Q4 20/21

Apr 29, 2021

Ladies and gentlemen, good day and welcome to Titan Company Limited Q4 FY 'twenty one Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. C. K. Venkataraman, Managing Director, Titan Company Limited. Thank you and over to you, sir. Good evening, everyone. It is Wonderful and also a little strange to be talking to all of you in this manner. Before I start highlighting the performance For the quarter, I would like to pay tribute once again to all those thousands of women and men in Various stores of Titan Company very, very diligently and patiently wearing that shield For much of FY 2021 and resisting the disease and presenting a very safe environment For the customers of Titan Company. And I would also like to thank the customers of Titan Company And of course, all the franchisee distributors and warehouse partners, all our partners in the back And all our other partners who helped us cope with this extraordinary situation and of course all the employees of Titan Company. I would also like to thank all of you on the call, the investors and analysts who are such well wishers of the company and keep challenging us on the most important things That we should be delivering. The quarter itself was a fantastic quarter in terms of sales growth. We outdid our own plans and expectations, which we had shared with you when the year began way back in the month of May. The sales growth in Q4 was exceptionally high even after discounting for the fact that one fortnight of The base quarter was 0 sale and we are only 5 footnights in the base quarter. But given After accounting for that, if you just look at the Slide number 35, from a 63% for Tanishq to 10% for Helios to a 28% for I plus to an 8% for the World of Titan. We were crossing The targets that we had set for ourselves for quarter 4 and we're very, very happy about it. We believe that we have improved our competitive Position in the market serially quarter after quarter and this quarter represents that. The year FY 2022 also began well in a way continuing the momentum, but of course, COVID came once again To complicate matters and therefore it would be a little academic for us to speak about it at all on this call And I would like to defer that conversation to a more appropriate day in the future. All I would say and assure you at this moment is that During FY 2021, we also realized what kind of power we have. On the one hand, as a digital organization With substantial digital knowledge and total physical connect on the ground with our customers and how we used it to recover. We also know how many different innovations that we put together in terms of customer acquisition, in terms of cost management, In terms of cash management and therefore that entire personnel is available for all of us to deploy at a more Deliberate pace in a more systematic manner to make sure that whatever targets we have taken, we will achieve them in FY 2022. Now coming back to the profit performance standalone of FY 2021, the sales growth was very good at 60%, but for various reasons, the gross margin growth was not commensurate. And It's a combination of 3 or 4 big ticket things. 1 is, of course, a much higher share of the jewelry business In the year and in the quarter and the jewelry business is the lowest gross margin business of the company because of the nature of the business And that increasing share obviously dipped the overall gross margin profile of the company for the period And so the gross margin growth was depressed on account of the business mix. The second is that we had 2 other one time, one of which is accounting one time, we had a substantial gain In Q4 of FY 2020 on account of C4 and all that, we had a loss in FY 2021. There was a combined effect of that was material. 3rd, of course, was customs duty, which we had spoken about, which got reduced and we ended up incurring a loss in Q4 FY 2021. The last part is the individual gross margins in the businesses and even the category mixes. For example, we sold a lot of coins in Q4 of FY21 including a very large order to the Tamil Nadu government. While the standard growth was very, very satisfactory, The gold jewelry growth and overall coin growth was sort of overcompensated for that. Therefore, the Product mix within jewelry, the product mix within watches, between watches and wearables also complicated the matter. And On top of all of this was a dilution in the category gross margin within each one of those, which we were aware of For many months, but for reasons of continuing to give the momentum on the sales growth and increasing our market share for FY 2021 and also play Our proper role and responsibility to our other stakeholders in the system, so that the vendors get good volumes, The franchisees get good sales value growth. The salespeople get to achieve their targets and on their incentives. We didn't correct any of those, which We knew certainly H2 of FY 2021 very clearly what was going to some some plan. But nevertheless, The quarter ended on an excellent note in terms of sales growth and even profit growth, while the profit growth was not In line with the sales growth and the EBIT expansion that may have been expected did not happen, but the EBIT growth itself was a very handsome growth at at 35% and a bad growth at 48%. So we're very, very satisfied in the manner in which we ended the year And we began the year and the current complication honestly notwithstanding because we realized way back, 1 year back that this is a crisis of Such huge proportions and so much out of anybody's control that there is simply no point in fretting about it and Ringing your hands. It pays much more to stay calm, confident in the capabilities of the company, the assets On the ground and of course the commitment and the sheer will power that the organization has to come out of any challenge that comes its So Vishal, we'll use all that to overcome the current challenge as well and emerge on top in FY 2022. And what is exceptionally gratifying is that the management of cash and the balance sheet became a Well institutionalized process in the company, not restricted only to the top team. In fact, I would say, CEO minus 2 level, it has deeply penetrated. CEO minus 2 level people talk in terms of cash, in terms of Balance sheet and therefore that is behind the exceptional cash balance that we are exiting the year with and we are very sure That with the innovative model that we in a way deployed in FY 2021, which is selling of bullion and Increasing the share of gold on lease to free up cash is something that we have got a very good grip on today and we will Executed as and when required to the extent required. So I would stop here and thank you once again for all your Advise that all you are challenging over the times and all your support. And over to you and your questions. Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Manoj Menon from ICICI Securities. Please go ahead. Hi, team. It was good performance and more importantly, Venkat must firstly compliment you for it was an excellent You know overview which you actually gave because we were listening to a lot of conference calls, truly it was a very, very good one actually. I have a couple of questions actually. 1, on in the first week of April, when you put out the Okay, update. There is a fair amount of mention about, let's say, an amount in Tamil Nadu vessel market, the wedding segment, etcetera. To the extent, it is feasible for you to comment in a public conference call subject to obviously your internal competitive confidentiality, which you need to maintain. Just very curious to understand what was this thing which you did, let's say, 3 or 5 things, which resulted in this trajectory change. I'm interested in the direct vintage, not about 1 quarter here and there. The reason I'm asking is because vending market as an opportunity has been For Titan and most of the journalists for a very long period of time. And for some reason, few of them, which probably as an analyst, I may have It has not been necessarily fully achieved in the past. So just really curious to understand what will be in the wedding segment, etcetera, which is So likely leading to a different trajectory currently. So that's course number 1. The second one on when I look at the historical All the empirical evidences, it does tells me that when gold price inflates significantly over a period of time and then there is a correction, Consumer tends to even prepone some of their consumption, so definitely leading to a volume surge. So just wanted to pick your So what at this point in the quarter, you're seeing the consumers are telling you based on the growth rate behavior in the last 2 or 3 months? Thank you. So I'll take the call. This is Ajay. Hi. Nice to talk to you, although it's peculiar circumstances. So, Manoj, two questions. First one about the Tamil Nadu market. I think the idea of gaining market share in TN is not a recent piece that has happened over the last couple of years. It's a strategic initiative. We took it as a test case to see if you do a 360 degree approach to the market, Can we kind of, A, connect with the customer more deeply? We had a local brand ambassador, Anantara has been there. We had customized campaigns for that market, which Seeks to connect with the cultural nuances of the Tamimadu market and the customer. 2, we also had a fair number of Network expansion strategy in terms of some of our older Gold Plus stores, of course, converted into Ganesh stores and Thus, we've been adding a lot of stores in TN. So we have a fairly formidable network presence across many, many towns and town classes of TN. The third piece is we also recognize that the TN customer is extremely price sensitive when it comes So, gold rate and policies on exchange, etcetera, because of the nature of the local competition. So, we realigned our policies for the TN market Also accordingly. And the 4th piece is not so much on wedding, yes, we are doing some work, but in TN, I think that frontier and let's say that opportunity still exists on the wedding segment. But I would say a lot of regionalization in terms of products, Which are daily wear and regular wear products, which we focus a lot on. We are also doing a lot of work on wedding, but that is Yet to kick in. So a 360 approach on a sustained basis over the last 2 years is what And of course, a lot of work on the retail and customer experience side as well. I mean, many initiatives taken, We strengthened our team there, etcetera. So a lot of work that's gone in and that is beginning to yield fantastic results. The second question you asked about gold price going up and then correction leading to customers, let's say, coming into the market. Yes, we have seen that In the last in fact, quarter 4, we saw after many quarters, grammage growth besides buyer growth across all price segments, even the sub-fifty thousand price segment, which was sluggish even as late as quarter 3. So across all segments, we saw customers and we saw grammage growth as well. We also saw some amount of Advancing of people buying for weddings, etcetera, in anticipation for quarter 1 as well. And that continued all the way up to April as late as 20 April. So yes, we have seen that and that's added to a good Thank you, Achor. That was extremely comprehensive. Just one follow-up if I may, and that's the only question I have, is that The Amelnatu experience of the learning that you had strategies, then you had tactics, then you ended up implementing it, and then you had results also. Do you think that there are a lot of learnings from a playbook point of view to be applied in some of the other large gold high heavily indexed markets in India, That, Randall, I mean states. Yes, true. We have been applying some parts of the playbook in other markets like Bengal, Bihar, even parts of Maharashtra, but not as comprehensively as we've done it in TM. And we have a plan to ensure we do that a lot more. In fact, we are seeing taking on different Approaches in different markets and doing it in a 3 60 degree manner is what is actually gaining us good results. So Doing all the engines firing simultaneously. Yes, we see that as an opportunity and we hope to take it forward. Thanks. Okay. Sure. Thank you. Thank you. All the best. All the best team. Take care. Thank you. The next