Q1 21/22

Aug 4, 2021

Ladies and gentlemen, good day, and welcome to the Q1 FY 'twenty two Earnings Conference Call of Titan Company Limited. Continuation Concludes. Crown. Please note that this conference is being recorded. I now hand the conference over to Mr. Venkat, Company, MD of Titan Company Limited. Thank you, and over to you, sir. Thank you very much. Good evening, everyone, on the call. Company. It was a very satisfying quarter for Titan Company as the presentation revealed. Company. And as usual, the people of Titan Company, the extended Titan organization Companies from the employees of the subcontractors and creditors and all the retail store staff, Company. All the sales staff of distributors and sales and distribution organization and of course, all the employees came together performance and the management and profit performance, it's been a very encouraging quarter. We are very Company. Confident about the balance 9 months of the year. The level of vaccination, I just checked today, we are at, Card. I think 46 crore people have been vaccinated. And in the 18 plus age group, It's 43% and at current rate of vaccination, we expect 75% to 80% recognitions by end of September. And therefore, from an overall safety perception point of view, Company. It's a good sign and it will open up the door to demand in various categories, including lifestyle categories such as hours Card. And barring any other unforeseen or the consequence that is lifting to COVID, which is We are pretty upbeat about the balance here. Company. And now I would request Ashok, Ashok Santalya, who is here now in the first meeting as the CFO of Titan Company. Welcome, Ashok, Card to share some thoughts before we start the Q and A. Thank you, Venkat. Good evening and hello to all of you. Company. It's really wonderful to be talking to you. My first meeting is Venkat Azar. While Venkat gave you some details on Commerzbank. Our overall performance in the just concluded quarter, I wanted to brief you about some updates on our subsidiaries and on gold hedging approach. Composition. We had incorporated Titan Commodity Trading Limited, and I'm very happy to inform Company that TCPL has started operating in and Titan has started heading its goal through TCPL, obviously. Company. Titan also established 100% subsidiary in USA this quarter to further its Company. Now coming to our approach Company. While there is no change in Titan's philosophy of not taking any price exposure on the gold that we have, Company. We have made a change which is effective from July 1, 2021. Earlier, we used to hedge cash flow arising out of Capital Markets Day and accounted for it under cash flow hedging methodology. With the volatility in cash Company. There were mismatches in hedges, which created ineffectiveness of hedges and created volatility in financial performance on quarter on quarter basis. Company. We have now decided to hedge the gold inventory itself instead of cash flow arising out of sale of inventory in future. Card. And this will this shift will minimize and bring in more certainty to our hedging activity Company and the chances of mismatches in the hedges will get minimized. The old outstanding contracts that are open as on 30th customer. June 2021 would continue to be under cash flow method till the year's closure, Company. And all the new contracts from July 1 are under fair value method. We have included these details on Slide number 36 and 37 of the investor's presentation uploaded on Capital Markets presentation uploaded on stock exchanges and on our website. So you can look at them for more details if you could not capture whatever I spoke about. Company. Another point before we open the floor for questions that in view of the stricter regulation on Closure coming into play, in this call, we will not be able to share specific growth revenue growth number for July. Company. While we will be providing you qualitative picture of that, what a specific growth number we will not able to provide. So with that, we can open the floor for questions and answers. Company. Thank you. Thank you very much. We will now begin the question and answer session. Kainab Parseipanthaki from IRASL. Please go ahead. Hi, sir. A couple of questions from my side. So in terms of store openings over the next 2, 3 years, could you give some idea on what would be the proportion between metro Tier 1, Tier 2 towns, etcetera. I mean, I'm not looking at exact figures, but Company. What I'm trying to understand is that the store split of the current stores that you have now, Company. Will the store openings be in roughly the same proportion or it's going to be materially skewed towards any particular pop strata? Company. Thanks, Percy. I think the opportunity for Titan Company in Middle India and below is customer service. A lot of stores that we have opened in the last 2, 3 years are certainly in smaller and smaller towns, Company. When you open Companies. Stores in small your over of total store shifts over a period of time, does it have any implications either On your sales per store or on your profit margins? Card. The sales per store obviously is lower in smaller towns, I mean, as we increase in smaller towns. But it is not as if the growth Company. So opportunity in large cities is low. For example, our largest jewelry store, which is in Delhi, Company has grown handsomely in the last few years even when we are opening our store in Gandaanagar or Yamunaanagar in Ariana, for example. Company. So they have a sort of compensating effect. And the leverage is what we are pushing as opposed to per store sale. Company. And the individual store economics in terms of asset turn as well as margin are anyway sort of built into the system through our terms of trade and all that. So there is no worry sitting there. Okay. So apart from this, I mean, for any reason whatsoever, let's say, once the COVID Disruption is fully out of the way. Your margins for your jewelry business, I think Company. Before COVID, for 2 years, you had average somewhere in the region of 12.5 percent EBIT margins for jewelry. Company. So once the COVID disruption is completely out of the picture, is there any reason why you would not go back to those margin levels in Juicy? Company. There is no reason why we would not go back to those margin