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Edited Transcript of TITAN.NSE earnings conference call or presentation 6-Aug-19 11:30am GMT

Q1 2020 Titan Company Ltd Earnings Call

Hosur Aug 13, 2019 (Thomson StreetEvents) -- Edited Transcript of Titan Company Ltd earnings conference call or presentation Tuesday, August 6, 2019 at 11:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Bhaskar Bhat

Titan Company Limited - CEO, MD & Executive Non Independent Director

* C. K. Venkataraman

Titan Company Limited - CEO of Jewellery

* S. Subramaniam

Titan Company Limited - CFO & Head of IT Function

* S. Ravi Kant

Titan Company Limited - Executive VP of Corporate Communications and CEO of Watches & Accessories

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Conference Call Participants

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* Abneesh Roy

Edelweiss Securities Ltd., Research Division - SVP

* Amit Sachdeva

HSBC, Research Division - Analyst, Consumer and Retail

* Avi Mehta

IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary

* Harit Kapoor

Investec Bank plc, Research Division - Analyst

* Kunal Vora

BNP Paribas, Research Division - Analyst

* Manoj Bajpai

* Niket H. Shah

Motilal Oswal Asset Management Company Limited - VP & Associate Fund Manager

* Nillai Shah

Morgan Stanley, Research Division - Equity Analyst

* Rakesh Radheyshyam Jhunjhunwala

Rare Enterprises - Executive Officer and Partner

* Richard Liu

JM Financial Institutional Securities Limited, Research Division - Research Analyst

* Tejash Shah

Spark Capital Advisors (India) Private Limited, Research Division - VP of Research

* Ushma Sheth Sule

* Vishal Gutka

PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst

* Vivek Maheshwari

CLSA Limited, Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Titan Q1 FY '20 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded. I now hand the conference over to Mr. Bhaskar Bhat, our Managing Director. Thank you, and over to you, Mr. Bhat.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [2]

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Good afternoon, everyone. Thank you for joining the conference. We have just concluded our AGM, and we are at Hosur. I'd like to introduce my colleagues here. With me are Dinesh Shetty, Company Secretary; Suparna from the Watch division; CFO, Subbu; Ravi Kant; Ajoy Chawla; C. K. Venkataraman; Ronnie Talati; Nandu -- Nandukumar; and Vikas.

At the AGM, the Chairman announced the appointment of C. K. Venkat as Managing Director of the company effective October 1. Congrats, Venkat, and welcome in advance to the Board. The AGM, of course, as usual, was held in Hosur, and questions were mostly about the last year.

So coming to Q1, I think we have sent you the presentation. Apart from the top line growing at 14% and the bottom by 7% primarily the bottom line has been affected by 2 big impacts. One is the biennial business associate conferences that we have every year, an almost INR 40 crores impact of that. And we concluded our long term -- 3-year wage settlement with our worker-level employees that has also had the Q1 effect. And store openings have continued at a reasonable pace. The market had a significant impact, jewelry sales post 15th of June, and it was -- what triggered it, we don't know, but certainly it coincided with the rise in price of gold and thereafter the further impact of 2.5% customer duty imposed on gold. The other 2 divisions have grown well, but there are certain challenges we face in the marketplace. And the company is addressing those in the next few months in the quarter itself -- second quarter itself. And we hope to continue to grow -- focus on growth and on cost is what going to emerge in the next few months in the company.

I think we'll start with the questions and answers. Questions?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [3]

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Before the questions, I'd just like to take the opportunity to thank Bhaskar on behalf of all of us for more than 30 years in the company and 17 years at the helm of the company as Managing Director, guided us, mentored us and created what is uniquely one-of-a-kind institution in the world of business. And this is his last official investor call, and I wanted to take this opportunity to thank Bhaskar and maybe, say, give an opportunity for some of you to say over the call, thanks to him as well. So thank you, Bhaskar, on behalf of all of us.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [4]

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Thank you. Thank you. Thank you, Venkat.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Abneesh Roy from Edelweiss.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [2]

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First question is, if I see the Studded share, that has been fairly stagnant over the past few quarters definitely and maybe past few years. In spite of very high gold price, it's not moving up. While the stated goal is to do that, and especially in the light of high gold prices, that's easier. So what's the reason why it's not gone up? So is the sentiments weak? Is that the reason?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [3]

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Actually, Abneesh, just to clarify, our stated goal is not really to increase the Studded share. As stated couple of times in the past calls, that even between FY '07 and FY '12, at that time, the stated goal was a substantial expansion of the Studded share and the EBIT expansion expected to come through that. But the leverage in the business of some 3 or 3.5x actually took us to the EBIT levels that we wanted to do without actually altering the Studded share. So even today, our emphasis is Studded growth and not Studded share because we are emphasizing a big drive in the wedding business, which will anyway keep the Studded share for us at the same level. So in the last many quarters, the reason for that is that, and it is likely to continue because we are continuing to push weddings.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [4]

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And sir, the CaratLane 60% growth versus jewelry physical overall sales growth around 13%, 14%. So is there any down-trading which is also driving all this? Or is it just the fact that still you're expanding in CaratLane into the physical stores also and it's still in initial years? Is that the reason why it's such a higher growth in...?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [5]

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Actually, because first of all, the actual growth of retail is 16%, whereas what you are seeing is the primary sales growth that the company reports. And so that 16% has to be compared with the CaratLane's figure, firstly. And secondly, the price point of CaratLane is nearly 1/4 of Tanishq, so there is no question of down-trading happening there. It's a very different segment. That segment at that price level is also not so much affected by the price of gold, that women's view on the matter itself is very different. Very low market share or very low sale base chasing an opportunity which is very large. Very large opportunity in online. We have done exceptional work in lower price points and all. So there is no connection.