question is from the line of Avnish Roy from Edelweiss. Please go ahead. Yes, congrats on good numbers. My question is when I see ad And it has increased only 4%, while revenue growth has been extremely strong. So has the competitive intensity gone down in January, Especially from the larger players and on the smaller regional players because of the way pandemic is extremely challenging situation, Are you getting from ground that some of the players are exiting? So if you could comment on competitive intensity both from larger players And smaller even unorganized there? Yes, Avnish. I'll take that call. Azar here. So competitive intensity actually from the larger national players has only gone up significantly. And I'm sure after the IPO of Allian, even one more player would be rich with more fund flush with funds. So competitive intensity has gone up significantly on all fronts. In fact, we had to do some amount of Aggressive pursuit of market share in Q4, which has also in a way we've given away some margin to gain some share. From local jewelers, yes, they have been impacted significantly. I don't recall of any significant Having vacated or exited the market, but certainly what we are seeing is the tailwind of You know, keeping moving away from smaller local jewelers to the larger national ones continues as a consequence of this situation like in any other disruptive situation in the past. Having said that, there are several regional players and Stand alone local players who are very strong and who continue to do well. So it is a mixed bag. I can't paint it in one go. But yes, if I were to classify it, the larger national players and organized players and the stronger regional players Has gained perhaps some of the unorganized and smaller players might have lost. But let me also share this that in quarter 4, the market itself Has also been good. It's not that we are the only ones who clocked in growth. Many other players have also clocked in growth. We may have clocked in higher growth Because of the multiple strategies at play, but I think the market itself was good. On marketing spend, we didn't Hold back any marketing spend in quarter 4. We have optimized. We have done a lot of work between digital and physical, I mean, ATL marketing and ETL activities. And therefore, we didn't compromise, but the marketing spend across larger players has actually gone up significantly and their share of voice So my second and last question is in Q4 and even in Q3, you have done exceedingly well in jewelry. So there was some level of pent up demand and marriage season was very strong. So if you could update on marriage demand in the FY 2020 2, how things are. More importantly, in the current scenario, which states still your stores are open? Some business update if you can give on the current scenario? And are you sharing any guidance for either this year or the long term? So on the marriage thing, I think the wedding you're right, there was pent up demand for wedding. A lot of weddings took place and lot of purchasing for weddings took place in quarter 3 and quarter 4 and in fact was continuing to take place in the month of April as well Even as late as 20th April. So we have been seeing a good growth in that segment. Our pre this wave 2 hitting us. We were extremely bullish on a strong wedding season for quarter 1, both Pending as well as fresh many, many good dates. And in fact, we also launched in mid March, I think we started the Reva campaign And we also had major PR activity around that in the 1st week of April. So all done blazing with the Reva campaign and It's almost nearing its logical end right now and maybe we will pick that thread up later. So we are bullish on vetting. Current month, it's too early to talk. We were growing very well, as I was saying, up to the middle of the first fortnight and even up to the 3rd week of April. Obviously, with the closures and lockdowns, etcetera, all over the place, that is Fast coming down. So we may still end April at a marginal growth of over April 2019, But nowhere near the kind of growth that we were aiming for or we were clocking in the Q1. We don't have a guidance for the year or the long run right Okay, sir. That's all for me. Thanks a lot. Thank you. The next question is from the line of Prasad Deshmukh from Bank of America. Please go ahead. Yes, good evening and congrats on good set of numbers. So a couple of questions. 1, in your initial assessment, how many stores are now impacted as a result of lockdown? And also in terms of production, is it still going or production on jewelry, is it still going on or it's like complete halt right now? Since the question is directed towards jewelry as I understood, I'll take the call again. Ajay here. I think as on yesterday, we had about 50% of our stores were shut and 50% were open. It's a dynamic situation. We have to go as per what's happening. And in some places and many markets, we have also taken proactive calls. If we see tremendous risk On the ground in terms of constraints, etcetera. We are taking the call to shut those stores in those And this is happening dynamically on a day to day basis. And we will continue to do so till things become safer. The second piece was on the production. No production is still on. This time around manufacturing constraints have not been imposed in any of the states. Yes. The rate of production has slowed down because we had to ensure safe production across our unit as well as vendor units. And in fact, we have engaged deeply with All the vendor community and their carriggers and dense carriggers, etcetera, to ensure they are following this and they understand the importance of prevention. So certainly the rate of production has slowed down, but nothing is shut as of now. But of course, if there is a situation in any particular unit, We may shut it down for the interim as and when things go down. As of now nothing will happen. Sure. And then last question then, I know you just said we will not be able to give any guidance for FY 2022. So safe to assume you would probably come out with some number towards it once the situation normalizes? Or is it like completely dynamic situation