levels. Okay. That's all from me, sir. Thanks and all the best. Company. Thank you. Thank you. The next question is from the line of Chirag Shah from CLFA. Please go ahead. Companies. Yes, thanks for taking my question. At the outset, I also wanted to congratulate Ashok, and good to have you sir on this call. Company. I wanted to take a step back and understand how we are thinking of economics. Titan is a first model that we have, but for our franchisees, operating entities work against them in this pandemic period. Company. Given this, is there any change in franchise economics that we are that is needed going forward? And last time, you Cowen. How are we thinking of institutionalizing the same within the franchisees? And how do we think of improving inventory turns for the franchisees? I'm wondering some of the digital initiatives that you have Recently, would also help them in higher inventory turns for them. Certainly, the Company. Leverage advantage that a corporation like Titan has, an independent businessman does not have. And therefore, when the sales fell in FY 2021 Card. And even during FY 2022, now there is an impact on the economics I mean on the financial performance. But fortunately, over the years, we have built Card. Robust businesses in most of the franchises. And last year as well as to some extent this year, we stepped in Card. With the loans, grants and sort of help them buffer customer acquisition. And because of the overall cumulative prosperity that they have Titan brands have delivered to them, it was not an issue. Company. So that is therefore, we have not had to make any structural change to the terms of trade Card. So that's the first point. Company. The second one is actually individual businessmen are quite savvy in the management of cash actually, and we don't really need Company. We often find digital business, for example, where we have these 2 different Company. L2 and L3, which is a buy and sell versus company stock. You're fully fine that the stock turns of Company. The franchisees who own the stock for comparable turnover bands is actually better because they are there Cargo. On the ground managing it and it makes so much more and the cost of borrowing is much more than for us from the build on lease and all that. So there is really nothing that Company. We have plans of teaching them, as you say. But the principles of Company. Stock management, for example, in the watches and variables division, we have taken the whole period of constraints principle all the way down to all the franchisees so that Card. It's a flow system where what sales get sort of linished and how long it took to sell is considered before it We ordered and stuff like that to manage the AFFETRA. And in jewelry, the same principles of what we use in the consignment L2 management engine. Company. We have now created a team in head office for the franchisee L3 to help transfer all these best processes to Company. Sure, sure. And also can you touch upon the 2 key growth levers Card. We have one we speak about the many India's program to increase the fleet level relevance. Cowen. And just on the second part, the Golden Harvest scheme, enrollments in FY 2020 have been uneven for obvious reasons Company. And that would understandably result in some volatility in revenues in the current year. But can you just give us a sense of how enrollments are moving in the current year On the Golden Harvest team. Yes. Hi, Chirag, Ajay here. Enrollments, Company. Obviously, in the month of May, everything was shut, but June and even later on in July, pickup has been good. Customer. So, has kicked in well, and it will it is continuing to ramp up. So hopefully, going forward, it should be a good base that we will rebuild. Cowen. In quarter 1, I must certainly share that since last year, quarter 1 was a disrupted quarter, Company. Therefore, enrollments were not there. Therefore, the opening base of matured accounts were limited. So to that extent, that engine Company. It was understandably a lower contributor to sales in quarter 1. But going forward, the enrollments look good. On your Company. On the part about, let's say, trying to win in different parts of the country and Tamil Nadu, which has been Card. Our strategic market has continued to fire well, and we have also done a lot more Companies. Localized activity in what we call Bharat markets, which is really UP, Bihar, Jharkhand, MP, Cowork, and that has also been working well this year as well with a lot of localized activity. We are also exploring a couple of more markets Card. But we are waiting for things to stabilize and see if the momentum is right for us to intervene in those markets going forward. But Company. Overall, that approach what we kind of crystallized a lot more last year, we are continuing with that cummerzbank, state level kind of customized plans. But it is going on well and it has really helped us a lot in the states where we've done a lot of this Cook. Sure. And just one last question, if I may. In the annual report, if you see the Capital Markets. While the Golden Harvest fixed deposit, which is held as a reserve as a proportion of Golden Harvest related liability has gone up materially, Just wondering if that has to do with any regulatory change that has happened? Company. As per Ru is 20%, but can I give a specific number that should be the same? Sure. That number is for FY 2021, that number has gone up to 28%, which Company. I will get back to you, Anast, after checking the call. Sure. I will join back the queue. Thank you very much and all the best. Card. Thank you. The next question is from the line of Vivek Maheshwari from Jefferies. Please go ahead. Company. Mr. Maheshwari, your line is in talk mode. Kindly go ahead with your question, please. Cartridges. As there is no response from the current participant, we move to the next question from the line of Avi Mehta from Macquarie. Please Hi, Venkat. Hi, Ashok. Welcome to the Board. I just had two questions just taking up on the demand recovery, Company. Is that what you would expect as we go forward into the year? Company. Is that the reason for your relative bullishness? And if it is, would you be able to share any guidance on the sales for the 9 months as we go forward. Hi, Avi. Ajay here. Yes, there has been we have seen