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Abneesh Roy, Edelweiss Securities Ltd., Research Division - SVP [6]

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And sir, final question, in Watch business, this TCS large sales was there. So could you quantify in terms of the EBITDA margins, was it broadly similar to the Watch segment? And how large was this in terms of sales? And similarly, in terms of the dealer commission, dealer event which was held, does it also help in sales because this is held in alternate years. So in a year in which it was held, is there any benefit in terms of sales also because there is more motivation in general?

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S. Ravi Kant, Titan Company Limited - Executive VP of Corporate Communications and CEO of Watches & Accessories [7]

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On the TCS order, see, we have a separate structure for corporate sales, which -- and we have a margin structure based on quantity. So different [slabs] are there. So it was in line with what we offered to other large institutions. However, it may not be as high as what we would make in our own exclusive brand outlets. On the BAM, which is our Business Associates Meet, it is like advertising. It has an impact. And in fact, over a period of time, it is about connecting with all our business associates, sharing our business plans with them. There may be no direct impact in sales in the following month or the following quarter.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [8]

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Also this is -- these people have been -- one of the big assets we have are these relationships, which have been around for between 5 and 30 years, and it is an investment worth making to keep their spirits high, alive. And across businesses, they have stores for us. Therefore, it's a very important event every 2 years. It brings the company people together as well as the associates with the company. Of course, business was transacted, as Ravi pointed out, in the form of sharing of plans and their sharing of their concerns, so on. Yes, there is an impact, like Ravi said, like advertising.

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Operator [9]

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The next question is from the line of Avi Mehta from India Infoline.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [10]

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Sir, just wanted to kind of understand, first, you are investing in innovations to drive up growth rate. But given the slower growth that you've seen in the first quarter, would you revisit your guidance on the Jewellery segment for FY '20?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [11]

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As far as -- Avi, as far as H2 is concerned, just staying with our annual growth level, which is in the 20%-plus range, whereas obviously H1 because of the performance in the first few months, will end up certainly being lower than what we originally thought. And yes, the conditions are less conducive to growth than when we began. And obviously, the company and the people have to innovate rather more to actually make this H2 numbers happen, but we are gunning for it. We are not setting our sights lower.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [12]

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Sorry, on this one, just a follow-up, you said H1 would be impacted. Is July also kind of a cause of concern?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [13]

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Yes. Actually, to just clarify, the growth in Q1 was 16% in retail, which you have seen as 13% in the company's sales. July has been, actually, I would say, almost as bad as June -- I mean the second half of June at least. But we're starting to see some early green shoots end of July, early August. But we expect August to be also a little muted, but September is going to be a big thrust month for us and then there are Q3 and Q4.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [14]

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Okay. And secondly, sir, are you -- just on the custom duty bid, is that resulting in price competitiveness of unorganized pricing? Is that the challenge that you were referring to? Or is there anything else that you...?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [15]

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No. It's actually the level of price of gold. If you see the month of June itself, the price of gold rose substantially. In fact, it rose by more than the customs duty increase in the month of June and further by the customs duty increase sometime during the month of July. So it is not the price and a little bit of volatility on the price that's keeping people worried and away. It's nothing to do with smuggling and increasing competitive advantage of the informal sector.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [16]

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Okay. And lastly, on the Ind AS adjustment, would you be able to share the segmental margins impact for the Jewellery items?

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [17]

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Avi, the impact on Ind AS 116 segmentally has not -- has been sort of uniform almost. So the impact -- there's not been any major impact on any particular division, okay? Overall, for the company, the PBT impact was INR 2 crores. And of that, it was about INR 1 crore or something for Jewellery division. That's about it. So it's not -- it's been uniformly low, fortunately.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [18]

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So I mean I should kind of just -- the margin that we see is more or less...

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [19]

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Yes, yes. You can ignore it.

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [20]

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You can ignore it. Yes, 116 is not a [material] impact.

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Avi Mehta, IIFL Research - Assistant VP & Lead Analyst of Consumer Discretionary [21]

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Okay. And lastly, thanks a lot, Bhaskar, for sharing your thoughts, not just on Titan, but also on the consumer sector. It was always very great interacting with you and look forward to doing that even after this.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [22]

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Thank you, Avi.

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Operator [23]

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

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Vishal Gutka, PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst [24]

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Congrats, Bhaskar, sir. Just 2 questions. One thing is on the Golden Harvest Scheme. Sir, we have hit the limit. So how will we plan to start the fresh enrollment? Do we plan to give more incentive to customer for faster redemption?

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [25]

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No. Golden Harvest is something which -- the limit is an annual limit, okay? It depends on the net worth of the company as reported by us after we account -- the final accounts are over. So now the limit has gone up again, okay? So we don't see a problem for some time for sure, okay? Yes, after that, we have to be far more innovative in terms of getting maybe redemptions up or look at something else. Yes.

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Vishal Gutka, PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst [26]

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So this limit will be based on FY '19 net worth, right?

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [27]

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That's right. Every year it will get reinstated.

