Titan Company Ltd (TITAN) Q2 FY23 Earnings Concall Transcript

Titan Company Ltd (NSE: TITAN) Q2 FY23 Earnings Concall dated Nov. 04, 2022

Corporate Participants:

C K Venkataraman — Managing Director

Ajoy Chawla — Chief Executive Officer- Jewellery

Ashok Sonthalia — Chief Financial Officer

Saumen Bhaumik — Chief Executive Officer- Eyewear

Suparna Mitra — Chief Executive Officer – Watches and Wearables division

Ambuj Narayan — Chief Executive Officer – Taneira

Manish Gupta — Chief Executive Officer and Vice President- Fragrances and Fashion Accessories Division

Analysts:

Abneesh Roy — Nuvama Institutional Equities — Analyst

Jaykumar Doshi — Kotak — Analyst

Avi Mehta — Macquarie — Analyst

Shirish Pardeshi — Centrum Broking — Analyst

Manish Poddar — Motilal Oswal Asset Management — Analyst

Percy Panthaki — IIFL — Analyst

Siddhant Dand — Goodwill — Analyst

Latika Chopra — J.P. Morgan — Analyst

Vishal Gutka — PhillipCapital — Analyst

Anush Mokashi — Yadnya Academy Private Limited — Analyst

Vijay Gala — Gala Consultancy — Analyst

Sheela Rathi — Morgan Stanley — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Titan Company Limited Q2 FY ’23 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Mr. C. K. Venkataraman, Managing Director, Titan Company Limited. Thank you, and over to you, Mr. Venkataraman.

C K Venkataraman — Managing Director

Thank you very much. Good evening, everyone, on the call. For the last many — I would say, dozens of quarters, there was one person who was a constant source of encouragement to support for Titan Company and he is not on this call. We all miss Rakesh.

Quarter two was a very, very good quarter for the Company. All the macro factors, in a way, continued to remain in favor of companies like Titan and you would see from our note on the quarter that the season continued to be a good season and our major businesses delivered a growth between 17% and 19% over the same period last year. So, overall, we remain confident about the immediate future and certainly the medium-term outlook is also very positive in our view.

And since the presentation has anyway been uploaded, I don’t have anything further to add and we will wait for the questions to unravel. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama Institutional Equities. Please go ahead.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Yeah, sir. Thanks and congrats on extremely good set of numbers. So first question on jewelry, if I see one observation was the studded share, see, most of the consumption habits have now come back versus pre-COVID. Studded, you have done well on YoY basis, but when I compare pre-COVID, there is a 500 bps difference still. So is this because the mix of the business is now far more South focused versus earlier. I’m not saying entire business is South focused, but this pre-COVID, is the South mix higher and that’s why reaching the 37% number this quarter was 500 bps lower or is it also because of the festive mismatch or gold prices being much higher than, say, three years back? What was the key reason?

Ajoy Chawla — Chief Executive Officer- Jewellery

Yeah. Hi, Abneesh. Ajoy here. Yes, studded ratios have started climbing back, but they are still below Q2 of FY ’20 pre-pandemic is what you’re saying, just to share the numbers, it was 41% then and it is 35% now on a retail sale basis. Your base may be slightly different. The reality is that quarter two of FY ’20 also was actually a slightly abnormal quarter where gold prices have shot up dramatically, if you recollect. So, therefore, the share of studded, as our share contribution, was perhaps a little overstated. But having said that, the dynamic is playing out. We have done a lot more work on as you rightly said different markets and particularly South and East and some of the other markets. So there is a trajectory for gold which is taken off at a higher rate and that remains.

