TITAN COMPANY LIMITE

500114
Cours en clôture Bombay Stock Exchange - 00:00:00 02/02/2023
2304.95 INR -1.80%

Transcript : Titan Company Limited, Q2 2023 Earnings Call, Nov 04, 2022

04/11/2022 | 13:00

Presentation Operator Message
Operator (Operator)

Ladies and gentlemen, good day and welcome to Titan Company Limited Q2 FY '23 Earnings Conference Call. [Operator Instructions] Please note this conference is being recorded.

I now hand the conference over to Mr. C.K. Venkataraman, Managing Director, Titan Company Limited. Thank you. And over to you, Mr. Venkataraman.

Presenter Speech
C. Venkataraman (Executives)

Thank you very much. Good evening, everyone, on the call. With the last many, I would say, dozens of quarters, there was 1% was a constant source of encouragement to support for Titan Company, and he is not on this call. We all miss Rakesh. Quarter 2 was a very, very good quarter for the company. All the macro factors in a way, continue to remain in favor of companies like Titan. And you would see from our note on the quarter that the season continued to be a good season, and our major businesses delivered a growth between 17% and 19% over the same period last year. So overall, we remain confident about the immediate future. And certainly, the medium-term outlook is also very positive in our view. And since the presentation has anyway been uploaded, I don't have anything further to add, and we will wait for the questions to unravel. Thank you.

Question and Answer Operator Message
Operator (Operator)

[Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama Institution Equities.

Question
Abneesh Roy (Analysts)

Congrats on extremely good set of numbers. So first question on January. If I see one observation was the stated share. See, most of the consumption habits have now come back versus pre-coat studied you have done well on Y-o-Y basis. But when I compare pre-COVID, there is a fine [indiscernible] difference still. So is this because the mix of the business is now far more south focused versus earlier? I'm not saying entire business is out [indiscernible] pre-Covid is the south mix higher. And that's why reaching the 37% number this quarter was 500 bps lower? Or is it also because of the festive mismatch or gold prices being much higher than 3 years back? What was the key reason.

Answer
Ajoy Chawla (Executives)

Abneesh, Ajoy. Yes, standard ratios have started climbing back, but they are still below Q2 of FY '20, pandemic is what you're saying. Just to share the numbers. It was 41% then, and it is 35% now on a retail sales basis, your base may be slightly different. The reality is that this is quarter 2 of FY '20 also was actually a slightly abnormal quarter where gold prices had shot up dramatically, if you recollect. So Therefore, the share of [indiscernible] as a share contribution was perhaps a little overstated. But having said that, the dynamic is playing out. We have done a lot more work on, as you rightly said, different markets and particularly South and East and some of the other markets.

So there is a trajectory for gold, which is taken off at a higher rate, and that remains and started -- we cannot really give an exact figure, but we are very happy with the growth. So if I look at year-on-year growth, as you said, it's very good. It's 25% in retail terms. And on FY '20 also, it's 56%, which would probably give us a CAGR of 15%, 18%. So it's a pretty healthy growth. But gold may be growing at a faster rate. So that's -- this is an outcome.

Question
Abneesh Roy (Analysts)

Right, sir. My follow-up question is general on international business, it has become 5x Y-o-Y or 400% growth. If I do the math, around -- 3 overall jewelry business is coming out from international. So I wanted to understand the confidence on the U.S. foray. Secondly, other geographies, if you could give color in terms of international, are they also doing well? And where do you see this number settling over a 3-year time frame, given the kind of success you've seen in the initial quarter. So is there a risk that this may slow down also in the coming quarters?

Answer
Ashok Sonthalia (Executives)

Before Venkat comes in to give you more perspective, just one clarification, I will give you that as the IBD network, international network is expanding, so whatever supply happens from India to fill up the inventory and prepare the inventory from new stores, that is also sitting there Abneesh and that is where that 3% is sitting. But the rest of the question, of course, I will ask Venkat to respond to you.

Answer
C. Venkataraman (Executives)

Yes, the -- we have now many stores in the GCC region. Each store is playing to its potential as well as planned. We are quite [indiscernible]. Many franchisees from India are lining up to partner with us there. We're also looking at external partners. The U.S. store is yet to open, hopefully, sometime in November. -- because some of the complications relating to permission and all that, we are -- these are new to us. But once we get our first store and become clear about what all is required, I think the ramp-up will begin. And every store is playing out to plan demand ratio, ticket size, customer satisfaction, which is a Net Promoter Score. And even our trunk shows in New Jersey, in Houston, in Dallas before we actually set up the store are all confirming the potential. So we are pretty [indiscernible]. And currently, we are staying with the indication we had given in the investor meet, which is 200 by 2025, if I recollect. 25...

Question
Abneesh Roy (Analysts)

Sure. My last question is on the IT business. So are you happy with the 4.9% sales growth because on a much smaller base, obviously, it is growing much slower than your other 2 larger businesses. And when I see the advertising spend, say around 7%, 8% of the sales, it's up sharply Y-o-Y. I don't think it's that relevant given Covid impact in the base quarter. So for the category also, is this the kind of 7%, 8% in terms of ad spend and 4.9% growth, how do you look at this versus the category growth?