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Vishal Gutka, PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst [28]

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Okay. This should be 25% of the net worth. That is the limit, right?

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [29]

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That is right.

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Vishal Gutka, PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst [30]

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Okay. Sir, the next question on the wedding side -- wedding jewelry side. Can you just throw some light what percentage of Jewellery revenue is coming from wedding and how has growth been in this quarter?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [31]

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The growth was a little less than expected in Q1, Vishal. Even though (inaudible) on the -- when we started appeared to be better than last year. And we're expecting, at least in the second half, where the number of events is vastly higher, to play off more. So to that extent, there was only a marginal shift in the share of wedding in quarter 1 and nothing substantial.

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Vishal Gutka, PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst [32]

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So you are telling basically the growth has been slow this time for wedding jewelry, right, for 1Q?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [33]

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In Q1, it was not like expected. Another way said, the overall growth was below our 22% that we were targeting.

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Vishal Gutka, PhillipCapital (India) Pvt. Ltd., Research Division - Research Analyst [34]

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Okay. Sir, it will contribute around 25% to 30% of our Jewellery sales, wedding jewelry sales?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [35]

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Of the -- yes, of the total revenue.

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Operator [36]

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The next question is from the line of Vivek Maheshwari from CLSA.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [37]

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My first question is the earlier question, the GHS limit of 25%, which you mentioned, why did -- Subbu, you have called it out in your presentation. If -- because I thought you -- the presentation clearly says that you have hit the regulatory limit in this quarter. So what does that mean then?

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [38]

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So Vivek, we hit the limit in the month of April, okay? Then we filed, and June is when we got the limit back. So till then, we were actually hitting the ceiling. That is the problem. So what happens is after the accounts are over, we need to file -- we need to get it audited first, there is a certification and then there is DPT-3 which we have to file and there is ROC 30-day limit and only after that do we get it. We're still operating on last year. Essentially, that is -- yes. Till then, it operates on the previous year's limit.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [39]

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So as of now, let's say, July, August, what is the...

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [40]

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The limit is higher. Now we don't have...

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [41]

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No. I'm saying what is the benchmark? Which balance sheet is the benchmark or which net worth is the benchmark?

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [42]

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The current balance sheet is the benchmark now.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [43]

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Okay. Okay. So I mean from a FY '20 perspective, is there a risk of you hitting the limit again and, therefore, GHS being lower than what it should otherwise contribute?

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [44]

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Yes. We will hit the limit -- yes, but we should try and manage -- all we are saying is we'll try and manage if we can redeem further. But we will hit the limit otherwise. Yes. We have recoupments, yes.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [45]

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Got it. Okay. And second bit on the -- with gold prices further moving up, Venkat, I understand that while you are -- perhaps you are being hopeful for the second half, but is there a risk of not hitting 20%-plus mark that you were foreseeing? Because at the time when you gave the guidance, macro was perhaps looking much better than what it is today. Is there a risk of a miss here?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [46]

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For the full year, yes. I would say, reasonable chance, to be frank, because we're talking about blended H1 and H2, H1 being significantly lower than the guidance for H1. But H2, 2 reasons, one is that while the macros are certainly more challenging, but obviously, it means that we need to innovate that much more. Whatever we do has to have the potential of working that much harder. So the teams are currently at work on figuring out big ideas, which I cannot share for obvious reasons. Therefore, one is hopeful. The other is there's a certain level of confidence that the gold rate also is -- after a while, things change, people's reaction to the gold rate also changes after a few weeks of sort of perceiving it. So all that we expect to come and play in our favor. But sure, there is always a chance, but we are quite confident of trying to hit that 20%-plus in H2.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [47]

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Sure. I mean the only reason of asking this is while you have always been innovative and -- but the issue is if consumer sentiments are weak, those are weak. If consumers are not opening the wallet, there may -- despite your effort, consumers may not still buy as much as you would want them to, right?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [48]

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Yes. You're right. I mean you may be right -- I mean you may turn out to be right, Vivek. I'm not arguing. I'm only saying because of the very low market share we have, despite that flagging consumer sentiment, the space available for us to grow is there. So it will finally depend on how effective our innovations are.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [49]

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Okay. Sure. And lastly, Subbu, if I can ask you something from the annual report, if possible. Annual report, somewhere in the opening pages, you have mentioned total gold processed as 34.7 tonnes and gold recycled as 18.87 tonnes. So gold recycled means what? It is the barter, the exchange?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [50]

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It is exchange program, yes.

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [51]

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No, plus if we have brought back some gold from the stores. We would have brought some gold back from the stores, old stock, after 1 year, there is a certain program. So it includes, what, [GP&T] -- yes.

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Unidentified Company Representative, [52]

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Yes, [GP&T].

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [53]

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So what we buy back from the customers, Vivek, plus what we actually recall back from our stock, which is old stock, melted, reprocessed -- that's what is reprocessed and then converted back to jewelry.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [54]

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Yes. Because I was -- when I divide 18.87 by 34.7, the number comes to 55%, which is not the exchange. So it is essentially the old designs which are not moving. That's why that number is looking high.

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [55]

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Yes.

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Vivek Maheshwari, CLSA Limited, Research Division - Research Analyst [56]

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All the very best. And Bhaskar, pleasure talking to you always and wish you all the very best.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [57]

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Thank you.

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Operator [58]

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The next question is from the line of Amit Sachdeva from HSBC.