Company. Certainly, what I would call is pent up demand on account of gold jewelry, even studded jewelry, on account of missed milestones in the period of lockdown as well as, Let's say typically people wanting to buy during Akshay, Krithya were not able to buy. So we have seen evidence of that in June and it has continued in July. Company. The rest of the quarter will look like it's kind of difficult to give a guide, but we are seeing Card. It is still seeing a good at least for us, we are seeing a lot of new customers also walk in. And the contribution of new customers as well as the absolute growth that we are seeing in new customers is also giving us a lot of confidence. Company. And the 3rd piece which I would like to share here is this milestone that I talked about birthdays and anniversaries. Company. This is now becoming a growing trend for us. It is one is, of course, a spike that you see immediately after unlocking. But Company. I think as of process, we have become little better at managing that. So that is among repeat customers is also growing up. So I think we have Card. More than just the pent up demand as a basis. And there are varying demand, which anyway people are advancing their purchases Because they don't know when Wave 3 may come, if it comes, etcetera. So these are some of the demand drivers. Okay. No guidance on recovery by then, nothing like that, right? You would not be comfortable. That's the answer. Yes, not on this call. Not on this call. Okay. And so secondly, on the Capital Markets. Margin front, I mean, there were in the last call, you highlighted towards some discounting pressures from other peers. Is that now behind us? Card. Is that a fair understanding? See, discounting has always been there last year, this year and nowhere have we actually Slipped down margin on account of that piece. I mean, we no, so I mean, Competitive intensity continues to be high. Post unlocking, most players in the market have been on aggressive offers, Company. But we followed whatever we think was right to do, and we followed our schedule. So it's okay. I mean that will continue. It's Company. It's an operating aspect of the industry. Okay, sir. And lastly, sir, just a bookkeeping on this change in hedging. Does this in a way Companies. I mean, would that be a right understanding or that will start correctly? No, I don't think that's Company. Right understanding. Because it is just I will again repeat Company. That instead of the inventory which was exposed to price risk, can we be hedging the cash flow in future out of that inventory? Now we are hedging inventory itself. So it basically brings in more certainty that what hedges we are doing and tagging to the exposed inventory, which is for Titan. Company. We are kind of bringing through GOL, which are naturally hedged inventory. So that proportion is we are not foreseeing meaningful change. Company. If that proportion change, then in any case, we have to hedge the remaining inventory. So again, this is operating and very tactical month to month, week to week, quarter to quarter. But this system doesn't bring in any structural change into amount of hedges need to be taken. Company. Okay, it's sister accounting. Got it, sir. Clear. So the unhedged and ineffective hedges account behind us. That's the takeaway. Card. Okay, sir. Thanks a lot. Thank you very much, sir. Thank you. The next question is from the line of Avnish Roy Khan from EagleWise. Please go ahead. Yes. Thanks for the opportunity. My first question is on TCL North America. Company. So 12 years back, you had exited USA. So I want to understand what has changed Company. And if you could discuss any numbers here in terms of investment or losses. Is there any learning from Company. Currently in international business, which has increased 9x YOY, is that giving more confidence? Because the U. S. Market in 11 years Company. We have become much more competitive now, so if nothing worked then, then you had highlighted that you want to put and U. S. The market is much higher. So if you could defer this point? Yes. Thanks, Avnish. For various reasons which were valid Company. In 2006, we decided to target the mainstream American consumer Company with Tanishq. And we went into malls. We created a product line, which was totally American Global in terms of styling. Took an unknown brand into the American market. At that time, we felt that we could make success because Card. The proposition that we had was differentiated and we felt that there was a decent space in the American market for that. Company. There was a decent space. Everybody who came into the Tanishq store loved the entire value proposition that they had put together Company. The biggest challenge that we had not visualized that well was the investments that we needed to make Companies. And even as we were starting to grapple with it, the Global Financial Crisis Stuck, and we realized that it's going to be a long haul. Company. Many tens of crores would have had to be sort of lost before we saw light, Company. And Titan Company was in a very different situation in 2008. So that was the reason for closure at that time. Company. Now the incorporation that we are referring to is for making a serious play in the NRI PIO market of North America. Company. And just in 10 years, there has been I mean even in our IPO market was large, I won't go Company. Why we chose not to go there then, but I'm telling you why we are choosing to go there now. The per capita GDP of the NRI PIO is USD 100,000 in a country which is $65,000 And the NRI PIOs are more Indian than Company. I know Indians living in India and their connection with the culture of India, the festival in India, even the functions, the Nile just celebrated with Pomp, Credit Suisse during December month and already peaks. So we are now playing in a very different category, which is pretty large. Card. Our sense is that it may be $3,000,000,000 $4,000,000,000 at least, and the market is pretty unorganized. Card. And we believe that we can hit the ground running. We can get very decent ticket sizes, very good diamond jewelry share Card. And also a lot of prestige by upping the game in terms of the style quotient. So all in all, the Card. The game that we're going to play now is very different. The Panish brand is very