And studded, we cannot really give an exact figure, but we are very happy with the growth. So if I look at year-on-year growth, as you said, it’s very good. It’s 25% in retail terms and on FY ’20 also, it’s a 56%, which would probably give us a CAGR of 15%, 18%. So it’s a pretty healthy growth, but gold may be growing at a faster rate. So this is an outcome.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Right. My follow-up question on jewelry was on international business, it has become five times YoY, 400% growth. If I do the math [Technical Issues] coming also around [Technical Issues]. Also, overall jewelry business is coming out from international. So wanted to understand the confidence on the U.S. foray. Secondly, other geographies, if you could give color in terms of international, are they also doing well? And where do you see this number settling over a three-year timeframe, given the kind of success you have seen? [Technical Issues] so is there a risk that this may slow down also in the coming quarters?

Ashok Sonthalia — Chief Financial Officer

Before Venkat comes into give you more perspective, just one clarification I will give you that as the IBD network, international network is expanding, so whatever supply happens from India to fill up the inventory and prepare the inventory for new stores, that is also sitting there, Abneesh, and that is where that 3% is sitting. But the rest of the question, of course, I will ask Venkat to respond to you.

C K Venkataraman — Managing Director

Yeah, Abneesh, we have now many stores in the GCC region. Each store is playing to its potential as well as plan. We are quite gung-ho. Many franchises from India are lining up to partner with us there. We’re also looking at external partners. The U.S. store is yet to open, hopefully, sometime in November because some of the complications relating to permission and all that, these are new to us. But once we get our first store and become clear about what all is required, I think the ramp-up will begin and every store is playing out to plan, diamond ratio, ticket size, customer satisfaction which is net promoter score and even our trunk shows in New Jersey, in Houston, in Dallas, before we actually set up the store are all confirming the potential. So we are pretty gung-ho. And currently we are staying with the indication we had given in the investor meet which is INR2,500 crores by 2025, if I recollect.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Sure. Sir…

C K Venkataraman — Managing Director

By ’25.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Sure. Thanks, sir. That’s useful. My last question is on the EyeCare business. So are you happy with the 4.9% sales growth, because on a much smaller base, obviously, it is going much slower than your other two larger businesses. And when I see the advertising spend, say, around 7%, 8% of the sales, it’s up sharply YoY. I don’t think it’s that relevant given COVID impact in the base quarter. So for the category also, is this the kind of spend, 7%, 8%, in terms of ad spend and 4.9% growth, how do you look at this versus the category?

Saumen Bhaumik — Chief Executive Officer- Eyewear

Quarter two — hi, this is Saumen here, Abneesh. Quarter two, if I break into two parts, July sale was actually pretty good. We had fulfilled our own expectation on the numbers. It is in August and September, more so in the month of September, by the time when the festivities came in, we saw a sluggish demand. And therefore, sale was below our own expectations. So to that extent, growth was lower, but given that people are celebrating Diwali after two disrupted years, I don’t think the specs was top of anybody’s list and therefore we would consider that it’s one of those — if you have got something as a need-based categories advantage in the last year, we probably have seen the other side of it. So that would be my take on the growth side. As far as marketing is concerned, I think we invested more than what we did last year and it’s going to get only higher in the two quarters that we are entering into.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Yeah. I asked that because out of all your three key businesses, the smallest business has the highest margin. So that on such a smaller less size, that kind of, 16.5% EBIT margin seems slightly too on the higher side. So I hope you are not under-investing there?

Saumen Bhaumik — Chief Executive Officer- Eyewear

Yeah, we take your — this and as I said, the second half would see lot more investment in the customer acquisition side as well as the footprint that we have already promised also that will reach INR1,000 crore.

Abneesh Roy — Nuvama Institutional Equities — Analyst

Sure, sir. That’s very helpful. That’s all from my side. Thank you.

Saumen Bhaumik — Chief Executive Officer- Eyewear

Thank you.

Operator

Thank you. The next question is from the line of Jaykumar Doshi from Kotak. Please go ahead.