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Amit Sachdeva, HSBC, Research Division - Analyst, Consumer and Retail [59]

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Congratulations, Venkat, and thank you, Bhaskar, for being there. It's been a great pleasure to interact with you. Quickly, my first question is, again, when I look at the next quarter, Venkat, obviously the base is very high. And if I recall Q2 last year, the gold was -- also grew very strongly, hence the margins were lower in the mix, although it was a Studded quarter, if I recall correctly. But then if the gold price has been the cause of lower sales, and it has rallied further, and on top of it, 2.5% in custom duty also would add some part to it, doesn't it seem like that the asking rate for H2 would be so high, if H1 is weak, why not, you probably say that this probably might be -- why 20%, why not 18%, why not 17% and we sort of try and make it more realistic? Or otherwise, we sort of see that as a number which always as seen as whether it's doubtful will be doable or not? What's your thought on July? And obviously, promotion has just started, and probably, if I recall, promotions, typically, first 15 days are the very ripe one where maximum sales happen. And what's your reading from the initial days of first 15 days of Studded promotion? Does it give you confidence that H2 will recoup what H1 is losing? Sorry for this long-winded question, but you know where I'm coming from.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [60]

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Yes. I understood you completely. On the first point, just to clarify, we are not taking the shortfall of H1 into H2. That was the understanding that you ended up getting through various answers of mine. The shortfall of H1 will remain and will be forgotten at the end of H1. The target for H2, which is growth similar to the 20% plus of H1, we are holding. That's what I say. Reason is that we have seen typically that some of these things, particularly because gold is a store of value product, the sentiments end up improving sometimes. That's one. The second is H2 is nearly 60 days away, and the teams are working on big ideas to move consumers in an environment where they're not feeling particularly strong about buying. So therefore, just to reiterate once again, we are not carrying the H1 shortfall into H2. H2 growth is the original H2 growth that we have targeted.

On July itself, July is muted, like I said a little while back. The targets for August and September are stacked much more in September and less in August. So to that extent, the target for August and the early signs of August are sort of close for us not to worry so much yet about whether September will happen. And obviously, as we come closer to the end of August, we'll have a better sense of whether we have been optimistic about September.

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Amit Sachdeva, HSBC, Research Division - Analyst, Consumer and Retail [61]

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Okay. Sir, if I'm getting you correctly, probably H1 is sunk and H2 is 20%. Whatever H1 will do will do, but H2 will do, at least target is 20%-plus. Is that the correct understanding?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [62]

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Exactly.

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Operator [63]

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The next question is from the line of Nillai Shah from Morgan Stanley.

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [64]

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My first question is on the World Gold Council data, which came out for last quarter. The jewelry offtake was very strong for the quarter. And it seems that we haven't really gained market share in this quarter versus the rest of the industry. Now there's only 1 quarter, so hard to draw conclusions, but what is your take on market share gains more near term at this point in time?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [65]

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Actually, on the basis of our own understanding, every month we have a network of contacts across multiple cities in the country where we get to understand competition performance. And if I go by that understanding for Q1, this 12% is not jelling with that, to be honest. But I just saw the 12% in the -- yesterday, and I'm not commenting any further on that. But if I were to just take the Tanishq growth in the last many quarters and take it against the growth rate which the same report mentions, we find the difference between Tanishq and the industry growth as reported by WGC substantially falling down. Tanishq is outstripping the industry by a big margin, except for Q1, where the 12% is shown as the industry growth. And in our case, it is 10% in terms of grammage. And I'm not clear on what is the building blocks that WGC is using on the demand side because demand is very complex. Normally, they deal with imports which are precise, but demand I don't know. But all our understanding is that we continue to gain market share across the country.

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [66]

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Right. That's clear. Okay. So we probably will track this for a few more quarters. Then coming back to the growth rates in the last quarter, would you say that you ended June with declines of double digit in the Jewellery business after the impact of the gold price was fully factored in, at least the month of June?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [67]

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The month of June?

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [68]

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Yes.

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [69]

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The kilo grammage.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [70]

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No, no, no. For the month of June was 9%...

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [71]

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Revenue growth, would you say, was down double digit in the Jewellery business?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [72]

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No. We grew 16% in the quarter, and we grew 19% 2 months, which is April plus May together. And there was a growth in June, but a muted growth of 9%. So the 19% plus 9% translated to 16% for the quarter. And in that line, the first half was an exceptional growth, and the second half was a decline.

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [73]

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So second half was a decline?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [74]

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Yes. If you look at the gold rates...

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [75]

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Okay. So July, you basically believe that will mirror the back half of June or has mirrored the back half of June basically.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [76]

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Yes.

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [77]

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Got that. Just a decline. Very clear. The second question was, Subbu, the INR 37 crores inventory gains which you had -- or loss which you had last time, is that been reversed this quarter?

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [78]

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Yes, partly, around half of it. So I'll give you the net impact, okay, because we had -- we took that back, but some other thing happened, but the net is about half of it. Yes.

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [79]

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Net is half of it. Okay. And finally, could you quantify the TCS order on the Watch business revenues? Has that order been completed? Or is there more to go?

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S. Ravi Kant, Titan Company Limited - Executive VP of Corporate Communications and CEO of Watches & Accessories [80]

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There is more to go. I think we've reported that we've done INR 56 crores so far. So most of the order is done and some part of it is left because it's a global order, and it has to be shipped to employees all over the world.