right now and it's not on the agenda at this point. Actually Prasad, let me come in here. We had originally scheduled an investor conference If I remember right, on the 7th May. And we had to reschedule it because of the dynamic situation. And now I don't know when exactly we'll be able to do it. And this is what we would have covered in that particular conference. And we will Still plan to do it. I think sometime in June, we plan to do it, if I'm right. And by then, hopefully, the air will be clear And we'd be able to take a view on FY 2022, whatever the situation is. And at that time, we will share this. Got it, got it. Thanks a lot, sir. On the list, okay. Thank you. The next question is from the line of Rakesh Jhunjhunwala from RARE Enterprises. Please go ahead. Yes. Good evening, sir. Congrats on a good result. I would like to know why you have cut the dividend. That's INR 3,000 crores of cash and until April 15, 20 as your sales will be also saying very good. I don't understand the reason why your honorable board has decided to prune the dividend. I don't know what you're creating this cash for And what are you going to use it for? No, actually, we didn't actually think we were pruning the dividend, like confidence in your business and you're carrying 3,000 crores of cash. Yes, yes. Okay. At least you're not approved as a shareholder, I'm not solely and solely, solely disappointed. It's that. So I'm a little surprised because we had INR5 in FY 2019 and INR4 in FY20 So maybe they have not pruned it, but I don't know, giving a follow-up with dividend setting up fees on close of cash. I don't know what are you going to do with the cash? And for our shareholders, we don't know how some of the earnings call. I think this is probably I don't know why our If I may just Kabin here. Actually, this is by far the highest payout ratio we ever had, okay? And we took that call also with cash in mind that, yes, We have the 3,000 plus flows of cash in line and which is exactly why we went way above what we have ever given. So as possible, what is the payout? What is the payout policy? You declared it as a policy? It is declared. As I It will be on our website very soon, okay. We have a policy. We are talking about a range on note. So That is coming out and this is clearly at the top of that range. I mean you still haven't formulated a policy. No, no, no. We have a policy, but we are now More, we're talking about it. We are giving you a range also as to what we are Are you taking the risk of that policy, Subbu? Sorry? What is the range of payouts you are declaring? Well, we are talking 25 to 40, okay? Yes. So, don't lose it for a cash generating business like yours. It's a very, very miserly percentage. It's a point of view, Rakesh. Yes, it's a point of view, but let's also not target one thing. The cash We are generating also because we are doing a lot of gold on these, right? If the gold on these for some reasons were to be curbed By Reserve Bank or anybody else just because gold imports are going up. We are going to be flat to We need to be careful. We need to be conscious of the fact that Anyway, this is the point of view of your Board. It's my point of view as a minority shareholders. I think you are being totally unfair to minority shareholders. That's my view. My opinion and my firm opinion. And it's not within the 1st of the Tata Group. Let me tell you. Thanks. We'll take that as an input, Rakesh. Thank you. Thank you. The next question is from the line of Amit Satchdeva from HSBC. Please go ahead. Hi, good evening, everyone, and thank you so much for taking my question. Congratulations on a great set of numbers. So my first question is on Jewelry, Because if I look at till Q3 or even Q2 as the whole recovery was happening, I would assume the growth was led by more Tier 2, Tier 3 towns And a lot of margin area were also being added there. And in Q4, obviously, for delivering that kind of number, I would assume that metro markets, which were sluggish earlier, perhaps would have come back to growth. And Why I'm asking this question is because lockdowns is not uniform. Some cities are more impacted, some are less. So in that sense, If I were to look at the next quarter and the base effects, can you give us some regional color like West was still recovering and West was more impacted last year And the North was good. How should we think about this recovery phase in the light of large metros versus Tier 2, Tier 3 towns? Some understanding would be really helpful, Ajay. Yes. Hi, Amit. So you're right, it's been a differential Recovery and growth. Let me say that Tier 2, Tier 3 towns continue to lead the growth. So the pattern of Tier 2, Tier 3 being faster recovery or higher recovery and higher growth compared to metro towns continued as And it continued even in quarter 4. If I were to give you a flavor, the growth, if I see quarter 4 From a buyer perspective, because that's a useful customer facing data. It has been led by East, Followed by South, then North and then West. West has certainly been most impacted and it continues to be as we know Maharashtra Bombay and Delhi have been sluggish relative to the rest of the market. In the East, if I look at it, States like Bihar and Jharkhand, Orissa, even Northeast and then West Bengal have led. And in the South, it's really TN, which has powered ahead strongly for us at least with Karnataka following after that. Punjab and Chandigarh are also decent in the north As was UP. I must say UP was following a similar trend as Bihar and Jatin. West, it's been a tough situation. Bombay has been the worst impacted. Briefly in between Maharashtra started doing well, especially upcountry Maharashtra, but in the last Several weeks, it's taken a hit. And Gujarat also has been fluctuating in its performance. MP has been doing well. So this gives you a flavor on And I think this may how it will proceed ahead will depend on how the kind of disease is spreading out. And we think what is happening now to Maharashtra will happen to Orissa later and so on and so forth. So we'll play it by market and we are anticipating different peaking in different markets. Sure. That's really very