Answer
Saumen Bhaumik (Executives)

Quarter 2, this is Saumen here Abneesh. Quarter 2, if I break into 2 parts, July is actually pretty good, okay? And fulfilled our own expectation of the numbers. It is in August and September, more so in the month of September by the time when the sites came in, we saw a sluggish demand. And therefore, sale was below our own expectation. So to that extent, growth was lower. But given that people are celebrating Diwali after 2 disrupted years, I don't think the aspects was top of anybody's list. And therefore, we would consider that as one of those if we have got something as the heat-based category's advantage in the last year, we probably have seen the other side of it. So that would be my take on the growth side. As far as marketing is concerned, I think we invested more than what we did last year, and it's going to get only higher in the 2 quarters that we are entering into.

Question
Abneesh Roy (Analysts)

Yes. I asked because out of all your 3 key businesses, the smallest business is the highest margin. So that on such a smaller size, that kind of 16.5% EBIT margin seems slightly on the higher side. So I hope you are not underinvesting there.

Answer
Saumen Bhaumik (Executives)

We take your [indiscernible] -- and as I said, the second half would see a lot more investment in the customer acquisition side as well as the footprint that we have already promised or that we'll reach [indiscernible]...

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of Jaykumar Doshi from Kotak.

Question
Jaykumar Doshi (Analysts)

Just a follow-up on the question asked earlier on international. So in this quarter, primary sales for international business must be around INR 225 crores, INR 250 crores. Can you call out what will be the secondary sales. The reason I'm asking this is your guidance of INR 2,500 crores indicated about 30 stores by 27. And currently, you have 4 stores and in this quarter, primary sales reported is about INR 225 crores, any INR 150 crores. So just to get a sense whether anything has surprised you positively in terms of revenue throughput per store for the international business versus what you were located...

Answer
C. Venkataraman (Executives)

So like Ashok was clarifying, actually don't look at the billing from India into this. I'd like to confirm that the stores are in the INR 80 crores to INR 120 crores average in the range of INR 80 crores to INR 120 crores per year. That's the full year, wherever it is full year or run rate wherever it is new. So we are sort of so far so good on track for that FY '27 figure that you're describing. 30 stores, 2,500 should happen. Obviously, the network has to fall in place, but the run rates are consistently happening.

Question
Jaykumar Doshi (Analysts)

Understood. That's helpful. Second is, in this quarter, Y-o-Y sales growth [indiscernible] 18%, whereas CT sales growth is about 13%. Is this usual -- or is there any change in store mix? Or this is perhaps also related to the international [indiscernible]...

Answer
Ajoy Chawla (Executives)

Yes. So I'll take that, I am Ajoy. The 13%, I would like to first offer a correction for everybody on this call is to be read as 15% because when you look at all channels, Tanishq, MIA, Zoya, e-commerce and institutional domestic growth actually is 15%. This 13% probably reflects only one channel. And therefore, the like-for-like is likely to be closer to 11%. Having said that, is 15%, good, bad ugly, that's the question that you seem to ask. We think it was...

Question
Jaykumar Doshi (Analysts)

No, no, no. I was -- my question was related to the gap between '18 and 13%, which looked higher than usual, but if it is 15% and 18%, it's not very different from what we have seen in the pack.

Answer
Ajoy Chawla (Executives)

The rest of it is explained by pipeline filling for which Ashok explained.

Question
Jaykumar Doshi (Analysts)

Final one is first half, your EBIT margin for jewelry business standalone is 14.4%. And you've maintained 12% to 13% as your comfort zone or range. Would you like to upward revise that bank?

Answer
Ashok Sonthalia (Executives)

So Jay, Ashok here, the focus on this quarter, where we have 15.3% is the jewelry margin. And there are about 2% represented by certain items, which are not sustainable. One is, of course, our custom duty related gains, the other one is also on diamond pricing. And this being a studded quarter, of course, so we are at 13.3%. So quarter 2 being a stated quarter should have a high margin. But 13.3% to 15.3% is not sustainable. So we are still talking about that bank 12% to 13% in the medium term, next 12 to 18 months. That's the range which we think more comfortable with.

Question
Jaykumar Doshi (Analysts)

Perfect. A quick one diamond prices come off? And are you seeing any sort of change there?

Answer
C. Venkataraman (Executives)

Can you repeat your question? You broke your voice...

Question
Jaykumar Doshi (Analysts)

Have diamond prices come off from peak and...

Answer
Unknown Executive (Executives)

Okay. So diamond prices are no longer going up like they went up earlier, but we have not seen any reduction, a little bit of softening on the higher carat solitaire, but on the bulk of them, which is more in the small diamonds or the maritime as we say, there is no letup. Supply still remains a little constrained.

Answer
Unknown Executive (Executives)

We hit the dock perhaps. We don't expect it to go up further.

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of Avi Mehta from Macquarie.

Question
Avi Mehta (Analysts)

Congratulations on this performance. Just continuing with very agile left essentially on the other segments as well, in particular, watches, we had shared that you would look at now close to 13% as the most steady state, but the first half has been very healthy. So just wanted to get your sense whether there is a one-off over there? Or should we assume that 13% probably can be reached? And similarly, in the eyewear that you had indicated an over 15% kind of expectation, should we also revisit that segment on the margin side?

