First private sector Power utility

First luxury hotel (Taj)

First Airline (now Air India) The Worlds least expensive car (Tata Nano)

Indias largest software company (TCS)

Indias largest watch & jewellery mfgr (Titan)


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About Us

Titan is the worlds fifth largest, integrated own brand manufacturer

for watchesCommencing production in 1986-87, the Company is today theleader in the Watch & Jewellery businesses in India First & largest player in the branded jewellery segment

(Tanishq) >60% share of the organised watch market Over 90 million watches sold across 30 countries, cumulatively

Manufacturing Facilities Main Watch & Jewellery plants in Hosur near Bangalore

(Indias Silicon Plateau) Watch assembly plants at Dehradun, Baddi, and Roorkee.

ECB plant in Goa; Jewellery Plant at Dehradun Investment of US$150 million in a 450,000 sq.ft. state-of-the-

art facilityOwned by Tata: 25.17% and TIDCO: 27.88%

Professionally managed by TATA group & an independent Board


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Recognition and Awards in many categories

The Watch Division won the coveted JRD QV (Malcolm

Baldrige) Award in 2006 and its score was affirmed in 2007. Indias most admired consumer durables company having

the most trusted brand -TITAN.

Both TITAN and TANISHQ adjudged most admired brandsfor the last 4 years.

Adjudged Retail Company of the year. Retail Asia and Media Award-Singapore, for Retailing and

preferred brands.

Selected as Asian Dynamo by BCG

Ideator Awards for Titan designers. Best Corporate Citizen Mother Teresa, Helen Keller,Rotary and Chamber of Commerce Awards.

President of India Award for best employer of the physicallychallenged.


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Our businesses

Watches

Jewellery

International Business

Precision Engineering

Currently

Marketing

our Products in

26 countrieswith a larger

footprint in the

Middle East and

Asia-Pacificregions

Prescription Eyewear


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Our Brands

TITAN

SONATA

FASTRACK

XYLYS

TANISHQ

GOLD PLUS

TITAN EYE+


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2007-08 Highlights

Businesses

Watch volume crosses 10M Jewellery turnover crosses Rs 2000 cr.

Brands Brand GoldPlus crossed Rs 200 Crore mark

Brand Sonata touched 5 million watches

Brand Fastrack crossed 1 million watchesRetailing World of Titan stores crossed 225

Tanishq boutiques crossed 100

International

Watches launched in PakistanNew Businesses Gold Plus outlets reached 22 (from 10)

Titan Eye+ outlets reached 10 (from 1)

Titan the worlds fifth largest own brand mfr.


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THE THREE YEAR JOURNEYINCOME

655

784

919

0

200

400

600

800

1000

IncomeinR

s.

Cr.

2005-06 2006-07 2007-08

Year

Watches

17%

1481

2136

3041

0

800

1600

2400

3200

IncomeinR

s.

Cr.

2005-06 2006-07 2007-08

Year

Company

42%57%

791

1292

2028

0

600

1200

1800

2400

IncomeinR

s.

Cr.

2005-06 2006-07 2007-08

Year

Jewellery


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THE THREE YEAR JOURNEYCAPITAL EMPLOYED

328338

327

0

100

200

300

400

inRs.C

r.

2005-06 2006-07 2007-08

Year

Watches

137

186

299

0

50

100

150

200

250

300

inRs.

Cr

.

2005-06 2006-07 2007-08

Year

Jewellery

525

592

719

0

100

200

300

400

500

600

700

inRs.C

r.

2005-06 2006-07 2007-08

Year

Company


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THE THREE YEAR JOURNEYCOMPANY PROFITABILITY

87

132

202

0

50

100

150

200

250

inRs.C

r.

2005-06 2006-07 2007-08

Year

PBT

74

94

150

0

50

100

150

200

250

inRs.

Cr

.

2005-06 2006-07 2007-08

Year

PAT


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Market Capitalisation (Rs. Cr.)

218500

1018

3530

44005300

0

1000

2000

3000

4000

5000

2002-

03

2003-

04

2004-

05

2005-

06

2006-

07

May-08

Market Cap.

CrossedBillion $


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Jewellery Division - Q3 08 Performance

The Jewellery business had turned in mixed results for the Third Quarter, as

under :Rupees in Crores

Quarter Quarter Nine months Nine monthsended ended ended ended31.12.07 31.12.06 31.12.07 31.12.06

Net Sales from segment 591.41 366.51 1496.66 951.65

Profit before interest & taxes 23.15 40.16 81.60 67.68

While the performance for the nine-month period had been good, with salesgrowth of 57% and PBIT growth of almost 21%, the performance for theQuarter (Oct-Dec 07) had seen a drop of Rs 17 crores in PBIT.


