Post by Equity Section on Sept 2, 2011 14:39:48 GMT 5.5
Key Points from the Annual Report
1. Watch Business achieved breakthrough in several new consumer segments in the watch market – the sub Rs.500 economy segment, where Sonata Super-Fibre recorded handsome sales and the children’s segment, with Titan Zoop. The successful expansion of exclusive Fastrack stores net work has reinforced Fastrack’s position as India’s most exciting youth brand. The Company also took confi dent steps into accessories market with the national launch of Fastrack accessories (bags, belts, wallets, wrist-bands). The Jewellery Division aggressively pursued growth of diamond studded jewellery and was also able to improve the grammage growth of gold jewellery, despite the increase in gold prices. The Eyewear business witnessed rapid expansion of its retail network, with healthy sales growth in like-to-like stores. The B2B business of Precision Engineering which was hit last year due to global slowdown made good recovery and performed reasonably well compared to the previous year.
2. The year witnessed expansion of the Company’s retail network with a net addition of 122 stores (124503 sq.ft.) across Watches, Jewellery and Eyewear businesses. As on 31st March 2011, the Company has a total of 665 stores, with over 810000 sq.ft of retail space, delivering a retail turnover in excess of Rs.6150 crores.
3. The Company achieved an export turnover of Rs.127 crores during the year. Exports include sale of watches and precision engineered components.
4. The International Business Division of Watches made a splendid foray into Vietnam in 2009 and followed it up with an equally successful launch in South Africa in 2010-11, the initial results of which have been encouraging. While Far East Asian markets continued to do well, some Middle East markets reported sluggish economies and results during the year. The export of precision engineered components during the year showed improvement over the previous year.
5. The Company is continually sourcing about 30 % of its energy consumption at its Watch Manufacturing facility through the renewable energy resources – Wind Mills. During 2010–11, 3.14 million units of energy has been sourced from the private wind farms which is equivalent to 25.8% of the annual energy consumption. This initiative helped us to reduce carbon emission to an extent of 2198 Tons and supported to achieve cost savings to an extent of Rs.10 lakhs during 2010-11.
6. In line with the vision of becoming “Carbon Neutral“, your company is investing in its own Captive Wind Power plant under Joint Venture Model, in collaboration with M/s TVS Energy Limited. Capacity of this wind power plant is 3 MW, estimated to generate 72 lakh units per annum which will meet 40% of the Company’s annual power requirement (estimation for 2011-12 : 170 lakhs units) at Watch and Jewellery manufacturing, Hosur. Total investment by your company on this project is Rs.1.50 crore. This project will support to reduce the carbon emission to an extent of 5040 Tons per annum. This project will be operational from June 2011.
7. Watch assembly unit at Pant Nagar (excise duty free zone) successfully ramped up the production volume in a short span of time and produced 1.5 million during the financial year.
8. The Company has successfully re-engineered the existing metal movement of Cal.7000 series to Hybrid version in collaboration with Seiko Epson, Japan. The movement division successfully productionized Cal.7000 hybrid movements and achieved a volume of 0.4 million during the year.
9. The Case Division has taken up the initiative of improving capability of Case plant by introducing automation for case
machining to improve productivity, developing colour planting and enameling of cases.
10. The Company has adopted various technologies from different part of world to reduce gold loss like electro polishing, automatic refi ning, smelting setup, shoe scrubber, etc.
11. High Density waxing technology has been introduced to convert handmade jewellery manufacturing to cast route for delicate fi ligree type of products. This helps to reduce weight of the product and lead time for manufacturing.
12. As Titan Watch business has aspiring plans to grow in terms of volume, value and its share in Indian as well international markets, Hong Kong sourcing offi ce plays a crucial role in supplying the increased volumes of watches, cases, straps, dials and components from Hong Kong by enhancing the vendor base, networking and building relationship with key vendor fraternity. During 2010-11, about 3.5 million watches including 1.6 million of plastic watches for Sonata Super Fibre and Zoop, have been sourced from Hong Kong.
13. In addition to the enhanced volumes of sourcing, Hong Kong sourcing offi ce was involved in identifying the contemporary designs, features, materials and developing new products on time at optimal cost. About 120 new products have been developed from Hong Kong during the year 2010-11. These include development of watches with mechanical automatic movements sourced from Japanese brands.
14. A new product line using a diamond like material but substantially lower in price, Diamantine has been introduced in the GoldPlus market.
15. During the year under review, the Company earned Rs.127.15 crores in foreign exchange and spent Rs.2969.17 crores
(including Rs.2628.51 crores for procurement of gold and Rs.4.13 crores on capital imports).
16. During 2010, global production of watches was estimated at around 1.2 billion timepieces, an increase of more than 20% compared to the previous year. Many global markets displayed a strong uptrend in sales volumes, after a sharp fall in demand during recession-hit 2009.