Jaykumar Doshi — Kotak — Analyst

Yeah. Hi. Thanks for the opportunity. Just a follow-up on the question asked earlier on international. Sir, in this quarter, primary sales for the international business must be around INR225 crores, INR250 crores. Can you call out what will be the secondary sales? The reason I’m asking this is, your guidance of INR2,500 crores indicated about 30 stores by FY ’27 and currently you have four stores and in this quarter primary sales reported is about INR225 crores, so annualized INR950 crores. So just to get a sense whether anything has surprised you positively in terms of revenue throughput per store for the international business versus what you had indicated as well?

C K Venkataraman — Managing Director

Yeah. So like Ashok was clarifying, actually, don’t look at the billing from India into this. I would like to confirm that the stores are in the INR80 crores to INR120 crores average — in the range of INR80 crores to INR120 crores per year. That’s the full year. Wherever it is full-year or run rate wherever it is new, so we are sort of so far so good, on track for that FY ’27 figure that you’re describing. 30 stores, INR2,500 crores should happen. Obviously, the network has to fall in place, but the run rates are consistently happening.

Jaykumar Doshi — Kotak — Analyst

Understood. That’s helpful. Second is, in this quarter, YoY sales growth ex-bullion is 18%, whereas the city sales growth is about 13%. Is this usual or is there any change in store mix or is this perhaps also related to the international studded sales?

Ajoy Chawla — Chief Executive Officer- Jewellery

Yeah. So I’ll take that. I’m Ajoy. The 13%, I would like to first offer a correction for everybody on this call is to be read as 15% because when we look at all channels, Tanishq, Mia, Zoya, e-commerce and institutional, domestic growth actually is 15%. This 13% probably reflects only one channel. And therefore, the like-to-like is likely to be closer to 11%. Having said that, is 15% good, bad, ugly? That’s the question that you seem to ask. We think it was…

Jaykumar Doshi — Kotak — Analyst

No, no, I was — my question was related to the gap between 18% and 13% which looked higher than usual, but if it is 15% and 18%, it’s not very different from what we have seen in the previous call.

Ajoy Chawla — Chief Executive Officer- Jewellery

The rest of it is explained by pipeline filling for which Ashok explained.

Jaykumar Doshi — Kotak — Analyst

Sure. Thank you so much. Final one is, first half your EBIT margin for Jewelry business standalone is 14.4% and you’ve maintained 12% to 13% as your comfort zone or range. Would you like to upward revise that diamond?

Ashok Sonthalia — Chief Financial Officer

So, Jay, Ashok here. The focus on this quarter where we have 15.3% is the jewelry margin and there are about 2% represented by certain items, which are not sustainable. One is of course our custom duty related gains. The other one is also on diamond pricing and this being studded quarter, of course, so as we are at 13.3%, so quarter two being a studded quarter, should have a high margin, but 13.3% to 15.3% is not sustainable. So we are still talking about that band, 12% to 13% in the medium term next 12 to 18 months. That’s the range which we think more comfortable with.

Jaykumar Doshi — Kotak — Analyst

Perfect. A quick one there, have diamond prices come off and are you seeing sort of a change there?

Ajoy Chawla — Chief Executive Officer- Jewellery

Sorry, can you repeat your question, you broke, your voice broke.

Jaykumar Doshi — Kotak — Analyst

Have diamond prices come off from peak and…

Ajoy Chawla — Chief Executive Officer- Jewellery

Okay. So diamond prices are no longer going up like they went up earlier, but we have not seen any reduction. Little bit of softening on the higher karatted solitaire, but on the bulk of them which is more in the small diamonds or the Nelly [Phonetic] diamond as we say, there is no letup. Supply still remains a little constrained.

Jaykumar Doshi — Kotak — Analyst

Thank you so much. Excellent.

Ajoy Chawla — Chief Executive Officer- Jewellery

Have we hit the top? Yeah, perhaps. We don’t expect it to go up further.

Jaykumar Doshi — Kotak — Analyst

Thank you so much. Excellent quarter. Thanks for the answer.

Ajoy Chawla — Chief Executive Officer- Jewellery

Thank you.

Operator

Thank you. The next question is from the line of Avi Mehta from Macquarie. Please go ahead.