strong in the NRIPIO consciousness. Company. We've done a fair amount of research to make sure that when we go in, people are welcome waiting there to welcome us just like it has happened in Dubai after many, many years. So therefore, the market opportunity very different, the strategy is very different, the competitive advantages, Company. Something else compared to unknown brand fighting big global brands at that time, Huge desirable brand fighting mostly local players this time. So that's a big difference. Card. Sure. My second question is on closure of stores. So you have closed 5 stores in different formats, 1 NER, 2 W40 and 2 in Card Strike. So we could discuss the reasons and is this more focused on digital or online you want to try? Amish, we have 1800 stores Company. We can't help not close some of them every year. I mean, it is like that. It's just a regeneration of customer. Nothing particular to know. It's not a material number from a network size point. And last quick one, so Company. You have pointed that in jewelry last year, you saw a quick turnaround, quick football recovery. And you have said this time, even in watch, you have seen that and the eyewear. Company. So what is driving this? So essentially, is it more of base effect or there is a softer sentiment improvement? Hi, this is Suparna here. Yes, I think the consumer sentiment has been faster to recover, and we see that across Companies. All channels in the watches division. So whether it is multi brand outlets or the large format stores and certainly in our retail stores, Companies. Consumer has come back faster and that's such an overall level. It took longer for people to come back to buying after the COVID wave last year. This year has been much better. And, Agnish, last year, there was no vaccine. Card. This year, there is a vaccine. I mean, I was in Punjab last week and so many people on the road, so many people Company. So the fear of COVID, even though the tragedy of COVID was greater this year, Company. But the fear of COVID is much less because the vaccine is the protection's shield. And that's what I'm sure is affecting the inflowing the recovery across categories. Company. The next question is from the line of Kunal Vohra from BNP Paribas. Please go ahead. Yes. Thanks for the opportunity. First question, if many of you have seen the experience over the last What are the benefits you expect in the near to medium term? Yes. So hallmarking is mandated, yes. Customer. We have been compliant right from day 1 across all our stores, whichever city it is. There is some amount of disruption in the supply chain In terms of production, post production, because there is a new system of, in a way, capturing the hallmarking UID number customer service through some centralized system that is resulting in some significant bottlenecks, which BIS is trying to address. Carlton. So that is the main impact currently of Hallmarking. Meanwhile, jewelry associations continue to Company. We are carrying on the way it is and we have expanded our operations suitably to cover up for these delays. Now the benefit for us, well, in the long Company. I think HUID is a good move because it will really bring transparency and some credibility to the hallmarking So tomorrow as a customer, if you are able to use that number and check where it was all marked, etcetera, Company. It gives us so you will prevent any contamination in the hall marking process. And BIS also seems to be pretty clear That they are going around checking the quality of hall marking and all of that in the initial months weeks so that there is no hanky panky. So we think this will be good for formal organized players who are operating on Clear Purity, etcetera. And eventually, I think the entire industry will kind of get into that mode, Company. This is good and if it's good for the customer, it's good for us, it's good for all of us. So it will be Company. Sure. Okay. Co. We have Mitron here, who is the Managing Director of Carat Leyan. It will be wonderful to hear him Company. Sure, Mr. Could you the first part, did you ask me the current store count? The current store count? No, no. Store count potential, like where do you think Yes. So if you consider that the stores are roughly about 1,000 square feet Cowen. And we are currently in only 44 towns with debts in about 16 towns only. You could put any multiplier to that and we would find a lot of potential if you look at just India alone. Beyond that, the second question that you had was around sorry, could you repeat the second one? Company. Yes. I was wondering whether this brand can be extended to other luxury products. So right now, these are the words, can you extend it to other luxury products as well? It could be, but it hasn't crossed our mind yet. Thank you for agreeing to have noticed. Company. Sure. And one last question if I can. Like so for FY 'twenty two, how do we look at jewelry and virtual business revenue compared to FY 'twenty? Cum. Level of sales in Q4 of FY 2021. And then we were gunning for a good growth in all the businesses in FY 2022 till Company. I think in the 9 months, I think we should be running for certainly matching and exceeding. Are you saying Company. Yes, last year was a drop. It will be just a point to point Carr. The next question is from the line of Aditya Soman from Goldman Sachs. Please go ahead. Company. Mr. Sohman, your line is in stock mode. Kindly go ahead with your question, please. Card. As there is no response from the current participant, we move to the next question from the line of Krishnan Sambamurthy from Kamuthi Lalorzwala. Please go ahead. Yes, Vikat, last year, particularly the second half, we saw a significant bunching up of bidding demand, Company. The overseas travel part from whatever we are sensing is still a big constraint. While the Company. People's moves have improved, actually, and all that, but the governments continue to be strict about Visa. Card. And therefore, for example, even for our own launches stores in Dubai and U. S. And others, we are not able to step out of this country. So I suspect that, That advantage will remain for a while. Weddings are not clear. Maybe as I can speak. Yes. I think wedding demand will be stronger in the Card. It's already there because people are advancing their purchases, not