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [81]

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Okay. All right. Got it. And final question, sorry, one more, is that on the margin front, you've maintained in the past that you strive to keep margins flat. If it expands, that's great over the long term, but for F '20, flat. Would that same margin view hold even now given what happened in the first half of the year?

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [82]

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For the company?

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Unidentified Company Representative, [83]

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Yes, yes. For the company.

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [84]

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For the Jewellery business, actually. No, for Jewellery business, sorry.

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Unidentified Company Representative, [85]

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Jewellery.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [86]

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Yes. Yes. Jewellery business, yes, it's too early to comment on that, honestly, because we are -- if I remember, if I were to just elaborate on the same point, and Subbu and I have spoken about it many times on this, which is our first and most important objective will be growth, and thereafter, maintaining margin. And if we achieve the growth, reasonable chance that the margin expansion will happen. So now growth is under pressure. And therefore, we will invest in growth. But at the same time, try and make sure that the margin doesn't dilute.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [87]

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I think that holds for the other businesses as well. As in, I think we are -- I mean okay we've seen this headwind and consumer sentiment, et cetera. But we are in the unique position, when looking at our brands and our footprint, we are way ahead of competition. And we should gain rather more if there is a consumer sentiment impact on the categories that we run. We should gain more or lose less. So growth has to be a primary target as far as we are concerned. Therefore, we won't stop investing, whether in brand promotion, new products or store expansion.

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Nillai Shah, Morgan Stanley, Research Division - Equity Analyst [88]

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Thank you, Bhaskar. And thanks a lot for all your interactions over the last many years. All the best, Venkat.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [89]

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Thank you.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [90]

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Thank you.

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Operator [91]

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The next question is from the line of Rakesh Jhunjhunwala from Rare Enterprises.

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Rakesh Radheyshyam Jhunjhunwala, Rare Enterprises - Executive Officer and Partner [92]

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First of all, to give a very emotional bye-bye. We won't be having Bhaskar on the calls again. I'll really miss him. And congrats on a good performance in difficult times. Thank you.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [93]

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Thank you, Rakesh. I'll miss you as well. But we'll meet socially.

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Rakesh Radheyshyam Jhunjhunwala, Rare Enterprises - Executive Officer and Partner [94]

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No, Bhaskar. It's end of an era.

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Operator [95]

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The next question is from the line of Aarti Kapoor (sic) [Harit Kapoor] from Investec.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [96]

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So this is Harit here. Just 2 questions. Firstly, just wanted to understand on the expansion side. For this year, for Tanishq, could we expect the expansions to be a little bit more back-ended towards the year? The first quarter has been slightly slower. Just wanted to get a sense on that.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [97]

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We have a target of 70-plus stores, really, really ambitious target this year. And we could do only 12, significantly less than we planned for quarter 1. We expect to do a little better in Q2. Currently, we're looking at a 15-store -- setting up 15 stores in Q2, but 27 in H1, which from a pro rata basis, substantially more than last year. And that 70 is still in our sights. We'll not change the view on that. I think I'd be in a better position to speak on the full year in November. But we are pretty confident of getting close to 30 by H1 -- end of September.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [98]

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Correct, sir. The second question is similar to what I had asked in your earlier call as well. From a franchisees perspective, are you witnessing any kind of complaints from them in terms of liquidity? Or anything that you can talk about since you're such a large franchise network? And we are hearing about liquidity constraints in the channel, not for jewelry per se, but in general. So anything that you're seeing, not only for yourself, but also in the industry?

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Unidentified Company Representative, [99]

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Franchisees' liquidity.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [100]

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No, not really. Some of the distributors are having liquidity issues, and we are seeing if we can support them to some extent, but not franchisees of our EBOs.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [101]

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Okay. And this would be a similar experience for jewelry as well, no real challenges there?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [102]

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Yes, yes. Actually, our performance has been better in the medium and smaller towns in Q1, and that's where most of our franchisees are sitting. So as long as sales are good, there is no issue. Plus, overall prosperity of the franchise is pretty high. And therefore, a few months here and there, even a couple of quarters here and there is not going to unsettle that. We have healthy, wealthy people.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [103]

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Got it. Got it, sir. Wish Mr. Bhaskar Bhat a great future, and all the best to you, Venkat, as well.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [104]

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Thank you.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [105]

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Thank you.

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Operator [106]

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The next question is from the line of Tejash Shah from Spark Capital.

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Tejash Shah, Spark Capital Advisors (India) Private Limited, Research Division - VP of Research [107]

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Venkat, in past, when gold prices had such sudden spikes, I remember you calling out that increasing prices of gold scenario has always hurt overall revenue more than the falling prices scenario. So keeping that in context and current scenario, would you be benefiting from this trend in, let's say, second half or latter part of the year?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [108]

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Typically, what happens is that people get spooked when it rises too much in a very short time. It also is a little volatile. And they pause for a few weeks, wait for it to settle and then come in. That's what has been the trend in the past, and we are hoping that, that will come back soon, particularly late September onwards.

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Tejash Shah, Spark Capital Advisors (India) Private Limited, Research Division - VP of Research [109]

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But do you suspect this to be one of the key reasons for the slowdown that we witnessed?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [110]

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Certainly. I mean it becomes a little difficult to quantify, but it is so coincidently aligned with the performance drop in H2 of June and continuing poor performance in July, so coincidentally linked that it cannot be a coincidence.