helpful, Ajay. So can I sort of see that, well, Maharashtra is most impacted, but this has not yet recovered? So although The crisis is unfolding. If it is not widespread crisis like last year, like where there's a lockdown all over and all those things, You would probably think that you could still escape any hard landing of growth. Is it a fair assumption or is it still very uncertain? Very uncertain, Amit. The situation is evolving on a day to day basis. And we think Every market at some point in time will get impacted. It's a question of timing, and we are not able to predict Yes. Sorry, I was put on hold by mistake. Okay. Anyway, am I audible? Yes, yes, Ajay. Very, very audible. Thank you. Okay. So, yes, as I was saying, the timing is going to vary. We think every market at some point will get impacted. It looks It's like and the problem that I was saying is that even Maharashtra, let's say, is likely to come out fast, but It looks like based on the latest announcement that it's likely to remain shut down till 15th May. And then we will hope for whatever best happens. Very unpredictable and very difficult to give you a sense. Sure. No, it is very, very helpful of your guys' perspective. And And second, if I may ask, like the last time I asked that, I noticed that you announced last time on Trunk sales of Taneira, because why I'm also asking is this a business which is still in some sort of pilot phase and a lot of economics are being tested. So I would assume that lot of trunk sales happened of Taneira last quarter. What was the experience and has it given you confidence What the business model could shape or it's just still too early days? But I assume that some of it is well received in some markets. Can you give us some color of the aggressive plan you had On trunk sales and taking Tenera deeper down to Tier 2, Tier 3 through to existing Tanish franchises? The trunk shows of Tenere have been very, very sorry Rajiv, you're on the call, right? Sorry. One second. No, I'll take this question. The trunk sales of Panera have been very, very encouraging in the smaller towns Cities like Patna and all that, we have a pretty ambitious plan for Panera over the next few years And in FY 2022, in specifics, I will we will share it in the investor conference in May that I spoke of. But overall, our we also have 2 franchise stores now, Amit, over the last 6 months, we have I got into franchising with Tanaira. Sure. These who are excited to get into this business is growing by the day because Everyone is so convinced about the customer value proposition that we have established. And in a way, are very clear that we're going to do Some kind of a panish in the ethnic wear business with Panela. So outlook is very, very good. We are very, very positive. More news about it in concrete terms in June. Okay. That's very good to hear, Venkat. Thank you so much. Thanks, Anurag. That's all for me. Yes. Thank you. The next question is from the line of Aditya Soman from Goldman Sachs. Please go ahead. Hi, good evening. So two questions from me. Firstly, a date on how Golden Harvest is progressing. I think you had indicated in the previous call that you are also trying some Any update on that? And the second question, can you also give us I may have missed this, but can you also give us a sense of the customer growth for each of the verticals, watches, jewelry and iron? On Golden Harvest, Amit sorry, not Amit, Agutya. The Sales through Golden Harvest has been pretty robust. In fact, we've seen a good contribution for the year, 21% Versus 21% of last year as well. However, in the month of from the month of March onwards and going into quarter 1, The contribution, understandably so, has come down to 15% because enrollments in quarter 1 were not there. And therefore, the impact of that is Going to be phased now and we have planned for it to be a lower, let's say, sales through Golden Harvest that Quarter going ahead. Having said that, the enrollments have been good both in quarter 3 and quarter 4 And even until the shutdown started happening. So that all goes well for the future. Your second question was on customer growth. I'll tell you jewelry and then maybe the others would be able to share. On jewelry for the quarter, the Overall, buyer growth for quarter 4 stood at 39% over last year. Of course, we must factor in that last year there was a slight base effect. So this 39% is not really reflective. Maybe I would take it down by about 10%, 12%. So it will still be a healthy 25% plus of buyer growth in Jewelry in quarter 4. But I'll leave to the others to respond on watches. Hi, this is Suparna. I wanted to I'll talk about the watches. So in watches, as has been published, the WOT growth has been around 8% in quarter 4. And similarly Helios growth has also been good. Most of it is on the is reflecting the quantity, the value In the quantitative, unlike in the first in the second and the third quarter, when there was a large increase in average price point, That is kind of evened out in the quarter 4 and that we saw across the channels, Trade channel, LFS channel as well as ISCOM as well as group was There wasn't a very big spike on the average UCP. Average UCPs remained more or less and whatever growth we got was on the buy Thank you. Very clear. Just one follow-up on the Golden Harvest. Is there can you give us a sense of what proportion of recruitment you're doing online or is that even possible? Thank you. So on Jugli, I can say that recruitment of customers online has Phenomenal. We have seen for the year, if I were to look at between online and omni And Omni is very important in jewelry because of the high ticket values. We have seen a 4x of last year in terms of share business And therefore, it's exploding and it continues to be a very big driver. We expect it to we expect to drive it even further, So more than double it again, and we would like to share that kind of ambition. And what is perhaps Superna might be able to share? Sorry, my question was also on Golden Harvest recruitment online. That can be done online or it has to be done in store? Okay. Sorry, I missed that. Golden Harvest, yes, can now be completely done