Answer
Unknown Executive (Executives)

So there is no one-off in watches. Similarly, nothing in eye care. Eye care is still we believe mid-teen is the number. Just in the earlier question, you heard there is a need to invest more on marketing and store expansions are happening. So I would still say that mid-teen number is much better to anchor expectation. As far as watches is concerned, they are doing well, growing well. The premium part of the watches and channels are doing well, and that is where margin is good. We have always talked that watch is a high operating leverage business. And yes, so -- but I would say 13% to 14% seems to be better expectation anchoring rather than thinking about quarter 2 margin.

Question
Avi Mehta (Analysts)

Got it, sir. Got it. And the second part is on the demand side. You had shared last time risk from low ticket size demand that you [indiscernible] -- there has been some players who have been arguing about pricing-based competition rising. Anything on the demand side that makes you worried?

Answer
Unknown Executive (Executives)

You're talking about any particular...

Question
Avi Mehta (Analysts)

January, in particular.

Answer
Unknown Executive (Executives)

Yes. On the entry point, in fact, we've seen a good healthy pickup on gold in the season. And during the quarter 2, we saw a good pickup on [indiscernible] as well because it is a [indiscernible] activation. But at an overall level, I would still say that in the sub-50,000 and sub-1 lac, there is some amount of, let's say, there is some amount of pressure. The growth on the higher segment is becoming more easier perhaps because different segments of the population have got affected differently. And also inflation has been there both in gold and diamonds over time. So I think that may also be adding to a little bit of stress in the sub-1 lakh segment -- at the buyer level.

Question
Avi Mehta (Analysts)

Okay. Sir, but then in that, just hoping a little bit more use state 17% to 19% growth in the festive period on a like-to-like basis. Would it be fair to say that your expectation would be a double-digit growth in the third quarter at least despite the high base? Or there are too many moving parts that would make it difficult to extrapolate that?

Answer
Unknown Executive (Executives)

So you're right, that I'm thinking in parts. What we can say for sure is the 36 days that we looked at from first day of Navratri to end of October compared to a similar period last year and jewelry, it was in that close to 19%, 18.5% to 19%. How that will pan out in the rest of the 2 months is difficult to say because quarter 3 was a high base last year, and it was a very good growth over the previous year. And that, in turn, was a very good growth over the pre-pandemic. So difficult to say. Things are a little volatile.

Question
Avi Mehta (Analysts)

And sir, what's the growth in the -- sorry, what I meant is was this growth in the next post-festive period? Is that what how the base was? I'm just trying to understand the base metal that we are.

Answer
Unknown Executive (Executives)

No, the base was good only, even post festive. And for us to be able to commit to any kind of growth for quarter 3 is very difficult to say right now. But what we have shared with you is how the season has gone, which I think is a substantial... And we are still in the midst of enjoying that 19% growth that we closed 2 days back. for us to start thinking about the next 2 weeks or so.

Question
Avi Mehta (Analysts)

Congratulations and wish you luck.

Answer
Unknown Executive (Executives)

Thank you.

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of Shirish Pardeshi from Centrum Broking.

Question
Shirish Pardeshi (Analysts)

I gave a full comment and full marks for this outstanding growth in this quarter. And I was quite impressed what you've spoken during 4, 5 months before during the analyst meet. I think the margins in the watches and wearables and in fact, it was happening to see the turnaround which is happening in eyewear -- the only concern which I have in the both businesses, as you -- as Ashok-ji mentioned that there is a strong operating leverage.

But I think going back in the past 4 or 5 things, what we have corrected and now we have got the model right, do you think this business -- both the businesses have a lot of strong momentum in terms of demand? Because on a prime as, it looks like discretionary demand is going to be stronger in the next 2 quarters. So are you saying that all the past and the learnings we have already implemented and these 2 businesses will not look back again?

Answer
Suparna Mitra (Executives)

Shirish for the Watches and Wearables Division. We have seen strong growth coming in for both quarter 1 and quarter 2. Quarter 1, of course, in a very walk based by quarter 2, except July, August and September was already back in full swing. We are seeing good demand in the higher-priced brands, higher-priced products and in the more premium channels and that continues very -- to kick in very strong.

So at this point, that is the way that we are riding on. The more economy-oriented price points are not doing as well. So there are some pressures in terms of demand there. But overall, being multi category, which is watches and variables as well as multi-brands as well as multichannel. So the interplay between the brands and channels, the way it is standing out right now. is that brick-and-motor has come back strongly. The premium brands are doing well. Premium channels are doing well. I think that is probably going to be similar. It is going to be similarly a couple of quarters after that, we'll have to wait and watching how things pan out.