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Jewellery Division - Q308 Performance

To summarise, the fall in PBIT of the Jewellery Division in Q308

relative to Q307 is explained by

the increase in the Gold price which resulted in- reduced sales relative to budget, resulting in higher closing stocks- inflation of the value of sales- reduced margins due to unchanged making charges

- reduced margins due to increased sales under exchange schemes- a deficit from hedging operations, primarily due to Gold price volatility- a deficit from application of Accounting Standard AS 11 due to highclosing stocks

increased overheads of Rs 13 crores

The Company took steps to mitigate these factors in future, and, in spite ofthe further rise in the Gold price, which crossed US$ 1030 per ounce inMarch 2008, the performance of the Jewellery Division in 2007-08 has beensustained.


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I Watch Business


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The Watch Market & Industry in India

India is an under-penetrated market for watchesonly 27 % of Indians own a watch

Total estimated market as of 2007 Volume ~ 42 mn

units & Value: Rs 2700 Crores (USD 675 Mn)

Vast proportion of the Indian market is below Rs 500~ 68% (85% by volume)

Market has been split into: Low end, Mass market,Premium,Luxury


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TITAN Citizen

Timex

Watch Market Map

Rs 500 1000 2000 4000 5000 30,000 +

Formal / Classic

Fashion/Sporty

Sonata,HMT,Maxima

Espirit, Swatch FossilGiordano, DKNY,Carrera

Tommy Hilfiger

Raymond WeilTissot

Omega,Rado,Longines

Tag HeuerHugo BossC Dior

Price

Fastrack

XYLYS

10000

Nebula


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* Significant growth over the past three years* Rs. 880 Crores Sales during the latest financial year

(over Rs 1000 crores at retail prices)

Profits

Consistent growth* PBT (2005/06) - Rs. 90 Crores* PBT (2006/07) - Rs. 96 Crores* PBT (2007/08) - Rs. 121 Crores

ROCE

ROCE exceeds Cost of Funds* ROCE (2005/06) - 50%* ROCE (2006/07) - 50%* ROCE (2007/08) - 56%

Revenues

ROCE

OUR WATCH BUSINESS OVERVIEW


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II Jewellery Business


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Jewellery Market & Industry highlights

Size of market: Rs 75,000 crores (~ US$ 19 billion)

Urban market is about 38% of this base

Branded jewellery is less than 5% of the overall market

Importance of jewellery to Indian consumers

Gold is seen as auspicious, an investment, for adornment.

Product mix: largely plain gold 22kt, with gem set

jewellery constituting less than 10% of the market

Players

Market

Key players: Fragmented market, mainly retailer driven.

Most retailers are unorganised and stand alone

Absence of hallmarking

Tanishq - the first branded jewellery player (1996)

Increased investment by industry bodies (DTC, PGI, WGC)is spurring rapid growth of the branded jewellery market inIndia


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TANISHQ TODAY A BRIEF OVERVIEW

Strongest and most aspirational brand in the jewellery category Awarded most admired brand and Retailer of the year byImages Fashion

Enjoys a market share of over 40% in branded jewellery

Network Indias only national jewellery retailer 106 stores in 70 towns prime high street locations Many of these stores are run by franchisees

Customer

Base

Over 1.5 million customers shopped at Tanishq last year

Brand


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Rapid growth of 40% p.a. over the past three years Rs. 1800 crores during the latest financial year 60% of the Companys revenues

Profits

Impressive turnaround

PBT (2005/06) - Rs. 35 crores PBT (2006/07) - Rs. 77 crores PBT (2007/08) - Rs. 101 crores

ROCE

ROCE exceeds Cost of Funds ROCE (2005/06) - 34% ROCE (2006/07) - 61% ROCE (2007/08) - 60%

Revenues

TANISHQ TODAY A BRIEF OVERVIEW


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Gold Plus :Size of the opportunity

Semi-urban and rural market estimated to be as much as

50% of the total : Over Rs 30,000 crs.

Highly value conscious consumers, buying traditionaljewellery

Very fragmented industry with under-karatage stillprevalent in many parts of the country

A new business model and a new brand to exploit this

opportunity

Sales of Rs 95 crs in 2006-07 and Rs 200 crs in 2007-08


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III INTERNATIONAL

OPERATIONS


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INTERNATIONAL BUSINESS

One ofIndias first companies to market a consumerbrand overseas.

Now present in 26 countries outside India

Among the top 3 brands in some Asian countriesSelling 650k watches annually with increasingpresence in jewellery.

Total export sales of over Rs 130 crores in 2007-08

(up from Rs 115 crores in 2006-07).


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IV Precision Engineering Business


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Precision Engineering Business

RationaleLeveraging Engineering capabilitiesB2B business balances risk of B2C businesses

The OpportunityIndia growing as a manufacturing base for precision productsacross industries

Cost pressures and offset requirements guarantee a long termopportunity

High cost of switching for customersLarge & growing market: The global market for precisionengineering products addressable by Titan is Rs.135,000 cr.


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Current position: 3 segments 3 streams

Automotive

Aerospace

Medical

Precisioncomponents

Dash boardinstruments

Sub systems

Market SizeRs 135,000 Cr.

AutomationSolutions

Market SizeRs 575 Cr.