17. The premium and luxury end of the global watches market saw vigorous recovery, with export sales of the Swiss watch industry growing by 22% in 2010, compared to the previous year. Asia has now become the largest market for Swiss watches, absorbing 53% of Swiss watch exports during the year. This is also the reason why many premium and luxury brands are now investing signifi cant amounts in Asian markets.
18. The Swatch group, global market leader in wrist watches, recorded gross sales of 6.44 billion Swiss Francs during 2010, a growth of 22% over the previous year. The group also reported record operating profi ts during 2010.
19. The Indian watches market continued to display good growth during 2010, with the premium watch market, in particular, recording a growth in excess of 25%. This is excellent news for the future of the industry, since global brands will continue to invest strongly in this rapidly growing market.
20. During 2010, your Company increased its market share in multi-brand outlets (as measured by M/s. Francis Kanoi
Research) by a further 2% to 45%, in the face of competition from over 65 competitor brands. Our share in the total market including sales at exclusive stores and corporate clients stands at 47% by value.
21. Based on these strong foundations, the watches business of the Company achieved a record profi t before interest and taxes of Rs.186 crores and a robust ROCE of 73% during 2010/11. Titan, our fl agship brand was ranked amongst the ten most trusted brands in the country, among 16,000 brands studied by the Brand Trust Advisory during 2010. In the same study, Fastrack was ranked the most trusted fashion accessories brand.
22. During the year, brand Titan successfully launched several new collections of watches, which received excellent consumer response. These new launches included Purple by Titan, an offering of fashion watches; Raga Aqua, a new collection whose evocative designs were inspired by the oceans and seas; Tycoon by Titan, a new collection of gold look watches; and new products in the automatic watches range, which cater to premium consumers. Titan Zoop, which had been launched in the previous year, further strengthened its position in the children’s watches category.
23. Xylys, our Swiss-made brand, also recorded an excellent year, with its highest ever sales. The brand has now established good momentum, and we hope to achieve further gains in the years ahead.
24. The Fastrack exclusive store network continued to expand, and ended the year with a total of 47 stores.
25. Our “World of Titan†network grew to 311stores by the end of the fi nancial year 2010-11. The Company has launched two flagship stores, in Mumbai and Delhi. The Delhi flagship store also has the distinction of being the country’s largest watches store.
26. Our customer service network, which offers excellent and affordable service to millions of customers, grew to 829 authorized service points nationwide.
27. In Vietnam, we launched a special series of watches to commemorate the 1000th anniversary of Hanoi, the country’s capital and one of Asia’s oldest cities.
28. A noteworthy development was a new Edge watch crafted in Titanium, which is now not merely the slimmest but also the lightest watch in the universe.
29. India continues to be the largest consumer of gold jewellery in the world estimated at 680 tonnes durimg the last year according to
World Gold Council (WGC).
30. Prices of rough diamonds moved up by 20% in December 2010 and this resulted in polished diamond prices moving up by a similar extent. By Q4, the rough prices moved up twice again, and the prices of polished diamonds have already moved up another 70%. Consequently, our procurement prices of polished diamonds have increased by around 90% in April 2011, compared to December 2010. This put a tremendous pressure both on the overall market and on the competitive position of our brands as the difference between our prices and our competitors widen on account of
these steep increases.
31. March 2011 also saw Excise Duty being levied on branded jewellery, this time to the extent of 1%. From what we understood from the Finance Ministry, this is applicable only on brands like Tanishq and not on “house mark†shops, which means that any big and reputed independent jeweller can avoid this. While Tanishq is absorbing this impact, it puts considerable pressure on Gold Plus.
32. One big-ticket initiative for FY12 is the setting up of the 3 additional Karigar Centres, through which we will seek to produce close to 40% of the FY15 gold Jewellery output, compared to the current 26%. Apart from the recurring labour charge savings that these will deliver, they will also reduce the risk down considerably and help raise the quality standards of our production environment. The preparation for this has been started in 2010-11.
33. UCP Turnover of the eyewear business grew 58% with same store growth being 33%.
34. The Company now has over 150 exclusive eyewear stores and is present in 45 towns as on March 2011.
35. During the year Titan Eye+ introduced many innovative and successful collections like Switchers Frames – with multiple temples, Manhattan frames for the Corporate consumer, Paolo Seminara – premium frames designed by a reputed Italian designer and Activ Lenses – tailor made to suit individual life styles of different consumers.
36. The year 2010-11 saw a net addition of 851 new recruits. As on 31st March 2011, the Company had 5204 employees on the Company rolls, out of which 2800 were in the factories, 2000 in Retail, Sales and Marketing and the rest in support functions.