Answer
Saumen Bhaumik (Executives)

This is Saumen. As far as ICR business is concerned, Shirish, I think we have got our basics organized, and therefore, we do not anticipate any more shops please. And on the demand side, I think what I mentioned earlier, after 2 years, people put the need-based category in the secondary list, I suppose you can't fault it, and that's our take on the quarter 2. As I said, July was very good. August and September is what we expect we actually experienced a bit of a sluggishness. And if you were to go over the last 7 days soon after Diwali as an indicator of what lies ahead, I would say that we should bounce back in the quarter 3 well. But whatever sailing done, it's still a need-based category and people who buy as they need. And so we are positive about the quarter 3 and [indiscernible]

Question
Shirish Pardeshi (Analysts)

I got that. That's helpful, Suparna, Saumen. But my only were is that now we have reached to a better margin profile. So I just wanted to hear from you what is the strategy? Are we going to maintain the margin and look at the growth as a stabilized matter or we go back and say that because we have taken a very aggressive target for expanding stores. So what I need to understand and confirm from you that the model and the business is on the sound footing and whatever new products, what we are getting into it, and for example, Reflex is one of the things which has picked up very well. So I think is that the thing which is in our confidence and in our control.

Answer
Suparna Mitra (Executives)

Yes, I agree that the basics are working well. In terms of -- you're right, that you've taken very aggressive growth as the main focus. Margin, as was explained by Ashok a little earlier, we are looking at 13% to 14% and really investing in the growth of the business for watches and variables for at least this financial year.

Answer
Unknown Executive (Executives)

And the similar thing for eyewear also, while we did +20% also we maintained -- and we have been consistent on this, about 15%, give or take, would be the expectation in terms of margin. And the rest of the energy and focus would be in order to sort of expand our...

Question
Shirish Pardeshi (Analysts)

Okay. My last question is on the Jewelry business. I think sometime when we met in person, some where we picked up that we were still underrepresented into high-value studied delay. So is that the thing which we are now focusing and that has really helped us to expand the jewelry sales and contribution? Or still it is underway?

Answer
Unknown Executive (Executives)

No, it is certainly under pitched even now because though we have focused a lot on it, and we have seen a very good jump in high value stated is back to what it was, let's say, 3 years ago, pre-pandemic level as a contribution. So that we have seen disproportionate growth there because we've also focused a lot on that. Having said that, the opportunity on that, we are still scratch the surface. I mean, there's a huge opportunity, a lot also depends on how customers are comfortable bringing out their time cards, et cetera, above a certain level. So that's a gradual process. But the opportunity is large.

Question
Shirish Pardeshi (Analysts)

Yes. I'm only telling this with confidence because having spoken to many people on ground, I think all those big bank [indiscernible], which has not happened in early part of the year, they all are coming back. And this is a very opportune time for us because we are one of the preferred and tested brands. So we should get that opportunity.

Answer
Unknown Executive (Executives)

Yes, hope so. Yes.

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of Percy Panthaki from IIFL.

Question
Percy Panthaki (Analysts)

My first question is on the jersey margins. You mentioned that there are certain one-off gains there, and one of them was related to diamond pricing. Can you elaborate on that? I did not understand what that refers to.

Answer
Ashok Sonthalia (Executives)

Okay. So Ashok here, diamond pricing have a few aspects to it. We have been, as our risk mitigation strategy when the supply chains we are getting disrupted, we started buying ahead of time and is stocking up. So some of -- and then diamond price kept on going up for some time. Today now, they are plateauing, but some of those purchase decisions, which were part of risk mitigation strategy have worked really well for us, and that's the stock, which is giving us good realization and margin. That is what I meant.

Question
Percy Panthaki (Analysts)

Understood. And a couple of quarters earlier, our commentary used to be that there is a lot of price competition amongst the organized players. So what is the situation on that aspect currently? Any comments on that, please?

Answer
Unknown Executive (Executives)

Yes. Percy, I think the price competition continues. In fact, it has intensified and every player, whether organized or independent jeweler or a regional chain is now fighting strong to retain their customers. So the price intensity is high price competitive intensity.

Question
Percy Panthaki (Analysts)

Despite that and adjusted for the 200 bps , we are still posting 13.3% margin despite high competition -- so then where is that high competition manifesting? And in what way do we see it manifesting because the margins are normal, growth is good. So then is it really relevant point for us?

Answer
Unknown Executive (Executives)

Yes. So 2 factors beyond the one-offs of 200 bps. One is this was a [indiscernible] quarter. And typically, you should compare it to a [indiscernible] quarter EBIT margin because the mix changes the situation. And therefore, annualized, it may be very different. Second piece is that some amount of operating leverage also kicks in when we do a certain quantum of sales. So -- but I would give more weightage to the first point that I said...

Question
Percy Panthaki (Analysts)

Okay. Understood. Second question also on jewelry segment. The growth is very, very strong right now on a 3-year CAGR basis, we are doing 25% plus in jewelry, et cetera. Of course, there's a pricing element on a 3-year although not on Y-o-Y. My question here is that this is not by linearly every quarter, et cetera. There can be sort of periods of troughs and peaks, people can postpone prepone [indiscernible] et cetera, et cetera. So I mean, keeping this in mind, are you worried about FY '24 growth in the sense that people have bought so much jewelry in the last 3, 4 quarters that there might be some amount of satiation reached in the customers and FY '24 growth could be at risk on a Y-o-Y basis. Any thoughts there?