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Tejash Shah, Spark Capital Advisors (India) Private Limited, Research Division - VP of Research [111]

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Great. And thanks, Mr. Bhaskar Bhat, it's been pleasure talking, listening and learning from you. I wish you all the best for your next thing. And all the best, Venkat.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [112]

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Thank you.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [113]

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Thank you.

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Operator [114]

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The next question is from the line of Kunal Vora from BNP Paribas.

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Kunal Vora, BNP Paribas, Research Division - Analyst [115]

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You mentioned that gold is like a stored value product. With an increase in gold price, are you seeing any increase in demand for gold as an investment? And how big is the contribution from gold coins?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [116]

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Not really seeing that because we have -- we focused on it for many years now, and it's in the 3% or something like that.

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Kunal Vora, BNP Paribas, Research Division - Analyst [117]

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Sure. But with increase in gold price also you're not seeing any traction, incremental traction?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [118]

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No.

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Kunal Vora, BNP Paribas, Research Division - Analyst [119]

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Sure, sure. And with the gold price like a steep increase, in this sense, would you look to maintain your gross margins? Or would you be okay to operate at slightly lower margins to drive volumes?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [120]

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It will be a very dynamic market-to-market kind of approach, and just -- because if the industry operates in a particular way, then we'll have to look at that and accordingly do rather than change our pricing approach. And unless we communicate it in a very visible and intense manner, people won't know. And otherwise, it's just, you're just giving money away.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [121]

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I think what we are saying is we won't deliberately want to drop gross margin, but growth is a primary objective. And what can get us growth without giving away, in a way, the [account]. I mean there is a fine line between the 2, but the objective is not to give away all of the gross margins just because we are in some challenged growth situation.

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Kunal Vora, BNP Paribas, Research Division - Analyst [122]

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So the making charges, would it increase in these times or...?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [123]

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Yes. Yes. Generally, it would increase.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [124]

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Challenged is what it means, no?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [125]

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Yes. It's a challenge, but I can't help it.

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Kunal Vora, BNP Paribas, Research Division - Analyst [126]

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Sure. Wish Mr. Bhaskar Bhat all the best, and all the best, Venkat.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [127]

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Thank you.

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Operator [128]

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The next question is from the line of Nikita Maheshwari from JM Financial Limited.

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Richard Liu, JM Financial Institutional Securities Limited, Research Division - Research Analyst [129]

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This is Richard here. I'm just...

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [130]

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A bit louder.

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Richard Liu, JM Financial Institutional Securities Limited, Research Division - Research Analyst [131]

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Yes, sorry. This is Richard here. Based on a very long period of experiences that you all have with you are seeing growth accelerate and decelerate and so on and so forth, that you would have observed in the last several years. In -- to put it into context, the growth recovery in recent years, when it had come, it came all of a sudden, right? I mean from 0% to 4% growth that you had, it suddenly accelerated to 50% in Q4 FY '17. And then now also suddenly from a very high growth rate, it's come off quite sharply. My question is do you have -- or do you look at any lead or -- lag indicators around you to help you better gauge demand condition going forward and plan accordingly? And similarly, when you talk about the hope for a 20%-plus growth in H2, to gauge whether that hope will materialize, what would be the indicators, be it economy, be it other consumption items, et cetera, that you will look at to gain confidence that, that will actually happen?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [132]

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We do frequent and deep consumer research to gauge the sentiment around buying in general and buying jewelry in particular, and we have done that in February, March of this year to get a sense of the first few months. And if you see, like I said, till 15th of June, we grew 22%. And then in the next 6 weeks, it just crashed, the next-6-week sales. And now we have again done, and there are some indicators that people are waiting and watching, and the next 2, 3 months, they are likely to come back into the market. Obviously, at these gold prices, lighter jewelry is an opportunity. And therefore, if you were to market that -- or exchange is an opportunity because people are -- everybody is starved of money, and therefore, getting them to use their old gold is an opportunity given the stock of gold. So we certainly keep doing consumer research to both understand and build our near-term customer acquisition strategy.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [133]

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And the research, last research didn't indicate any such [sudden]. So what Venkat said earlier, the coincidence is too coincidental to ignore. It is the effect of price. I mean it is quite a significance and volatility. It happened so suddenly. And also it happened at the end of the wedding season. So there was no real reason to go out and buy, no occasions to buy. So postponement is the obvious choice people would make. Wait and watch would be the approach. So I think our bet on the future in terms of gold still being a desirable item, aspirational, low market share, migration from the unorganized to us, all those, those change.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [134]

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And Richard, I mean just to emphasize the point that Bhaskar is making, we are on a quarter call, okay? FY '18, we grew 20%. FY '19, we grew 20%. FY '20, 75 days, we grew 20%. So from a -- I mean we need to also see it from a slightly going concern concept rather than from a quarterly because of one [dimension] -- opportunities are still there, the market size and all that Bhaskar mentioned, I won't repeat it. So the fundamental opportunity is still there.