online through the app And we earlier had some challenges on E KYC that has been sorted out And therefore, we can now do completely online as well. And we've had a good response. We think this can really grow dramatically. We have to push this engine a lot more to make people aware of it, etcetera. So yes, very, very happy with that and it's happening fast. But the base was low, so it's starting from 0 Got you. No, understand. Very clear. Thanks a lot. Thank you. The next question is from the line of Tejas Shah from Spark Capital. Please go ahead. Hi, thanks for the opportunity. First, if you can quantify impact of import duty cut in the quarter on jewelry segment margins? Hello. Yes, there was an impact on that. It will be there in the Q1 as well. But in the overall context of things, it's not as material as something that I would want to quantify. Yes, there was an impact. Okay. Second question pertains to Caratilim in a year where online was picking up across consumption categories. We have made a very decent expansion on footprint there. So how should we think about Caratlin going forward? Will it be only Strategy or offline stores will be a very sizable proportion of growth going forward for that brand? So Venkat, do you want to answer or you want me to take this? I can do that. Actually over the last 4 or 5 years, It's become very clear that Carrot Lane's growth lies in a combined strategy and it's an omni strategy actually because there is a lot of Discovery that happens on this site and the handshake and the final product purchase happens in the store. And that's because The ticket size opportunities even in the young women segment, the ticket size opportunities are large. And at INR 40,000 INR 50,000, the customer would prefer to look at the products and buy rather than just look at an image and buy. To that extent, not having retail footprint expansion would not capitalize on that very large opportunity. So it will be pushing both the buttons simultaneously to the hilt. That will be the strategy for Claritry. Sure. But the journey of here is slightly reverse that an online brand is going offline. So will it still be online heavy revenue model with offline being experience Fulfillment center or it can even on revenue form, it can equalize going forward? Yes. Having said that, if I were to look at our quarter four numbers for SUDDID buyers per se, It's been a fair mix across all the other markets. I cannot say that There is a regional dispersion, which is kind of evident. I would certainly believe that in because smaller towns have led the growth for us this year. And typically, started ratio in those markets is lower than the larger metro markets. That has played a big role. Otherwise, I don't see any trend which says that started sales are below. In fact, The buyer growth on Stuttgart has been leading that of plain gold, buyer growth, okay, customer growth. It is the ticket value in plain Because of gold price that has taken the value growth in plane higher. So there is no discernible trend of Differential growth from the total sales growth, whatever I said shared for all the different states Holds good even for starting. Got it. Got it. And my second question is on jewelry margins. Does the business have a fair bit of operating leverage or it's largely I mean the fixed cost structure is pretty high in this business. I mean not so much from this quarter perspective, but when we look at next year, I mean, when you had very high growth with the cost savings that you've done this year, would it be fair To assume a reasonable amount of gross of EBIT margin expansion over here or it will broadly remain in that 12%, 13% range? So let's put it basically that amongst all the businesses, the jewelry business has the Lowest amount of fixed costs as compared to all the other low margin, low fixed costs. So the operating leverage is that way, much lower compared to, let's say, watches or either. Having said that, because the scale is substantial, there are certain costs which are which can kick in from operating leverage, for example, marketing costs or let's say, employee costs, So those are costs which we have actually looked at very, very sharply in the current year and also other fixed costs. To that extent, therefore, we've got some benefits and we hope to reap those benefits in the future year. But in terms of what the EBIT margin will look like, the challenges here are difficult. We would not be able to give you guidance, but I just want to give you a That there are constant pressures on gross margins because of competitive intensity, which is happening across various markets. And Because fulfillment is not the only role that the store would play. The store would certainly play the role of Showcasing and persuading and convincing the customers from early stage to the later stage in the purchase journey. So it's an integral part because if it is a fulfillment center, then we need we don't need retail, we can be in the 3rd floor of a Commercial property as opposed to in the main area of a mall. So the retailing costs will kick in and that's why it's So retailing and not warehouse. Sure. Vihil, sir. And last, just one follow-up. Gold on lease emphasis has been talked about in the release today. So is it a tactical move for the year or is it Going forward strategic from as a key part of our procurement strategy. You're talking about The bullion sale aspect of it? No. Gold on lease has been called out as there's a renewed emphasis there. Yes, yes. Gold Ambulance has been central to the growth of the jewelry division ever since 2000 or 2,001 when we got it into our system. And a good spot purchase, which is essentially the Purchases we make from customers through the exchange program or the outright jewelry. That share versus the gold on lease Share in a way determines the capital into it in the business and keeps us asset light and returns a certain very attractive level of capital, I mean return on capital. So to that extent, the continuous management of that is critical to the Titan Company's Balance sheet and performance, and that's the angle for that. Nothing more. Thanks. That's all from my side. Thank