Answer
Unknown Executive (Executives)

It's rather early to think about FY '24 growth. But just to clarify, I don't know the 25% you've derived based on the primary sales reported, et cetera. So to help clarify that, for the quarter, it's a CAGR of around 23% over a 3-year period. So pre-pandemic to this recent quarter. And if I look at that, that is a mix of healthy buyer growth -- the ticket size growth will be about 6% or so. So the rest of it, about 17% is a CAGR on buyer growth over the 3 years. What gives us hope and confidence is our continued gain in market share, our continued share of new buyers. So even for the quarter that went by, we saw a new buyer contribution of 46%. The same figure in quarter 1 was around 43%. -- new buyer share. And therefore, it gives us the confidence that more and more we are able to attract new buyers. So whether or not people have satisfied their share of jewelry purchases, very difficult to comment, but the headroom for us to grow on market share itself is huge.

Answer
Unknown Executive (Executives)

And we also Percy unlike other expenses, discretionary categories, jewelry is also store of value. And there have been so many instances where, let's say, yesterday, a woman came and bought something worth 2 lakhs and 20 days later, a beautiful collection comes on the salesperson calls her. And sense again buys 2 lakhs was 20 days later because this is a total value in India. Whereas in most other countries, it's a disconnection product, which is an expenditure. So in that sense, there is never association limit kind of thing for jewelry. I mean I'm saying in a broad sense. Plus INR 400,000 crores plus market under 34,000 thereabout kind of sale in FY '23, maybe for the division and the market share opportunity like Ajoy said, and I'm just pinning it with the thousands of -- tens of thousands of crores sitting outside our share to play in, innovate and actually grow.

Answer
Unknown Executive (Executives)

And just to add, you know Percy, if you look at our GHS if that indicates any intent of buyer to buy after 10 months, 12 months, we are seeing very healthy enrollment and growth. So I think, yes, that's also one of the indicators, which gives us confidence that nothing is much changing in FY '24 until unless something unusual happens.

Question and Answer Operator Message
Operator (Operator)

Your next question is from the line of Siddhant Dand from Goodwill.

Question
Siddhant Dand (Analysts)

Can you hear me?

Answer
Unknown Executive (Executives)

Yes, now, we can.

Question
Siddhant Dand (Analysts)

My first question was regarding CaratLane, how is your balance sheet looking like and they've been growing very well. So will they need further equity infusion? Or are they good to go for now?

Answer
Unknown Executive (Executives)

So CaratLane is good to go for now. And anything will they need to do, they have the borrowing capacity and banks are willing to extend them at competitive rates. Being a part of TITAN Group helps them in that context because then debt equity ratios are slightly immaterial from their ability to borrow more. So at this point of time, I don't think there is any primary equity infusion is contemplated. They can borrow and fund their growth.

Question
Siddhant Dand (Analysts)

Currently, do they have any debt on the book?

Answer
Unknown Executive (Executives)

We have working capital. They have gold metal loan. So they would have about, I think, INR 400 crores worth of working capital loan on the books.

Question
Siddhant Dand (Analysts)

Okay. And second question was regarding new launch in the purchase division. So what's the market size and focus for us over there? Or it's too early to comment over there?

Answer
Manish Gupta (Executives)

This is Manish. So we are estimating the market size to be about INR 4,500 crores 1/3 is organized, growing at a fast pace. So maybe in about 5 years, it will be about INR 11 crores, and we are having an ambition of targeting INR 1,000 crores to INR 3,000 crores organized share.

Question
Siddhant Dand (Analysts)

Okay, INR 1,000 crores in 5 years?

Answer
Manish Gupta (Executives)

That's right.

Question
Siddhant Dand (Analysts)

Okay. And so currently, I noticed that you've been just importing from China business. So do we plan an in-house for us or how does it go?

Answer
Unknown Executive (Executives)

No. So at this point in time, we are still evaluating option, but we are -- yes, we are importing from China, but we are building capacity and capability also with some of our lines from a in India from -- for e-comm purpose, for example. And we'll evaluate option in the future from a vendor base in India.

Question
Siddhant Dand (Analysts)

Okay. Great. And my last question is regarding Taneira. So it's still a relatively unknown brand, of course. I think I noticed that you've doubled our marketing...

Answer
Unknown Executive (Executives)

Siddhant, I think [indiscernible].

Question and Answer Operator Message
Operator (Operator)

We'll move to the next question, which is from the line of Manish Poddar from Motilal Oswal Asset Management.

Question
Manish Poddar (Analysts)

Yes, sir. 2 questions. One is the absolute ad spend, which we do annually. If you could just help me understand the broader breakup, what would that be for the gold segment and for the other segments?

Answer
Unknown Executive (Executives)

So no, we will not be able to disclose that, Manish, but businesses are mature, have different level of maturity and scale. And that is how they take themselves -- how much percentage of their revenue is appropriate for them to do. And depending on different product launches, collections, et cetera, all those things and festivities, et cetera. So we were not able to kind of give you business-wise advertisement details here.

Question
Manish Poddar (Analysts)

So do you look at the spend as an absolute amount as you look at as a percentage of sales because this number was roughly about INR 522 crores in both FY '19 and FY '20, I understand there were some co-band stuff like that, this number was about INR 475 crores. So I'm just trying to understand, because INR 600 crores will add some for a company. I'm just trying to understand, do you look at an absolute number, looking as a percentage spend.