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Richard Liu, JM Financial Institutional Securities Limited, Research Division - Research Analyst [135]

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There's no doubt about that. I was just trying to get a hang of this quarter or half yearly call. Now that we have the benefit of hindsight, when your growth accelerated from that 0% to 4% sometime towards the middle of FY '17, suddenly to 50% in Q4 FY '17, would you have done a postmortem of how these kind of things suddenly came about? I know de-mon and unorganized to organized was one. But a growth from 0% to 4% to suddenly 53%, 54% in 2 quarters' time is a big swing. Is there a specific reason for that?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [136]

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I understand. If you go back and sort of recollect the engines of growth that we keep talking about every year in the conference, from wedding to high-value diamond jewelry to Golden Harvest to middle India to GDP to increasing market share in low market share cities. So there are 6 engines firing. So as the engines -- each engine starts sort of firing more and more aligned with the early engines or all cylinders, that's the right phrase, then you multiply the effect of that, which takes the growth to the 15% and the 20% and beyond that. Now when the conditions for the firing are poor, as today, despites the engines firing, the results don't come.

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Richard Liu, JM Financial Institutional Securities Limited, Research Division - Research Analyst [137]

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Okay. All right. And Bhaskar, wish you all the best. And I hope I get a chance to catch up with you once before you formally step down.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [138]

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Thank you, Richard. Happy to.

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Operator [139]

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The next question is from the line of Rakesh Jhunjhunwala from Rare Enterprises.

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Rakesh Radheyshyam Jhunjhunwala, Rare Enterprises - Executive Officer and Partner [140]

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See I would like to know, earlier also gold prices have gone from, say, INR 2,000 for 10 grams to INR 37,000 for 10 grams. Isn't it that once prices rise, there is some period of -- the customer takes to adjust, but ultimately leads to higher sales? But I remember the fall of gold -- rise of gold from 2007 to 2013, our sales went through the roof. And I for one see this kind of a long-term bull move in gold.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [141]

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Possible, Rakesh.

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Rakesh Radheyshyam Jhunjhunwala, Rare Enterprises - Executive Officer and Partner [142]

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[Do you think we will see this]?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [143]

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And even in those days, we used to see some kind of a slowing down in the interim period of a few weeks till people somehow got settled with the idea of the new price. So we are hoping that the same thing will play out, even though sometimes these things surprise us by not playing out, but you're right.

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Rakesh Radheyshyam Jhunjhunwala, Rare Enterprises - Executive Officer and Partner [144]

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In past, such experience has been that when the gold price goes up, people adjust.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [145]

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Correct.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [146]

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It has to settle down rather than keep going up. I think volatility and a continuous rise in a short period is what we are talking about.

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Rakesh Radheyshyam Jhunjhunwala, Rare Enterprises - Executive Officer and Partner [147]

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Typically, customer sentiment is that it goes from 100 to 150, they don't buy. It comes to 120 and comes to 130, then they buy. As your customers do. Anyway, I believe that during 2007 and 2013, when we had the gold bull run, our past sales went through the roof.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [148]

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Yes. Fair enough.

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Operator [149]

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The next question is from the line of Niket Shah from Motilal Oswal Securities.

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Niket H. Shah, Motilal Oswal Asset Management Company Limited - VP & Associate Fund Manager [150]

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Just wanted to know that in this quarter, where the Jewellery growth has been slightly on the lower side, is it largely to do with the Southern part of India? Or is it across India you've seen this kind of phenomenon?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [151]

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Actually, South has done reasonably well. West was an issue. South -- most of South did well -- just one.

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Niket H. Shah, Motilal Oswal Asset Management Company Limited - VP & Associate Fund Manager [152]

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So it's largely driven by West as such?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [153]

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West and East.

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Niket H. Shah, Motilal Oswal Asset Management Company Limited - VP & Associate Fund Manager [154]

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West and East. Got it. The second question I had is if you can give some sense on how has been the product mix within the Studded share in terms of color or clarity? How has that kind of moved? Have you seen any down-trading happening? So for example, if one customer would be buying, say, VVS1 and now down-trade to VS1 or something like that. If you can just share some insights around that, that will be very helpful.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [155]

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Nothing in the quarter at all on that. Over the last so many years, it has actually come down to a high share of SI, but that doesn't change much in the last maybe 18 to 24 months. We are at a reasonable equilibrium now on color clarity mixes within that.

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Niket H. Shah, Motilal Oswal Asset Management Company Limited - VP & Associate Fund Manager [156]

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Okay. So on the clarity part, it will be largely SI, and on the color, it'll be between K, L, N -- or K, L or N category? Or it will...

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [157]

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No, no. More on the G/H side.

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Operator [158]

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The next question is from the line of Aarti Kapoor (sic) [Harit Kapoor] from Investec.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [159]

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Yes. This is Harit here, again. Just a couple of quick follow-ups. One was the 2.5% increase in import duty, the benefit that we get on inventory valuation, would that have come in entirely in this quarter?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [160]

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No. This increase happened in July. The customs duty increase happened in July.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [161]

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Yes. That will come in, in Q2, right?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [162]

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Q3, Q4. It'll depend on when actually we sell that stock.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [163]

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Okay. Okay. And the second thing was this difference between the primary sales and secondary sales, we would expect this to reverse pretty much immediately in Q2, right?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [164]

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It should, except that it will also depend on the retail sale in Q2.

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Harit Kapoor, Investec Bank plc, Research Division - Analyst [165]

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Right. I mean assuming September is a decent month, we should...

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [166]

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September, yes. But we're talking about the whole of the quarter. Depending on how much is the growth in retail in the whole of Q2, it may have a bearing because the primary sales of last year Q2 would be different from the retail sales of last year Q2 and all that. I don't have the number to comment, but it will a bearing.

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Operator [167]

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The next question is from the line of Manoj Bajpai from Barclays.