knowing when Wave 3 will hit and therefore cum. Getting on with it. But having said that, certainly like last year, we think wedding demand will be stronger in the second half because Understood. The second part, while you did highlight that you don't want to give Joe Company. Could you share store operating base data similar to what you've given for April May and June? Sorry, what data? Store operating date. Store operating date. Card. July see, it's about 80%, 90% for jewelry, And it's in that around the 80 mid-eighty percent kind of number. Yes. For watches, it is Company. Around between 7580. Because of the malls. Because of the malls, yes. And there are lots of states where there is alternate Company. So it's certainly much below 80%. So yes, Garrett Lynn, Mitun says it's 88%. Card. Also, I feel that because the public is also now starting to become reasonably well aware of this, the sales must be getting distributed over the days in which those are open. Company. So you may not be able to use this frankly beyond a point for any practical calculation. Yes. I would Company. I strongly suggest not to use that data because the correlation is not standing out. What Venkat said is worn out by data. Commodities. So we should look at total monk sale only. Okay. Just one final question. Ashok, can you explain what's the role that Titan Commodities Trading Limited What does it plainly have been processed? It's the registered broker with NCX in a way. And Company. So earlier, if you remember, we used to deal with other brokers including CardV and we had a bad experience there. Company. And just to avoid that risk, we kind of created our own entity. Titan is a sizable player as far as gold bullion So apart from avoiding that risk, of course, we are saving Companies. That was not the motivation. Motivation was to avoid the risk of a counterparty Card. Thank you. The next question is from the line of Amit Sajdeva from HSBC. Please go ahead. Company. Hi, good evening and thank you so much for taking my questions. And congratulations on good set of numbers in the mid separate quarter, especially margins, if I may say, on the June Company. So I just wanted to Ashok ji or Ajay, if I can get some clarity on Gildry margin. I remember last Capital. There was a one off expenses or at least write off on account of the custom duty reduction that had already happened and impacted quite sizable amount in Credit Suisse. And if I remember correctly, Subbu has said that Card. Part of it would be also effective this quarter. And I if I were to say 2 third, 1 third. I just wanted to know that Card. What kind of custom beauty impact would have still hit in this quarter? And can you quantify that in terms of EBIT impact? Company. So I'll take that, Ramit. So we were actually expecting to absorb a much Kajar component of custom duty impact in quarter 1. But because sales itself are much lower, that amount is also much lower. Coincidentally, some of that loss has got set up by what we call as a FIFO Company, which is on account of gold rate valuation. So actually, in this quarter, those two amounts are canceling each other out, Company. So you're not seeing any impact of that. And they happen to be the same number, give or take Company. Yes. But to add to Ajayo, there will be some something going into quarter 2 now, But now amount is not significant where we call out specifically what that amount is, but some carry forward to quarter 2 will happen. Company. Okay. But that would be, I would say I would guess, would be marginal and not really very meaningful, which as in the EBIT margin level. Would it be safer assumption? Company. It should not be very, very meaningful, but we will kind of let you know. Not meaningful, but not material. Not material. Not material. Not material. Yes. Okay. That's very, very helpful. Thank you so much for clarifying this. My second question is, obviously, you talked about demand and Company. The fact that you will not be very specific about July, but I would also gather that July month is split into 2 halves and Capital Markets. First half July typically is a very bland and very lackluster anyway structurally and cyclically. And it's only the second half of July that takes off. So my question is and also there's a growth vector of metro demand and Tier 2, Tier 3 demand, Cup, which has been divergent at least last year and I would guess Q4 where metro demand would have come back as well. But Could you give us some picture of how the July has progressed on first half, second half dynamics? And second, Consumer Electronics. Tier 2, Tier 3 or smaller town versus metro dynamic. And are you seeing this trend sustaining? Some color would be really helpful, Ajay. Yes. Okay. Company. So actually, this time around, first half was much better than the usual because there were still quite a few wedding dates available till 17th July or so. And then after that, the Arie Ashad month started, so Demand actually slowed down. So the first half was quite good for wedding and therefore also more for plain world. Company. We actually advanced in the North Montel have started activation, which we usually Company. Towards the end of July and then it goes on all the way to mid September. This time, because of momentum as well as uncertainty of Wave 3, Company. In the North markets, we have advanced it by about a week, and therefore, we saw good opening traction to that. And then the rest of the markets followed Company. To give you a sense on metro and Tier 2, Tier 3, this time around, because Company. Bombay, Delhi and some of the North and other North and West markets have been good. Ahmedabad, Company. I think we are seeing a better response this year because some of these markets were badly impacted last year. Tier 2, Tier 3 towns are certainly recovering also pretty well, but the metros and the mini metros have started Company. So therefore, overall, most markets are firing well barring a few states which have got Card, which are still impacting, 3 or 4 states which are impacted. Okay, great. So that's very, very helpful. Ajay, thank you so much and all the Cartridges. Thank you. Thank you, Amit. Thank you. The next question is from the line of Sirish Pardeshi from Centrum Capital. Please go ahead. Company. Hi, Venkat, and welcome, Mr. Sonthaliya. I have