you very much. The next question is from the line of Ashit Desai from MK Global. Please go ahead. Yes. Hi. Thanks for the opportunity. My question is on studded jewelry. You highlighted the growth trend for jewelry across markets. Could you also share, I mean, the slower growth in studded, is it a feature across markets? Or is it more due to the sluggishness In some of your key markets like Maharashtra, Delhi, etcetera? Yes, I will just share with you. Yes, certainly The mix, there are 2 factors that play. There's a mix of markets and then there is a growth across markets. Now if I look at mix of markets, You're right. Bombay, Delhi, which typically has a much higher studied mix for us, Those markets being a little bit on the back foot in last year and last quarter has played a role. Our main goal is to ensure that we continue to Grow market share and go towards our ambition that we have set out. Maybe, yes, a year has gone by, which has kind of Held us back, but our ambition continues to be that high and we see tremendous headroom for market share gains. So to that extent, We would rather invest that money back into the market, back into the network and back into inventory, etcetera, To ensure that we are able to continue to grow aggressively and maybe maintain profitability over a period of time. Got it. Got it. If I may please just one small one last, I mean just wanted to know your aspirations for Caratiline margins. That's it for me. Thanks and all the best. In fact, we can't hear you. Nothing to share at the moment on the caratiline margin. We will talk about it in our June conference, Max. Thank you. Ladies and gentlemen, requesting you to stick to 2 questions per participant. If time permits, please come back in the question queue for a follow-up question. The next question is from the line of Kunal Voda from BNP Paribas. Please go ahead. Yes. Thanks for the opportunity. Just wanted to check what has been the learning from FY 2021 on the impact of Store closure. Is demand only postponed that it comes back as store opens and life normalizes? Or do you see did you see any demand destruction? And would you say that the consumer behavior is different in case of watches and like there is actual demand restriction? Have you not seen any pent up demand in that category? That is 1. And second one was what was the contribution of wedding and high value Suraj jewelry in FY 2021 versus FY 2020? And where are you versus your market share aspirations in these segments, Nitrat? Let me give you a larger view on this subject and then Ajay can speak thereafter on the specific question that you asked. See, while the products that we sell are reasonably high ticket categories and what you may generally consider As you consider purchases, some of them and even in jewelry, they're also linked to events, You've been impulse to some extent. For example, all our watch stores in the malls, whether it's a Helios or a World of Kettner or Fast Track Or even in a linking road, 100 feet road in Bangalore, there's a fair amount of young people who walk around in that area and in a way We are not in particular search of a particular product, but because the store is exciting, it is inviting, they go in and buy. Or there is a birthday that is happening in the month of April and June, but it even passes and the store is shut when the birthday is happening. And I doubt if that purchase will be postponed, let's say, late when the store actually opens. So the birthday and the event on that, The magic of the day has passed. So to some extent, that sale is not going to come back. In jewelry, I would think maybe the majority certainly Of the sale is in a way considered purchase because of the nature of the category as well as the ticket size. And it's like and especially if weddings don't happen, they get postponed. But if settings happen and the stores are closed, that sale may not come back. So it's not an easy full kind of answer. But I think by and large, we are okay as a company As opposed to like an apparel company, for example, which will be far more impacted because of the nature of the category as well as the ticket size If the time passes, it becomes lost sale. Ajay, now you can tell. Yes. To add to Venkat's point, we saw last year, especially, let's say, the month of June, July, We saw many missed hailstone deliberations coming back to us, maybe because we have planned, as Venkat said, for the jewelry during their Birthday or anniversary. And so we saw a spike in June, July, but thereafter it settled down to what it was and weddings for sure. Your second question was on the contribution or growth of wedding. Can you just repeat that? Yes. So Like, betting in high value stretch value was the contribution to sales in FY 2021 versus FY 2020? And where are you of your market share expression? Do you still see a lot of leg room for market share expansion in these two Segments, which have been the like which you aspire to grow in? Yes. So in terms of contribution, if I look at weddings, it may seem like For FY 2021, we were same as last year, 23% last year and this year. However, if I were to knock off the Impact of coins and then look at the contribution on the jewelry part of it, there is clearly 1% improvement there With a 2% improvement which we saw in quarter over quarter, Q4 was 24% this year versus 22% last year contribution And FY 2021 has been 25% versus 24%. So there's a 1%, but we are still way off our Most jewelers actually see 50% to 60% contribution from wedding. So we still have a lot of headroom, notwithstanding the fact that we sell a lot Everyday adornment G and G as well. On high value, Sajid, the growth has been decent in the second half, I must say. Earlier, we are seeing a Very depressed scenario in terms of what is the contribution. It has certainly come back to what it was last year. And in fact, For the year, it is the same contribution of around 10% over last year as well as this year, thanks to a good action on the second half. Opportunity is high, especially if you ask me on SOLIDEST, where we are growing rapidly and the opportunity is really huge And milestones are very important and we are very