Formalising informal sectors is what we have done best: Bhaskar Bhat

Vinay Kamath K Giriprakash Bangalore | Updated on September 10, 2019

Titan Co MD, who retires this month-end, looks back on his 36 years at the company

Bhaskar Bhat, Titan Co. Ltd’s Managing Director, retires on September 30 after 36 years with the company. Bhat, 65, joined ‘the watch project’ of the Tata group in 1983 from Godrej & Boyce and, for several months afterwards, didn’t know if the project would take off at all, as the government kept rejecting the Tata overtures. But, when it did enter watches, Titan revolutionised the business with its good-looking quartz watches. An IIT Madras-IIMA graduate, Bhat took over as MD in 2002 and it was a virtual baptism by fire; Titan was emerging from the Xerxes Desai era and the balance sheet was weak. The company was struggling with losses from a failed European venture and Tanishq was yet to turn around. The watch business too was under pressure and, in early 2003, Bhat had to contend with a 68-day lockout, with the workforce striking over a performance-linked wage revision. But he led the company turnaround and put it on a stellar growth path. In an interview with BusinessLine, he looks back on his many years with Titan. Even though Bhat retires, he continues on the board of Tata Sons, the group’s holding company.

Looking back what have been the highs and lows in your 36 years with Titan?

I don’t look at anything as low or high. At a time when the economy was closed, getting approval to enter the watch business was a high because our first application was rejected. Then, the decision to get into quartz was another high. There were others too. Our decision to get into the jewellery business and its eventual success; doubts about the Edge (ultra-thin watches) and again making it a huge success. It was perhaps the biggest innovation we ever had. Fastrack was another. We were actually apprehensive about how Swatch would play out in India because the youth is a big market. And, then we thought the mobile phone would affect the watch business, especially amongst the youth. But Fastrack cracked the youth segment very effectively.

When Titan entered the market, it was seen as displacing HMT watches and there was some heart-burn around that?

I must readily admit that we learnt a lot from HMT. Our technical experts were from HMT. But our focus was more on customers and dealers. We saw to it that our sales guys never mentioned HMT during their calls. I was the sales head at that time (in the late 1980s). I was obsessed with convincing dealers about our products. If HMT failed, it was of their own making. We always spoke about quartz watches and how it has less moving parts. These are the attributes that brought customers to our stores. So we grew on the back of an inept competitor. I wouldn’t say there was no resistance, say from certain dealers, and pressure from HMT itself. But look at it this way, those who joined from HMT blossomed here.

What is the future for watches today?

Smart, stylish watches will never go out of fashion. There are lots of things that make a good-looking watch. Raga is one of our most successful brands. Even Fastrack sells well. The next big hope is smart watches, not only from a tech point of view but also to bring the watches back onto the wrists. The best is where you can get a more functional analogue watch, which works hard for you but doesn’t necessarily have to give you 25 different functions.

What would you say were the inflexion points for Titan?

We created the quartz category in this country, and transformed the watch industry. Formalising an informal sector and transforming it for the benefit of the consumer is what we have done best. We are sort of bringing order from disorder. We create elevating experiences for the customers. Our getting into the jewellery sector, perfumes, even eyewear, where there was a lot of cheating going on, we changed all that. The inflexion point was Indianising the jewellery business. We have never succeeded in a big way in Kerala or Tamil Nadu, where there are traditional jewellery stores. But in other parts of the country, we have done very well.

The market cap when you took over as MD in 2002 was under ₹500 crore. Now it is ₹96,500 crore approximately (as on September 10). It must be a cause for celebration.

Nobody is celebrating it as such. Yes, I think it was less than ₹500 crore when I took over. In the company, the celebration is about what we did and what we have achieved. It is true that we feel good that the market has recognised and respected our performance.

Has Tata Sons thought of buying more stake from TIDCO?

I am the Managing Director of the company and I can’t tell one shareholder to leave… I wouldn’t do it. But there, again, it is about valuation. You know, it is like your own child. There is no valuation for it. We have had a fabulous relationship and I don't want to break my head on buying their stake.

Has the economic downturn resulted in fewer footfalls in your stores?

In each business it is different. Growth in watches is lower. Helios (Titan’s multi-brand watch outlet) is growing very fast but in World of Titan, it is not. Online is growing very fast. We believe it is a temporary phase. I think it'll all come together now in the festival season for gold and for watches; it is one of those steady lifestyle products.

We thought we would grow at 20 plus per cent. That is becoming a challenge as there is a bit of an undercurrent. But, in the next few months, it should turn around as there is a pent-up demand. On gold, we will grow, but on watches, we won’t go back to the high growth rates we saw earlier, for the next seven to eight months at least. But there’s no lack of affordability.

How would you define Titan now?

We are beyond being a lifestyle company. We are an institution now and the institutional values we have created are becoming more and more important to everyone in the company. The sense of continuous exploration, keeping the excitement alive, while continuing to be transparent is important for us. We have succeeded in embedding in our people that our culture is important but as a business entity, value creation is our most important task. Having created value, we can say we are a healthy, wealthy, sharing and caring company. Healthy is not about ‘tandooristi’ but is all about our margins. We should keep improving margins, because only when we improve margins, we are less vulnerable to a downturn. Wealth is not about making big margins with low turnover but big turnover with a reasonable margin is what we look forward to. But, low margin, low turnover is not fine! Wealth for us is not market cap but profits growing up and once we have created that kind of wealth we can share with employees and shareholders. We have succeeded in that. Our JV partners, TIDCO and Tata Sons, have given us enough freedom. We are a frugal company today with no borrowings; zero debt. But it is a problem now. We don't get good rates on our FDs or ICDs.

Published on September 10, 2019

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