three questions. The first question is on the jewelry part. If you could talk about the mix, Cars. How this has started in this quarter, maybe that would be very helpful. Card. Hi, this is Ajay here. So the started mix, I guess, that's what you're referring to. Yes, in the quarter, Company. We have seen on retail, I'm just giving you a retail flavor because on China resale, it is a little different. But Capital Markets. On retail and I think it's 25% has been the studied mix in this quarter. This compares to 21% last Capital Markets Day, which was impacted quite a bit. And the year before last, it was at around 28%. So the study recovery is better than last year, but yet to catch up at least for quarter 1 Cognizant. You have advanced the designs in the Northern market? No, no, no. That is in July. This is referring to quarter 1, so there is no impact of any activation in quarter 1. Got it. Got it. Thank you. My second question is on watches. When I Company. See the Slide 4748. I think you have reported a very strong volume growth. So maybe if you can help what is the volume absolute quantity in the quarter? And the related question on that Company. Is that despite higher volume growth, the EBIT is not showing that momentum. So could you talk something about the mix, how which Yes. So this is Suppar The volume growth is actually on a very dismal quarter 1 last year, where We had very, very low sales. Like I mentioned earlier, last year, the watches, the consumer sentiment is very weak The recovery was very slow. So I think the 466 should not be seen in any other context except that the base was Company. Can you just repeat the second question? What does it explain the lower growth in EBIT? Company. The Edith is actually last year, we had a loss of INR 164 crores in quarter 1. This year, we have had a loss of Company. And it's largely to a very large extent explained by a much better top line performance this year in quarter 1 as opposed to last year. So that's the difference in EBIT. Okay. Subarna, just one follow-up on Vachesh. What is the variable contribution now in this quarter 1? Or maybe if you can talk about last 2, 3 quarters, how it should Company. So, wearables contribution is still less than 5% in the overall value, but it is growing year on year. The growth in wearables is higher than the growth in watches. Even the recovery on wearables so far has been better than in watches, but it's on a very strong basis. Company. My last question is to Ajay. While speaking to few of the channel partners across geography, Card. What we are also seeing and you also acknowledge that the industry participants are pushing the deferment of hallmarking. But how Capital. What their thought is that if it is deferred, probably they can sell off the inventory. And if that doesn't happen in extreme situation, Card. We expect I mean, people are saying that there could be a discounting which will happen. I mean, there is no need of discounting. But obviously, Copper. The lower carat gold, which is there in the inventory, probably you will see more heightened promotions. So in that scenario, Cowen. How do you see the competition behaving normally, abnormally or heightened? So we were also anticipating because of this Company. In July, August, the 2 month window given by the Ministry to kind of get all your stocks all marked or sold, We were expecting a lot more competitive intensity discounting. So it is pretty much the way it has been. I don't see any Company. Further, it's not taking it up much more. But I'm sure the industry is also seeing some good growth in the month of July and they are also Company. So hopefully, you're going to see good growth in the month of August. So in any case, even after that, the window doesn't close. You can just go and get your opening stock Callmarked, yes, which is what we did in the 1st place. So that when on as on 1st July, everything was already hallmarked. So Company. I'm not seeing much. In fact, the greater issue here is as we build up towards festive season, Cup. Everybody is going to start upstocking. And in that period, therefore, the entire supply chain is coming under some stress due to this Cardholder's Hallmarking HUID process and that bottleneck can actually create greater chaos for Company, the rest of the players. And in that sense, maybe because we are a little better prepared for it, We may have some marginal gains there. But you don't anticipate that it will take little different turn in around fiscal season? Company. I don't think so. I think the ministry seems to be very confident and clear. Mitul wants to add something to this. The government has also plugged in by August It was originally July 30th August 15th, all opening stock either by thesis or by GrammEdge has to be reported into the BIS portal as well. Card. And so that doesn't allow for the scenario that you're looking at for it to play out. Thank you for that commentary. But where I'm coming from, Just to clarify that there are some glitches, even BIS is also acknowledging in terms of certification and on the ground infrastructure. Company. So maybe because of that, I'm anticipating some kind of super competitive pressure which can happen. Card. Yes, we don't know. I don't I'm not sure why. The kind of significant competitors that we play with, they're not the kind that you're Company. And surely customers would be wary of some local jewelers suddenly knocking off to stop at It will only increase the values that they already face about such possible brands. Sure. That's great, Venkat. Sure, Venkat. Thank you. And on the Company. Thank you. The next question is from the line of Vishal from Philip Capital. Please go ahead. Yes. Hi, sir. Congrats on a good set of numbers. I have two questions, both I booked within 1. Company. Share of old exchange gold during this quarter and store opening guidance for finished during FY22. Company. Yes. So share of Old Gold Exchange has been a little subdued since the last year. I think people's interest in bullion has not gone away. Card. And therefore, they have kind of also because of the curtailed wedding related purchases during this period, the total quantum, we see a lot more exchange during wedding purchases. So we saw a good one in April and then June was not really a great month for wedding Company. So