Answer
Unknown Executive (Executives)

I mean in the Metro business, it is certainly a percentage of sales because it's a value chain building thing and new businesses, which is absolute because we need minimum levels of investment to break through.

Question
Manish Poddar (Analysts)

Okay. And second bit is probably early days, but one of your peer set or one of the larger peers is rolling out this franchisee model, I know it's early days, but any sort of on ground when you interact with your China partners, any sort of difference in terms of negotiation? Or -- and just a thought around this...

Answer
Unknown Executive (Executives)

So I think none of our channel partners franchisees from the business will be participating in that. I understand where you're coming from. There were some statements made by this peer amongst a group of analysts, as I was given to understand -- but none of our franchisee partners is participating in that. And it's very clear for them and for us.

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of Siddhant Dand from Goodwill.

Question
Siddhant Dand (Analysts)

Yes, I don't know why it was disconnected. But my question was regarding Taneira. So it remains quite an unknown brand as of now, relatively speaking. So when do we plan an inflection point where we get a brand ambassador pan-India marketing campaigns, things like that?

Answer
Ambuj Narayan (Executives)

So a, this is Ambuj. And you're right. So we are investing in advertising and building brand visibility and building the brand. And we are getting -- we are seeing some very good results of that. And looking at whether we get in the brand better or not, I mean that's not a discussion that we are having right now. We are focused on building the footprint across the country. So now we have 31 stores in 14 cities, and we were 20 stores by the end of FY '22. And so we are satisfied with the progress and of store expansion and sales growth. And maybe just watch a few [indiscernible] quarters and we will share more with you.

Question
Siddhant Dand (Analysts)

So how many stores do we plan to add this in the next year?

Answer
Ambuj Narayan (Executives)

We plan to close this year, which is FY '23, around 50 stores. So next year, again, we would be opening about 30 to 35 stores.

Question
Siddhant Dand (Analysts)

Okay. And most of these new stores will be franchisee or owned by [indiscernible]...

Answer
Ambuj Narayan (Executives)

So as I speak, the franchisee stores contribution is already 55% continue to be largely transit...

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of Latika Chopra from JPMorgan.

Question
Latika Chopra (Analysts)

So I have a few questions of clarification on the Jewelry segment. The first one was if you could share some color on wedding demand through the quarter? Or how do you anticipate this to play out over the second half of fiscal, you would have some sense on fee bookings of the orders, if you could share that with us?

Answer
Unknown Executive (Executives)

The wedding demand Latika has been muted, if you ask me both in quarter 1 and quarter 2, even though there were weddings in quarter 1, perhaps because of timing of purchase, people might have bought it earlier, et cetera. Last year, quarter 2 actually had a good incidence of wedding buyers perhaps due to uncertainty of what may happen coming out of a COVID situation, et cetera. This year, we have seen that it has gone back to the lower contribution that you usually see in quarter 2. So given that both the first 2 quarters have been muted, our anticipation is that there should be a fairly strong wedding demand, though early signs are not yet clear.

But sometimes, we have to just take a punt and be prepared for growth when it comes. And this is something that we've seen happen time and again in the last 2 months. So we are actually funding and pitching strongly for wedding demand, and we have got enough collections and campaigns and on the ground events that we are continuing to do because we see a very good potential for this. Even if something doesn't come up in a particular quarter, it doesn't matter. Our share of market share in this is so low that anything we do now will keep on building a strong pipeline for the future. So my -- we are hoping we are hopeful and optimistic of a very strong second half for weddings. But yes, early days yet, we will wait and watch how things pan out over the next few months.

Question
Latika Chopra (Analysts)

All right. The second bit was on new buyer growth, which has been fairly impressive. I just wanted to check that if you exclude the new stores that you've added over the course of the past year or so, how does the new buyer growth looked like on a like-to-like basis? Is that tracking your expectations is the difference versus the 10% that you saw in this quarter significant or is it on similar side?

Answer
Unknown Executive (Executives)

So we are seeing reasonably healthy like-to-like buyer growth. We have seen good buyer growth over -- in terms of new buyers, we are seeing healthy both new as well as total buyer growth, including same-store growth. I won't be able to give you a number, but the percentages are fairly good.

Question
Latika Chopra (Analysts)

And are these new customers coming for the high-ticket price purchases? Or are you seeing more of these coming at the entry level for your existing stores?

Answer
Unknown Executive (Executives)

So usually, new buyers will come in at entry level. But this time around in quarter 2, we have also seen adequate number of new buyers come in at the upper end, especially for the high-value started end as well. So -- and earlier on a few months ago, we had also seen some new buyers come in for something like the [indiscernible] collection, which we had launched. So -- but yes, the majority still come in the entry point, but now we have started also seeing some incidents of high-value purchases from new buyers.

Question
Latika Chopra (Analysts)

The other bit, which I wanted more clarity was you alluded to the fact that price competition in the category has intensified. But have you also participated in this with more competitive pricing. So has your price premium versus the other organized players increased or it is stable because you've decided to match it?