well placed to kind of go after that. On the very high value started, I would say between the 2 lakhs to 10 lakhs space, the opportunity is richer for us. About 10 lakhs, there are many other constraints like PAN Card and other things which start getting into place. And those are things which Still a little unless those things improve, but between the 2 to 10 lakhs, we certainly see a lot of opportunity for high value studies as That's it so much. Thanks, sir. Thank you. The next question is from the line of Jay Gandhi from HDFC Securities. Please go ahead. Yes. Hi. Thank you for the opportunity. Just a couple of questions. If you look at the go down lease, it's Nearly double that of a typical year and probably 3 times that of FY 2019 or 2018. Just wanted to understand what are the underpinnings or the decisions that you go through, which kind of dictates the maneuvering of a sourcing in a certain direction? Subbu, you want to answer that? Yes. Okay. See, actually what we would want to do as much as possible and I'm going back in time 7, 8 years back before The curves came on gold on lease at all. We used to source more than 70% of our gold on gold on lease. Two reasons, one is, of course, the cost was lowest. 2nd, it was a natural hedge. Therefore, any impact on financials on a quarter on quarter basis was actually minimum. 3rd, of course, was the fact that in those days, there was also not very easy hedging in India. Then if you remember, we had the curves which came in 2013 And 14. And then we had no option but to explore doing more and more of the hedging Here, because we were not allowed to buy gold on lease, right? So we had to do that. And that in a way started developing its own Process, etcetera. And we've also brought came into a level where we were not worse off from a cost perspective also. Having said that, We still believe gold on lease is possibly the best way of buying gold. As I said, the volatility in margin clearly, the people Valuations, all of that, it is still the lowest. And therefore, we would prefer to do it. It does generate a lot of cash also, as you can see now, The 3,000 plus crores of cash that we talked about is a result of that. So we would therefore focus as much as possible Get back to that same level of gold on lead as we used to do in the past. Well, that I understand. I'm just looking, let's say, FY 2018 to Until date, right, the wallet all these issues that we had were historical. FY18 to 2021, what is happened during that period was That the exchange goal, our exchange programs have become extremely popular from 2017 onwards, okay. And that contributed a lot to gold, I think, to be buying it on spot. This year, we went ahead and actually disposed off some bullion And resorted to buying gold on diesel. That's the difference that we are talking about. So the gold exchange program has actually is continuing In its popularity, it is still contributing a substantial amount of the gold that we procure, but what we are doing is also swapping it to get as much gold on this as possible. Okay. Thanks a lot for that. Just one thing. So if I consider gold on lease as this low cost debt and hence part of the capital employed because Anyway, this INR 3,000 cash cannot necessarily be used for dividends or whatever, at least largely. Is it an obnoxious assumption that we as an analyst are communicating Actually, each analyst looks at it differently. The reason we keep taking go down lease as a payable in a way is because that's how it's traditionally been, Okay. It's more of a supplier credit as that's how we've been treating it, but yes, each analyst positively takes a decision. Thank you very much. Sorry to interrupt you, Mr. Gandhi. The next question is from the line of Parlsey Pantaki from IIFL. Please go ahead. Hi, sir. Just trying to understand your underlying performance for this quarter in the jewelry division. There were a couple of one offs. One was the customs duty and one which is across all divisions, of course, is the reversal of the employee In cuts with retrospective effects from May, so your reported margins of 10.9% in the jewelry business, If I just want to look at the underlying performance and remove the one offs for the quarter, These two one offs which I spoke about, what would the margins be in that case? I just wanted to know that. See, we won't be giving you those numbers here, okay. We haven't, I think, explained to you what the main basic reason or rather the why the margin was lower than what it Traditionally, Ravi. And that's too particularly based on the top line that we've achieved. But we've mentioned basically 2 major reasons. 1 is the mix, Okay. The status ratio is still much, much lower than what we did see in the past. The coins ratio is substantially higher than what we did in the past. So fundamentally mixed business with an issue. On top of that, we also said that we have been looking at gaining share That is important so much on margin. So to that extent, our focus has been to gain share in the years where we thought this is the best thing So that should explain your question. We can't give you anything more than this. Okay. Sub question to this, in an earlier question, I think someone mentioned that there would be some amount of custom beauty hit in Q1 as well. So I didn't understand why that would be the case because I thought this is a one time correction of custom duty in the February budget and you would have accounted for it Completely, whatever inventory you held as of 1st February would have got marked down in this quarter. Yes, firstly, we can't mark it down because our NRE is still higher than the cost, Okay. And therefore, it can only go as in when it's discontinued. Oh, I see. Okay. We can't do that. We can't do Thank you. Thank you very much. Ladies and gentlemen, due to time constraint, that was the last question for today. I will now hand the conference over to Mr. C. K. Venkataraman for closing comments. Thank you very much, everyone, once again For the exceptional and probing questions every time. Until we meet again, goodbye. Thank you very much. On behalf of Titan Company Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.