to cut a long story short, the gold exchange percentage contribution Company. P. Vijay Kumar:] To sale in quarter 1 this year was 24% compared to, let's say, 30% if I go to year before last. Last year, I think, is very relevant. What is the second question you asked? Store opening item for Tanishq for FY 2022? Yes. So we are targeting around 34 to 35 store openings and we are pretty much on track for that. We have already opened Company. We've opened 7 and another 4. So totally, we have opened 11 so far as we speak for the current financial Company. Okay. And then most of them would be on L3 kind of movie franchisee based offer a store operation, L3 kind of format or Sorry, L2 kind of format or what kind of we do? No, yes, yes, L2. Most of them are L2. A few will be L3 in very Small Towns. The The next question is from the line of Hakej Jhunjhunwala from RARE Enterprises. Please go ahead. Gokhan, sir, you have said Congrats on a fine performance. You said that you will not give a quantification of the realized sales, but how has been the trend? Have we been good? Company. Yes, we have been good, Rakesh. Rakesh, what is the cash you are rolling your books around on 30th June? Company. Kash, we have in excess of 2,000 crore rackages. Card. And what about Cabraluva? Is it going on? Has it closed? Or it still be expected? Yes, yes. Thavalumba, I mean, there are some procedural matters on the plate, but for all practical purposes, otherwise, it Close. The entity still exists and we have not yet sold the entity, so to speak. But Company. No investments ever since we decided to close it other than winding down expenses that we had estimated and running to that plan. Company. Arvind, what is the effect on the any effect on the IOS division? What is the vast quantity of money that the other company is raising? What is the name? I forget the online company, which is now got offline stores also. Lenskart. Lenskart. Hello, Scott. One of management really is quite amazing. Is there competitive effects on our IA division? Card. This is Shaul here, Mr. Nuno. Actually, the opportunity seems large enough, Capital Markets. Although they have been able to generate a lot of money and they are expanding, their business is doing well, our business Company across both in big cities as well as in the small accounts. So the prospects are very good. We are quite excited Also, Rakesh, if you really think about it and even go to the stores and speak to customers, we are an expert in this customer. Now the name for the division is Eyecare, not eyewear. So the expertise that expertise plays in a particular space of The industry of the category, which is very, very large in many cases. The competitors is playing in a way in the fashion space with a lot of you, which is a differentiator. Company. So to that extent, I think like Sharman said, the opportunities are different and equally large. Company. Sure, sir. I mean, we are in market through things. Titan has been trying for 10, 15 years for the growing producer profit. And it's again that I personally feel this is a very large market with a very big potential. Yes, yes. 2nd thing I want to say Company. Then are we going to continue with all this, Tamira, and the sales is 14th through the quarter? I mean, does it basically say we have our company after Of course, we want to make Taneva in the Company. Technicwear industry, what we made with Tanishq in the jewelry industry, that's our ambition. We're very, very clear about what levers of Panera Card. The women who got Tynaira love Tynaira. They have not seen zaris like that anywhere. The scale has been held back Company. P. Vijay Kumar:] It's the last 18 months of COVID, but we will speak soon at an appropriate occasion about the ambitions of Tenera. Without doubt, it's going to go somewhere else. You just wait and watch and you will applaud from the sidelines. And how is your perfume business doing? Card. Your business is doing very well. But at the moment when people are all sitting at home, you and I are the only 2 people who seem to be going out, Company. Most people are sitting at home and therefore the need for perfume is a little less. So I think it's just a matter of time, January, when all of us, the nation is vaccinated, socializing starts, people also Should start working hybrid working as opposed to just sitting at home and working. That's a concern for some category sleep perfumes. But we are very customer. Any plans to add items to Fast Track? In terms of categories, not yet. Company. We want to actually make the Fast Track, for example, the perfume business of Fast Track much bigger, the bags business, you may not be aware Cup. We are into girls. We make very, very wonderful bags for girls, fashion, fashion bags. Company. We want to make that big. So not enter any new category, but make much bigger. And the basic point you were making that some of these categories are so small Company. In a company of such a large size, you're very right. And it's our collective me and 3 of the heads of those businesses to make Company. This is much, much bigger, much more prestigious, much more profitable from the company's point. Maybe I suggest that all things large, start small. Card. Thank you, Rakesh. Thank you. The next question is from the line of Jaykumar Doshi from GoTalk. Please go Cowen. Hi, good evening. Thanks for the opportunity. Questions again on the ivory business. If you look at Card and scaled up from INR 150 crores to about INR 900 crores top line in the span of 4 to 5 years. And recently, they were valued at $2,500,000,000 So just want to understand what are the growth aspirations that we have for Titan Eyewear? Company. And what are the investments you're making to sort of strengthen the omni channel play, especially in the digital side? We hear a lot of thrust from Tata Group on building digital assets. Just want to understand what are Titan's plans for Titan either? Card. In the last 18 months, we have established some of the basic things that were kind of yielding us. Company. Having done that, we are getting into a rapid expansion mode, both in the top 7, 8 cities as well as Companies and Media. So therefore, if today or next year is 2022, in 2 to 3 years' time, it crossing 1,000 Capital. P. Vijay Kumar:] Won't be surprising at all, maybe even