Domestic &International

Market.

DomesticMarketOnly

TSMGStudy


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Precision Engineering Business

The Customers

Eaton, US

Hamilton Sunstrand, US

Microtechnica, Italy

Pratt & Witney, US

Schlumberger, USFord, UK

Bosch, India

Timken, India

Lucas, India

Visteon, US / IndiaTyco Electronics, India

Stanadyne, India

Tata Motors, India

Turbo Energy, India


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THE EYE WEAR BUSINESS

Started in 2004-05 by marketing Sunglasses under theFastrack brand

Targeted the youth segment

Achieved a sales turnover of over Rs 25 crores in 2006-07and Rs 40 crores in 2007-08

Pilot project for Prescription Eyewear started in Q4 2006-07

10 Titan Eye+ outlets as on 31 March 2008


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THE EYEWEAR MARKET AN UNTAPPED OPPORTUNITY

Growth: Market has been growing in double digits ~ 15-20% per annum andlikely to sustain

Demand drivers: Urbanization, literacy, Penetration of TV & computers, Pooreye health due to lifestyles/ improper diet, etc.

Margins: Overall mark ups of up to 300% exist between landed cost & retailprice!

Incidence:30% of population typically needs correction in vision ~ 300 mn

Users: 84mn users which is about 25% of those who need the correctionConsumers change their glasses / frames once in 3 to 4 years on an average

Market size:25-35 million units per annum

Rs 1500-1800 crs per annumComparable to the watch industry

Repeat purchase is a regular feature from adolescence to old age.Customer lifetime value is very high

Almost everyone over 40 yrs needs correction.


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OUR BUSINESS PROPOSITION

Product / Service Offering:

- Eye checking, Optometry

- Range of frames - Titan & licensed brands

- Range ofBranded Lenses

- Sunglasses Titan, Fastrack & licensed brands

- Contact Lenses, Accessories

To enter as a retail brand Chain of Stand Alone Stores


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WHERE WILL WE PLAY IN THE VALUE CHAIN

Frame andlens blank

manu-facturing

Wholesaledistribution

Lensfinishing

andassembly

RETAIL,SERVICE

Designand

Marketing

Mfg is not yet adesirable option

Focus on strengths and high margin areas:DESIGN, RETAIL, SERVICE & MARKETING

Tie up withreputed lensbrands & labs

O U T S O U R C E


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Long term initiatives

Restructuring

IBD demerged

Retail Infrastructure Service Group

Network expansion Store development

Retail Training


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Long term initiatives

Restructuring

Business Development Group

Scouting for new business opportunities

Identifying new geographies

Acquisitions

Separating Precision Engineering


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Way Forward


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2008-09

Turnover to grow by over 33% over previous year, tocross Rs 4,000 crores

Two important programmes launched:

CustomerFirst which seeks to enhance consumerexperience at every interface with the company

War on Waste that will improve productivity acrossthe Company


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Seize the Opportunity !Organised RetailingThe

New BuzzOur retail network comprising of

106 Tanishq stores

236 World of Titan stores22 Goldplus stores14 Sonata stores

117 Timezones and

135 Watch Care Centres

accounted for over Rs 2300 crsof sales in 2007-08 making usIndias largest speciality retailer


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Seize the opportunity ! Retailing Expansion 2007 08

WORLD OF TITAN

TANISHQ

GOLD PLUS

TITAN EYE+

207 TO 236

88 TO 106

10 TO 22

1 TO 10


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So what kind of company?

Wh k diff ?


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What makes us different ?

PioneerBreaker of rules

Leader in two businesses:premium and mass market

Manufacturer,designer,brand owner,marketer ,

retailer and after-sales service providerUnique culture

First company to dare to challenge the Swiss

B2C and B2B player

In four businessesOne of the Jewels of the Tata Group


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Titan Industries

A Happening Company ina Happening India !


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By 2009, More than a billion $ company

2136

3000+

4000+

5000+

0

1000

2000

3000

4000

5000

6000

2007 2008 2009 2010

Income in

Rs Croresi2136

3000+

4000+

5000+

0

1000

2000

3000

4000

5000

6000

2007 2008 2009 2010

Income in

Rs Croresi


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Multiple Businesses, Brands and Geographies

WatchesJewellery

Sun glassesPrecision parts

WatchesJewellery

Sun glassesEyewear

Precision parts

PRODUCTS

TITANSONATAFASTRACKTANISHQ

TITAN

SONATAFASTRACKTANISHQ

XYLYSGOLD PLUS

TITAN EYE +

BRANDS

300 STORES

IN INDIAAND

PRESENCEIN 26

COUNTRIES

450 STORESIN INDIA

ANDPRESENCE

IN 37COUNTRIES

GEOGRAPHIES

7 SBUs

7 PLANTSWITH3500

PEOPLE

10 SBUs9 PLANTS

WITH4500

PEOPLE

UNITS


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Further informationis available on www.titanworld.com


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THANK YOU

titan industries limited 1224679601179891 8

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