Answer
Ajoy Chawla (Executives)

It's a complex question to answer because pricing is in gold, it's a function on gold rate as well as making charge. So we have tried to balance it out between the 2, though it's difficult to argue whether it's on an absolute level gone up or low. Very difficult to answer. We've become more competitive on gold rates, but we are managing product mix. We are managing making charge and as a combination of that. In started, I think our premiums have gone a little higher because we've kind of implemented price increases as and when we've seen the costs going up. I'm not sure if the rest of the market has done that in that manner. So maybe on a like-to-like basis, some premiums have gone up on the state side.

Question
Latika Chopra (Analysts)

All right. And maybe the last bit was on store expansion. First half 14 stores added to punish and about 19, 20 stores for CaratLane. What is the number or largely you expect for the full year FY '23?

Answer
Ajoy Chawla (Executives)

Okay. So I'll give a clarity, 14 stores for Tanishq -- but what we don't report here is also the significant expansion in existing stores. So almost another 11 stores, we have expanded significantly by 40%, 50%, there area has gone up. So each of those expanded portion is like a store on an average of 2,600 square feet we've added per expansion. So technically, you can say Tanishq has added almost close to 25 or so. MEA has added about 30-odd stores till October, maybe 29, I think some such number was there.

For the quarter, it's there. For the quarter it's '16, but [indiscernible] I add -- we've had a lot of openings in October, so I'm giving you an updated view. And CaratLane also, we've added quite a few -- we added, I think, 20 in the first half, 14% in quarter 2. But thereafter, we've added quite a few more actually. We've added another 13 or 14 stores in CaratLane. So overall, each of our brands is on a fairly aggressive expansion spree because the opportunity is there in new catchments as well as new towns. So I think I don't know guidance, Tanishq will probably see totally new stores of 30, 35, but we may also end up expanding about 20-odd stores by the end of the year. MEA will probably see 70 -- 60, 70 store additions and CaratLane also is gunning for an aggressive similar number.

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of Vishal Gutka from PhillipCapital.

Question
Vishal Gutka (Analysts)

Congrats on a good performance. I have 2 questions. First question is that India signed agreement with UAE or for getting gold on concession duty rate, 1% concession, they give an import duty with first hand been restricted to 200 tonnes. So are we applying to get gold under the scheme? Any sense on that?

Answer
Ajoy Chawla (Executives)

Yes. Yes, Vishal. We have done so in the first installment for the first quarter and it started, we got 540 kgs license. And we are now, in fact, in the process of utilizing that because that was extended in November. -- in the next quarter, we've actually been given a significantly larger we had put an application. So we've got, again, a significant quantity on that.

Answer
Unknown Executive (Executives)

Just to add to Ajoy, this 200 tonnes which you mentioned, it is over 5 years, like it starts from 120 tonnes and then it goes up to 200 tonne in the fifth year. And then there are quarterly allocations which are happening. So first, a location came in quarter 2, but it came very late. So import time has been provided till November end. And then the quarter 3 reference, which Ajoy spoke about, we have got some higher allocations based on our capacity, et cetera. So it's a quarter-to-quarter thing, but we are very much participating in that actively.

Question
Vishal Gutka (Analysts)

So Indirectly, women were organized players because larger organized players will be able to generally get this gold at a concessional rate. That 1% concession is there. So overall beneficial for overall net, right because smaller place is finally difficult to procure in the scheme.

Answer
Unknown Executive (Executives)

Many jewelry vendors are also fairly large. So they have also applied and that benefit can translate to other players as well. So I wouldn't make that assumption entirely.

Question
Vishal Gutka (Analysts)

Got it. Got it. And sir, second question is on any sense of benefit coming on hallmarking front. Have you seen that benefit coming to us because now almost -- more than 9, 10 months, that's in hallmarking is mandatory in India. So any sense if we can provide on hallmark in trend, -- it would be helpful.

Answer
Unknown Executive (Executives)

Difficult to estimate whether we have got any direct benefit by virtue of hallmarking specifically. Yes, the broader theme of migration of customers from unorganized to organized continues to be a secular trend. But frankly, on hallmarking, I can't really -- I can't really say whether we are getting any specific -- it's very difficult to arrive at that view.

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of [ Anas Mokashi from Yadana Karami Private Limited ].

Question
Unknown Analyst (Analysts)

My question is about the Zoya segment. So like what is the growth we are looking in this segment on a quarter-on-quarter basis, a year-on-year basis? And some plans about expansion or , if you can share some guidance on this.

Answer
Unknown Executive (Executives)

Yes. So just to give you a flavor, Zoya, a few years ago, 3 years back, if I'm not mistaken, it was around INR 66 crores, then it went to some INR 70 crores, INR 80 crores. Last year, we did about INR 135 crores. This is all consumer price, so not NSVs. And this year, we have completed that INR 135 crores of last year in the first 7 months. So we are looking at anything between INR 230 crores to INR 250 crores.

And given that the base being so small and very few stores that we have, and a very small customer base right now out of the very significant HNI population and that's growing. I think the opportunity is very large. And we -- on that very small base, you can take any growth you want. It won't materially alter the Jewelry division or the company's top line. But for that brand, yes, can we see it to be a INR 500 crores, INR 700 crores business over the next few years? Surely. Can it go beyond that perhaps, but don't have a view on it right now.