earlier. Plus, we have also sort of cleaned up our trade channel, which is a multi brand outlet. Company. And we are seeing a significant scope for actually playing both the company, the view on the combination. So therefore, outlook Capital. For the business, actually could be very strong, meaning around last 5 year projection was somewhere around 18,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000 Company. I do not have a number or anything in mind right now, but I think we feel very strongly about the category Card. Given the opportunity that is available as well as the digital exposure people are going through the last 18 months. Company. Is there any gap in product portfolio? Because when I look at the store count of 750 and top line of 900,000 crores versus 600,500 crores top line, Company. So, Jashin, there may be some B2B component, distribution component. But at a product portfolio level, do you how do you sort of benchmark yourselves? Company. We had certain gaps lower end of the price point. I think in the last 6 to 8 months, we have more or less filled it. Company. And we, therefore, today don't see any real gap in the portfolio side. And of the 2 brands that we use in the for film segment, which is Titan and Fast Track. Fast Track is also going to scale up the play very, very soon and Company. Thank you. Good luck with that. All the best. And one bookkeeping question on other expenses. Card. Now and this is the other expenses that you sort of report in the presentation on Slide 40 this time. So this quarter was INR 2.40 crores, last year same quarter was INR 187 crores and March quarter was INR 400 crores. So I just want to understand what's the breakup between variable and fixed costs because it seems to be, I mean, a little bit lower than what I would have otherwise sort of anticipated or expected. So Company. Coming to the specifics, last quarter which you are referring to, of course, it was a very, very different quarter completely. Credit Suisse software, whether it is professional services, whether it is some of the rent concessions, we are also sitting here, traveling, 0. Company. So those things were there in Q1 2021 and that is what that number you see. Of course, this quarter was better off compared to last quarter 1 situation And that is what you are seeing. No, no, sorry. My question of taking For 400 crores in March, it has gone down to 240 crores in June. So there's a 40% decline. So it's a fairly good sort of Card. Of course, but is this is it because of our cash payable or? No, no, it is not that large part of it is basically the Travel, rent savings, professional services, which we hire a lot in our factories as well as everywhere, All those things are there. So they are, of course, curtailed because of closure, etcetera, like to like War on waste. Yes. And War on Waste sustainable part is, of course, built in, which was done. I understand. Okay. Thank you so much. So we'll take the last question, Company. Thank you. We'll take the last question from the line of Vivek Maheshwari from Jefferies. Please go ahead. Company. Am I audible now? So if we can speak closer to the handset, please. Is this better? Yes, sir. Okay. CapEx. Good evening, everyone. My question is again on Hallmarking. 2, 3 bits were here. So one on the Hallmarking bit, Card. Over time, let's say, in the medium term, if, let's say, one of the important USP of Tanishq was or has been around purity, Company. If, let's say, the neighborhood stores start giving selling Hallmark Gold, wouldn't that change the perception in the minds of customers that From a priority standpoint, whether Tanishq or Nigrook store, I mean, then the battle is or the competition is more on the designs. Is there a fair assumption? Company. You're right, over a period of time that will happen. But we have to compete on design, we have to compete on Card. Other practices, for example, when you take back gold, exchange gold, etcetera. But we also think because of this, their Company. They will pass their margin they were currently passing some of their margin from making charges into purity. Over a period of time, they cannot sustain. They will land up coming to take up their making charges. So in a way, this would then make our making charges more competitive. So that is my reading. Company. Vivek, for the last 3 decades, the exchange jewelry caratage has been in the 19.2 carats Cowen. Now that 2.8 carats is actually what Ajay is talking about, and that 2.8 carat is something like Company. 11%, 12%. That will kick in have to kick in otherwise they'll go bust. That's one point. The second is it's not only the purity. It is the Tata Trust. Cartridges. 50 years from now, I can come back to that store. The store will exist. I'll get my money back. Whereas with others, we don't know whether the store will customer. We don't know whether the money will come back. So that part is not spoken about so much, but it's very much there with customers. Company. I mean, Panish is a brand which is aspirational, desirous. All that is may not be articulated by customers to Company. In investing circles, but very much a power of the guy. Got it. Got it. And the other part, I know this may not be the best forum, but if you can briefly elaborate, how does this hallmarking work? So let's say whether it's a tonnage store or a neighborhood store, the gold physically actually goes So out to send that company back? You can reach out to me offline, Rick. I'll walk you through it, maybe through Pulkit or somebody Kumar Investor Relations. We can talk about it. I will do that. And last bit, a small bit on hallmarking. Does this increase your cost in any ways in the medium term Company. As it does for the industry? Or it is, let's say, cost wise, it's fairly neutralish for you as well? It's negligible. Okay, got it. Cutsugl. Thanks and wish you all the best. Thanks, Rick. Thank you. I now hand the conference over to Mr. Venkat for his closing comments. Over to you, sir. Thank you very much, everyone. As always, supportive, encouraging, probing Cargo. I'm leaving us with a good feeling at the end of it. So for a while, can we meet again? Cargo. Thank you. Ladies and gentlemen, I'm Jeff of Titan Cargo. That concludes this conference. Thank you all for joining us, and you may now disconnect your lines.