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Manoj Bajpai, [168]

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This is Manoj here. This is regarding some basic consumer trends, especially in the jewelry line in the younger segments of the population. So do you see any challenging trends emerging, such as the propensity for the younger generation to buy gold is lesser compared to people who are in the age of 35 to 45 years of age? If so then what is the mitigation plan for this kind of risk arising for the younger generation, not very, very good to gold and jewelry buying?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [169]

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Actually, the fundamental reason why a young woman would start switching off buying jewelry is because of the reducing relevance of the offering to her, in terms of price, in terms of style, in terms of wearability and all that. And our brand, Mia, created 7, 8 years back to address that likelihood. Our acquisition of CaratLane was further done to boost our thrust in that area. And we are very, very well placed to address that need. And therefore, whatever is the reducing relevance, these 2 brands are well placed to deal with that. And the results of the 2 brands are reconfirming that our strategies are correct. So we are not worried about that. Also the consumption in the jewelry industry is, I would say, almost like a 99 point some percent by women who are not young, who are 25-plus, other than the bridal jewelry, where the families come into play as customers. And even there, our reinvention of wedding lines with more contemporary [techno-fusion] kind of product lines, with Shubham and Divyam and all that, including Rivaah, which is a full line, make sure that we've got all jewelry rightly focused on what women want.

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Operator [170]

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The next question is from the line of Ushma Sheth Sule from Rare Enterprises.

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Ushma Sheth Sule, [171]

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My question is about Tanishq. You had a same-store sales growth of about 10%. What I wanted to ask is that your new store performance, the trajectory of that performance, is it in line with what you expect or what the past trends have been? Are there any [possible] challenges that you see there?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [172]

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Ushma, we -- if I were to give a sense of about 14%, 15%, I think, was the like-to-like -- same-store growth that we were targeting. And then another 2%, 3% was expected to come from -- we had a pretty decent store expansion last year. So the annualizing of that was expected to deliver maybe 2%, 3%. And another further 2%, 3% was supposed to come from new stores at FY '20. On the first and the last, we've had challenges. On the second, which is the annualizing obviously another thing happened. But not only that, the rate of sale of those stores which were set up in FY '19 was satisfactory in FY '20 Q1. We were behind on our expansion plan, like I mentioned, significantly in Q1 in terms of number of stores as well as number of store months. And like-for-like was also only 10% as opposed to 14%, 15% that we were targeting.

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Ushma Sheth Sule, [173]

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Got it, got it. Thank you so much Bhaskar. We've all learnt a lot from you [over the period]. All the best. Thanks for everything.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [174]

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Thank you, Ushma.

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Operator [175]

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The next question is from the line of [Chinmay Gandre] from Bharti AXA.

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Unidentified Analyst, [176]

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Sir, in Jewellery segment, our reported margins is 10.9%. And you mentioned about some reversal of loss in the current quarter from the previous quarter. So presuming the reported margin would be -- adjusted margins would be around 10.5% or so for the Jewellery segment versus 11% a year back and your Studded ratio is pretty much similar to last year. So I mean anything to read in terms of the margins of Jewellery segment like because the gold prices fell, did we kind of had lower making charges for it?

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [177]

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Actually, on this subject, I wouldn't worry so much about what got transferred from Q4 of FY '19 to Q1 of FY '20 because if we go back to Q4 of FY '18 and...

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Unidentified Company Representative, [178]

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Q1 '19.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [179]

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Q1 of FY '19, you will have a similar thing. So because of the -- both the accounting aspects of gold, the hedging aspects of gold, the results are quite in a way difficult to predict quarter-on-quarter. So we just take it as it comes. We got some of it back in Q1, like Subbu said, and it's part of the margin of the business, right? We got some other gain last year, some other loss year before last and so on.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [180]

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Maybe we should show Q -- quarter, 4 quarters rolling once in a while, after.

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C. K. Venkataraman, Titan Company Limited - CEO of Jewellery [181]

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So that's what I would suggest.

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Unidentified Analyst, [182]

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Sir, and another bookkeeping question. Sir, we have around INR 13 crores corporate unallocated income, which is normally a loss every quarter. I know there is IL&FS which you report earlier, but I mean anything in this INR 13.5 crores corporate unallocated segmental income?

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [183]

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[17, is it, Subbu?]

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [184]

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No, corporate unallocated will be corporate division, I mean corporate department after. See we don't allocate 100% of the cost of corporate to all the divisions, okay? So there is a loss sitting there, which is the cost that we incur. That is offset by the interest income that we also get there and any other income. And therefore, this is a net amount.

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Unidentified Analyst, [185]

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So there is an income of interest.

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S. Subramaniam, Titan Company Limited - CFO & Head of IT Function [186]

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Yes. That's right. Net of that, net of the interest.

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Operator [187]

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Ladies and gentlemen, due to time constraint, that was the last question for today. I will now hand the conference to the management for closing comments.

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Bhaskar Bhat, Titan Company Limited - CEO, MD & Executive Non Independent Director [188]

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Thank you, everyone, for participating and for your very useful inputs. We expect to come back in the next quarter in a big way and in the H2. Thank you. And thanks all of you for this wonderful engagement over the last several years. There's been a great amount of learning. I have from an (foreign language) I became quite savvy at answering your questions. I don't know whether I have been honest. But I certainly have been sincere. Thank you.

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Operator [189]

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