Avi Mehta — Macquarie — Analyst

Hi, team. Congratulations on this performance. Just continuing with where Jay left, essentially on the other segments as well, in particular, watches, we had shared that we would look at close to 13% as a more steady. So the first half has been very healthy. So just wanted to get your sense, A, whether there is a one-off over there or should we assume that 13% probably can be breached. And similarly, in the eyewear where you had indicated over 15% kind of expectation, should we also revisit that on the margin side? Thank you.

C K Venkataraman — Managing Director

So there is no one-off in watches, similarly nothing in EyeCare. EyeCare is still we believe mid-teen is the number. Just in the earlier question you heard, there is a need to invest more on marketing and store expansions are happening. So I would still say that mid-teen number is much better to anchor expectation. As far as watches is concerned, they are doing well, growing well. The premium part of the watches and channels are doing well and that is where margin is good. We have always talked that watch is the high operating leverage business. And, yeah — so, but I would say, 13% to 14% seems to me better expectation anchoring rather than thinking about quarter two margin.

Avi Mehta — Macquarie — Analyst

Got it, sir. Got it. And the second part is on the demand side. You had shared last time risks from low-ticket size demand that you saw weakness. There has been some players who have been arguing about pricing-based competition rising. Anything on the demand side that makes you worried?

C K Venkataraman — Managing Director

You’re talking about any particular sector or across?

Avi Mehta — Macquarie — Analyst

Jewelry sir. Sorry, jewelry, in particular.

Ajoy Chawla — Chief Executive Officer- Jewellery

Yeah, on the entry points, in fact, we’ve seen a good healthy pickup on gold in the season and during the quarter two, we saw a good pickup on studded as well because it is a studded activation, but at an overall level, I would still say that in the sub INR50,000 and sub INR1 lakh there is some amount of — let’s say, there is some amount of pressure. The growth on the higher segments is coming more easier, perhaps because different segments of the population have got affected differently. And also, inflation has been there both in gold and diamonds over time. So I think that may also be adding to a little bit of stress in the sub-INR1 lakh segment, at a buyer level.

Avi Mehta — Macquarie — Analyst

Sir, but then, in that, just hoping a little bit more, you did see 17% to 19% growth in the festive period on a like-to-like basis. Would it be fair to say that your expectations would be a double-digit growth in the third quarter, at least, despite the holidays or there have been too many moving parts that would make it difficult to extrapolate that?

Ajoy Chawla — Chief Executive Officer- Jewellery

So you are right. There, I’m thinking moving parts. What we can say for sure is the 36 days that we looked at from first day of Navratra to end of October, compared to a similar period last year in jewelry, it was in that close to 19%, 18.5% to 19%. How that will pan out in the rest of the two months is difficult to say because quarter three was a high base last year. And it was a very good growth over the previous year. And that in turn was a very good growth over the pre-pandemic. So difficult to say. Things are a little volatile.

Avi Mehta — Macquarie — Analyst

And sir, was this growth in the — sorry, what I meant is, was this growth in the next — in the post festive period, is that what how the base was? I’m just trying to understand the base better, so that we are…

Ajoy Chawla — Chief Executive Officer- Jewellery

No, the base was good only, even post festive. And for us, to be able to commit to any kind of growth for quarter three is very difficult to say right now, but what we are — what we have shared with you is how the season has gone, which I think is substantial.

C K Venkataraman — Managing Director

And we are still in the midst of enjoying that 19% growth that we closed two days back, for us to start thinking about the next two months also.

Avi Mehta — Macquarie — Analyst

Fair enough, sir. Fair enough. Thank you very much and congratulations and wish you luck, sir. Thank you.

Ajoy Chawla — Chief Executive Officer- Jewellery

Thank you.

Operator

Thank you. The next question is from the line of Shirish Pardeshi from Centrum Broking. Please go ahead.