Question
Unknown Analyst (Analysts)

Okay. Okay. And my second question was about a region-wise contribution in the Jewelry segment revenue mix. So how much is South region contributing, you can share that data?

Answer
Unknown Executive (Executives)

South region -- yes, we'll probably give it to you later. I don't have the exact fix, but it's beginning to get to its fair share among the 4 regions. I think by the end of this year, probably it may be 4 or maybe slightly less than 4%, but I don't have the exact fix now.

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of [ Vijay Gala from Gala Consultancy ].

Question
Unknown Analyst (Analysts)

Say, regarding everything asked on the delivery point of view, where competition for the [indiscernible] name, and we hope so that I think on the point of the point of view, subsidiary Tata Engineering Automation Limited. So defense portfolio there with you, how much of position is there in the aerospace and automation projects are asking.

Answer
Unknown Executive (Executives)

Could you just repeat the last couple of sentences?

Question
Unknown Analyst (Analysts)

We have the one subsidiary type on engineering automated limited.

Answer
Unknown Executive (Executives)

Yes.

Question
Unknown Analyst (Analysts)

So what is the end of sports division you are doing? And what is your order position?

Answer
Unknown Executive (Executives)

No, we are not in a position to share the order position...

Question
Unknown Analyst (Analysts)

But doing very good though.

Answer
Unknown Executive (Executives)

The numbers are there for you to see. I think they have done well in quarter 2. They have 2 businesses there. One is the manufacturing services we call where aerospace, defense and some of the newer tech area equipment they are supplying and the other one is automation solution services. Both businesses are quarter 2, particularly they have done well, and they are expected to continue to do well, while the end customer environment is not so certain at this point of time, they serve to U.S. and European customers as well as Indian customers. So it is more linked to cyclicality of economy, this business. But currently, they are doing well, good order inquiry, good order booking. So yes, all okay.

Question
Unknown Analyst (Analysts)

Okay. What about that -- that is continuous division will be good concern? Or what will be otherwise we demerged in another company?

Answer
Unknown Executive (Executives)

It is too premature to start discussing anything on that.

Question
Unknown Analyst (Analysts)

Congratulations on Tata [indiscernible].

Question and Answer Operator Message
Operator (Operator)

The next question is from the line of Sheela Rathi from Morgan Stanley.

Question
Sheela Rathi (Analysts)

I just had one question. When I just draw the conclusions from what you have said. The point you made was that the entry-level demand was weak, wedding demand was weak for second quarter in a row and the new buyers are coming at the upper end. Of course, this was an activation quarter where the results have been phenomenal. But going ahead, is there something we are worried about, especially with respect to weakness in wedding demand and as well as the entry-level demand?

Answer
Ajoy Chawla (Executives)

Yes. I'll answer this. So first of all, when I say weak, it is relatively weaker. It is still healthy growth, but the growth in the higher end is better. And therefore, I think in relative terms, perhaps I didn't clarify. Growth is coming easier upward, but it is coming, but it's not as easy and free flowing as it is in the upper end. Secondly, even for new buyers, I would like to moderate that comment and say that a few new buyers are now coming at the higher entry price point, but the bulk and the majority still come at the entry level, sub-1 lakh.

Thirdly, growth of new vis-a-vis growth of, let's say, repeat customers continues to be well balanced. And in fact, both in activation period of quarter 2 as well as in the festive season, we have seen new buyer growth outstripping total buyer growth. So therefore, we don't -- we are not worried about it at all. And whatever little bit of pressure is there at the entry point. We are anyway addressing it in many different ways because the opportunity continues to be large. So nothing to be worried about.

Question
Sheela Rathi (Analysts)

Understood. And just a follow-up here, is there a divergence with respect to the region? I mean, are we seeing stronger growth coming from Western region and weakness coming from the southern region, is there any divergence there?

Answer
Ajoy Chawla (Executives)

Not really. See, when you look at it point-to-point year-to-year, you will always find some ups and down. When you look at it over a 3-year horizon, South continues to grow for us because our penetration and our own market share there is much lower. So the -- and the headroom is much higher. -- certain bigger cities, let's say, last 2 years, metros went through a tough time because of coal. So it may look like, oh, in this quarter, metros have done better and Tier 2 might have done slightly lesser, but both have grown. And to draw some long-term conclusions on that, I would be very off. So overall, I would say, certain pockets, yes, the -- which have been a little bit under lower growth, some parts of the East and some parts of Eastern UP, they have been affected by floods, et cetera. But really, you can't draw large conclusion based on that. And therefore, we are powering and chasing growth on all the fronts. And we see that some of these ups and downs are like noise in a volatility situation. But secularly, I would say that there is no clear trend emerging.

Question and Answer Operator Message
Operator (Operator)

The next question is from… the participant has left. [Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Venkataraman for closing comments.

Answer
C. Venkataraman (Executives)

Thank you very much, everyone, for all the posing questions, as always, and the encouragement given to the company and all of us. Thank you, and see you soon.

Question and Answer Operator Message
Operator (Operator)

Thank you. On behalf of Titan Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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