BENGALURU: Bhaskar Bhat has had a great career at Titan, rising to be the Tata Group company’s MD in 2002, and building it into an over $2-billion revenue entity. But even by those standards, last year must have been special.
The jewellery-andwatch firm’s top line grew 21 per cent and net profit jumped 53 per cent, a performance that sent its share price soaring, taking its market cap to $12 billion, a little behind Tata Motors ($13.3 billion) and ahead of Tata Steel (9.4 billion). Ten years ago, Titan’s market cap was a quarter of Tata Motors’ m-cap and less than 10 per cent of Tata Steel’s. And in November, in a recognition of Bhat’s success and contributions, the 64-year-old was elevated to the board of directors of Tata Sons, the holding company that controls India’s largest conglomerate.
When we ask Bhat about it, he modestly acknowledges the company had a very good year. “You know that. Competition has kind of got demolished jewellery primarily, but in all segments, for all unorganised businesses.” GST, demonetisation, and the Nirav Modi/Mehul Choksi episodes have all worked to the benefit of Tanishq, Titan’s jewellery brand. It accounts for 83 per cent of Titan’s overall income, and grew by over 24% last year. Many of India’s jewellers have dealt in cash, avoided paying taxes, and have been conduits for those who wanted to launder black money. But the government is cracking down on efforts to convert black money into gold – by insisting on a PAN card for gold transactions above Rs 2 lakh, and keeping a closer watch on jewellers’ transactions. “Customers are even getting scared of being caught on camera (dealing in cash at stores),” says Bhat.
This, combined with the introduction of GST that makes transparent accounting more imperative, has made plain gold jewellery no longer very remunerative for small players, and more so because it is a very low-margin business. Banks, too, have become wary of lending to jewellers following the Nirav Modi scandal. Consequently, business is moving to organised players like Tanishq.
Watches, which Titan began with and became almost a monopoly at one point – demolishing incumbent HMT, is now a fraction of the jewellery business, but nonetheless a growing one. Mobile phones have become timekeepers for many. So Titan has focused on making watches cool, a fashion accessory a positioning that has worked especially with the young.
“Today, it has gone beyond even just good looks. There has to be some meaning attached to it. For example, I wear a different watch every day. Today I wore this mechanical watch because this director was coming – he’s an engineer. It’s a conversation piece,” Bhat says.
The effort now is to increase the extent of “smartness” in every watch – a lesson many have learnt from Apple, which has become the world’s biggest watchmaker. Titan will not give up its analogue legacy (moving hands on the clock face). But it will introduce some of the most relevant digital features, such as fitness measurements, into watches.
Asked about Titan’s newest business, the sari brand Taneira, Bhat says it’s still too small to even call it a business. “I can call it a business when it hits Rs 100 crore,” he says, but adds that the concept has been accepted well. Taneira’s value proposition is ‘India under one roof’. “We think it will do well because the India story is seeping into Indians,” says Bhat. “They are seeking a strong Indian identity.”