Shirish Pardeshi — Centrum Broking — Analyst

Hi, Venkat. Good evening, team. Thanks for the opportunity. I gave a full comment and full marks for this outstanding growth in this quarter and I was quite impressed what you’ve spoken during four, five months before during the analyst meet. I think the margins in the watches and wearable, and in fact, it was heartening to see the turnaround, which is happening in eyewear. The only concern which I have in the both businesses, as Ashok ji mentioned, that there is a strong operating leverage, but I think going back in the past four, five things what we have corrected and now we have got the model right, do you think this business, both the businesses, have a lot of strong momentum in terms of demand, because on a prima facie, it looks like discretionary demand is going to be stronger in the next two quarter. So are you saying that all the past and the learnings we have already implemented and these two businesses will not look back again?

Suparna Mitra — Chief Executive Officer – Watches and Wearables division

Shirish, for the Watches and Wearables division, we are seeing strong growth coming in for quarter one and quarter two. Quarter one of course in a very walk base, but quarter two, except July, August and September was already back in full swing. We are seeing good demand in the higher price brands, higher priced products and in the more premium channels and that continues to kick in very strong. So at this point, that is the guide — that is the wave that we are riding on.

The more economy-oriented price points are not doing as well. So there are some pressures in terms of demand there, but overall being multi-category, which is Watches and Wearables as well as multi-brand, as well as multi-channel, so the interplay between the brands and channels, the way it is panning out right now is that brick-and-mortar has come back strongly, the premium brands are doing well, premium channels are doing well. I think that is probably going to be similar. It is going to be similarly [Technical Issues] couple of quarters. After that, we’ll have to wait and watch on how things pan out.

Saumen Bhaumik — Chief Executive Officer- Eyewear

Hi, this is Saumen. As far as EyeCare business is concerned, Shirish, I think we have got our basics organized and therefore, we do not anticipate any more shocks at least. And on the demand side, I think what I mentioned earlier, after two years, people put the need-based category in the secondary list. I suppose you can’t fault it and that’s our take on the quarter two. As I said, July was very good, August and September is what we expect — actually experienced a bit of a sluggishness and if you were to go back the last seven days, soon after Diwali, as an indicator of what lies ahead, I would say that we should bounce back in the quarter three as well. But whatever said and done, it’s still a need-based category and people would buy as they need. And so, we are positive about the quarter three and time will tell.

Shirish Pardeshi — Centrum Broking — Analyst

I got that. That’s helpful, Suparna and Saumen. But my only worry is that now we have reached to a better margin profile. So I just wanted to hear from you, what is the strategy. Are we going to maintain the margin and look at the growth as a stabilized matter or we go back and say that because we have taken a very aggressive target for expanding stores. So what I need to understand and confirm from you that the model and the business is on the sound footing and whatever new products what we are getting into it and for example, Reflex is one of the thing which has picked up very well. So I think is that the thing which is in our confidence and in our control?

Suparna Mitra — Chief Executive Officer – Watches and Wearables division

Yeah. I agree that the basics are working well. In terms of — you are right that you have taken very aggressive growth as the main focus. Margin, as was explained by Ashok a little earlier, we are looking at 13% to 14% and really investing in the growth of the business for watches and wearables for at least this financial year.

Shirish Pardeshi — Centrum Broking — Analyst

Okay.

Suparna Mitra — Chief Executive Officer – Watches and Wearables division

Similar thing for eyewear also while we did 20 plus percentage [Indecipherable] and we have been consistent on this is, about 15% give or take would be the expectation in terms of margin and the rest of the energy and focus will be in order to sort of expand our…

Shirish Pardeshi — Centrum Broking — Analyst

Okay. My last question is on the Jewelry business. I think sometime when we met in person somewhere we picked up that to be — we were still under-represented into high value-studded jewelry. So is that the thing which we are now focusing and that has really helped us to expand the jewelry sales and contribution or still it is underway?

