Titan Company Ltd posted handsome Q3 results, with profits rising 18 per cent on festival demand and the rollout of new schemes. Speaking to Bloomberg TV India, Titan MD Bhaskar Bhat said the company will grow at least 10 per cent in FY17.

While consumer demand seems to be muted, what has really worked for you in Q3?

First, let me talk about the consumer sentiments in the third quarter based on the research that we do. The festival season sales didn’t bring that much of cheer this year.

But it was better than the previous year. But the quarter was certainly better towards the second half in terms of demand pick-up, thanks to the continuous strong wedding season. And we launched a lot of new products both in watches and jewellery — Divyam and Zuhur in jewellery and Raga collection in watches. That helped in improving sentiments.

But if you take the exceptional growth that we are seeing, it is on an account of the advancement of our end-of-season consumer schemes into December, which normally is done in January- February. And a certain expectation among the jewellery consumers about the PAN card limit dropping to ₹2 lakh from January 1, 2016. So, there was some advancement of purchase by jewellery customers as well. Overall it was a good quarter. The second half of the quarter was good from a consumer sentiment perspective.

How has the growth played out in Q3 and how do you see that panning out for FY17 as well?

The good part about FY17 for jewellery is of course that throughout the year we will have the benefit of the golden harvest scheme redemptions, which was absent last year. So, the growth will be on a base which was relatively lower. Having said that, the new segments that we have been exploring are going to play out. For example, the wedding jewellery is now picking up. Divyam, our new collection, has triggered that. We are being considered more and more by consumers, for wedding purchases. That’s a very large segment where we were not present in any significant manner.

Similarly, in watches, we have launched our technology product in partnership with HP and it is uniquely positioned as a stylish yet performing the functions of a smart watch. Therefore, the growth will come from several new product introductions and new segments within the core category and the low base in jewellery. Eyewear continues to grow and we are still penetrating new markets. And therefore, aggressive network expansion will be the objective in eyewear. We still have some fledgling businesses like fragrances, which have to grow to a much larger size than they are today.

What does this really mean for the margins for FY17?

We don’t really provide any guidance. But compared to the current year’s literally flat performance, thanks to the regulatory impact on the jewellery business and low growth rates in watches, we would do much better than that — at least a 10 per cent growth, which is not common to Titan. We were at a much higher growth rates. The fundamental category truths in the categories in which we play and our own company’s strength, both by way of distribution and brands, will come back to aid us in growth. So FY17 will be a much better year than this current year.

Plus, the watch business is undergoing a transformation. Quite a significant cost reduction is one thing we are looking at. And strategically, we have vacated lower price points because we are getting traction at higher price points. And brand Titan is moving up the price curve and consumer acceptance is very good at those price points.

Will the new PAN card rule have an impact in Q4?

It’s too early to talk about numbers. In general, we will get affected less than most other jewellers because the percentage of sales between ₹2 and 5 lakh in our case is rather small in cash. But having said that, what we are witnessing is a push back from customers — even those who have a PAN card — who are bringing legitimate money on the table, on which tax is paid, whether it is cash paid or credit card.

The reluctance to produce the PAN card or not bringing their PAN card along is because, let’s admit that, there is a fear that it could lead to other problems for them later.

It will take a while for the consumers to get used to it. I am not saying this just for jewellery. Now it is applicable to all categories. And I think as a nation, we have to overcome that in a sensitive manner. KYC is a part of credit card purchases. So asking for a PAN card on top of that, I believe, is not right.

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