Ajoy Chawla — Chief Executive Officer- Jewellery

No, it is certainly under-pitched even now because, though, we have focused a lot on it and we have seen a very good jump in high value — high-value studded is back to what it was, let’s say, three years ago, pre-pandemic level as a contribution. So that we have seen disproportionate growth there because we’ve also focused a lot on that. Having said that, the opportunity on that, we are still scratching the surface. I mean, there is a huge opportunity. A lot also depends on how customers are comfortable bringing out their pan cards etc. above a certain level. So that’s a gradual process, but the opportunity is large.

Shirish Pardeshi — Centrum Broking — Analyst

Yeah. I’m only telling this with confidence because having spoken to many people on ground, I think all those big bang wedding which has not happened early part of the year, they all are coming back and this is a very opportune time for us because we are one of the preferred and trusted brand. So we should get that opportunity.

Ajoy Chawla — Chief Executive Officer- Jewellery

Let’s hope so. Yes.

Shirish Pardeshi — Centrum Broking — Analyst

Yeah. Thank you all the best, Venkat, and to your team.

C K Venkataraman — Managing Director

Thank you, Shirish.

Operator

Thank you. The next question is from the line of Percy Panthaki from IIFL. Please go ahead.

Percy Panthaki — IIFL — Analyst

Hi, good evening, sir. My first question is on the jewelry margins. You mentioned that there are certain one-off gains there and one of them was related to diamond pricing. Can you elaborate on that? I did not understand what that refers to.

Ashok Sonthalia — Chief Financial Officer

Okay. So Ashok here. Diamond pricing have a few aspects to it. We have been — as our risk mitigation strategy, when the supply chains were getting disrupted, we started buying ahead of time and is stocking up. So some of — and then diamond price kept on going up for some time. Today, now they are plateauing, but some of those purchase decisions which were part of risk mitigation strategy have worked really well for us and that’s the stock which is giving us good realization and margin. That is what I meant.

Percy Panthaki — IIFL — Analyst

Understood. And couple of quarters earlier our commentary used to be that there is a lot of price competition amongst the organized players. So what is the situation on that aspect currently? Any comments on that, please?

Ajoy Chawla — Chief Executive Officer- Jewellery

Yeah, Percy, I think the price competition continues. In fact, it has intensified and every player whether organized or independent jeweler, or a regional chain is now fighting strong to retain their customers. So the price intensity is high, price competitive intensity.

Percy Panthaki — IIFL — Analyst

Despite that and adjusted for 200 bps gain, we are still posting 13.3% margins despite high competition, so then where is that high competition manifesting? In what way do we see it manifesting because the margins are normal, growth is good. So then is it a really relevant point for us?

Ashok Sonthalia — Chief Financial Officer

Yeah. So two factors beyond the one-offs of 200 bps. One is, this was a studded quarter and typically you should compare it to a studded quarter EBIT margin because the mix changes the situation and therefore annualized, it may be very different. Second piece is that some amount of operating leverage also kicks in when we do a certain quantum of sales. So — but I would give more weightage to the first point that I said.

Percy Panthaki — IIFL — Analyst

Okay, understood. Second question also on Jewelry segment. See, the growth is very, very strong right now on three-year CAGR basis, we are doing 25% plus in jewelry etc. Of course, there is a pricing element on a three-year CAGR also not on a YoY. My question here is that this is not [Technical Issues] yearly, every quarter etc., there can be sort of periods of troughs and peaks, people can postpone, pre-pone etc., etc. So I mean keeping this in mind, are you worried about FY ’24 growth in the sense that people have bought so much jewelry in the last three, four quarters that there might be some amount of satiation reached in the customers and FY ’24 growth could be at risk on a YoY basis? Any thoughts there?

Ashok Sonthalia — Chief Financial Officer

It’s rather early to think about FY ’24 growth, but just to clarify, I don’t know if the 25% you’ve derived based on the primary sales, reported etc. So to help clarify that, for the quarter, it’s a CAGR of around 23% over a three-year period. So pre-pandemic to this recent quarter. And if I look at that, that is a mix of healthy buyer growth. The ticket size growth will be about 6% or so. So the rest of it, about 17% is a CAGR on buyer growth over the three years. What gives us hope and confidence is our continued gain in market share, our continued share of new buyers.

So even for the quarter that went by, we saw our new buyer contribution of 46%. The same figure in quarter one was around 43%, new buyers share. Therefore, it gives us a confidence that more and more we are able to attract new buyers, so whether or not people have satisfied their share of jewelry purchase is very difficult to comment, but the headroom for us to grow on market share itself is huge.

C K Venkataraman — Managing Director

And also, Percy, unlike other expensive discretionary categories, jewelry is also store of value and there have been so many instances where, let’s say, yesterday, a woman came and bought something worth INR2 lakhs and 20 days later, a beautiful collection comes, and this sales person calls her and she again buys INR2 lakhs 20 days later, because this is a store of value in India. Whereas in most other countries, it’s a discretionary product, which is an expenditure. So, in that sense, there is never a satiation limit kind of thing for jewelry. I mean, I’m saying in a broad sense, plus in a INR400,000 crore plus market and a INR34,000 crores there about kind of sale in FY ’23 maybe for the jewelry division, the market share opportunity like Ajoy said and I’m just pinning it with the tens of thousands of crores sitting outside our share to play and innovate and actually grow.

Ashok Sonthalia — Chief Financial Officer

And just to add, Percy, if you look at our GHS and if that indicates any intent of buyer to buy after 10 months, 12 months, we are seeing very healthy enrollment and growth. So I think, yeah, that’s also one of the indicator, which gives us confidence that nothing is much changing in FY ’24 until unless something unusual happens.

Percy Panthaki — IIFL — Analyst

Got it, got it. Very helpful. Thanks and all the best.

Operator

Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead. Mr. Siddhant, please go ahead with your question. Your line is unmuted.

Siddhant Dand — Goodwill — Analyst

Hello, can you hear me?

Operator

Yes, now we can. Go ahead.

Siddhant Dand — Goodwill — Analyst

Yeah, hi. My first question was regarding Caratlane. How’s their balance sheet looking like and they have been growing very well so will they need further equity infusion or are they good to go for now?

C K Venkataraman — Managing Director

So Caratlane is good to go for now and anything we need to do, they have the borrowing capacity and banks are willing to extend them at competitive rate. Being a part of Titan Group helps in that context, because then debt equity ratios are slightly immaterial from their ability to borrow. So at this point of time, I don’t think there is any primary equity infusion is contemplated. They can borrow and fund their growth.

Siddhant Dand — Goodwill — Analyst

Currently do they have any debt on their book?

C K Venkataraman — Managing Director

They have working capital. They have gold metal loan. So they would have about, I think, INR400 crore worth of working capital on their books.

Siddhant Dand — Goodwill — Analyst

Okay. And second question was regarding IRTH, our new launched in the purses division. So, what’s the market size and focus for us over there or it’s too early to comment over there.

Manish Gupta — Chief Executive Officer and Vice President- Fragrances and Fashion Accessories Division

So, hi, this is Manish. So we are estimating the market size to be about INR4,500 crores, of which one-third is organized, growing at a fast clip. So maybe in about five years, it will be about INR3,000 crores and we are having an ambition of targeting INR1,000 crores in INR3,000 crores, organized shares.

Siddhant Dand — Goodwill — Analyst

Okay. INR1,000 in five years?

Manish Gupta — Chief Executive Officer and Vice President- Fragrances and Fashion Accessories Division

That’s right.

Siddhant Dand — Goodwill — Analyst

Okay. And so, currently, I noticed that you’ve been just importing from China. So do we plan an in-house thing for those or how does it go?

Manish Gupta — Chief Executive Officer and Vice President- Fragrances and Fashion Accessories Division

No. So at this point of time, we are still evaluating options, but we are — yes, we are importing from China, but we are building capacity and capability also with some of our lines for made in India for e-commerce purpose, for example, and we will evaluate option in the future, from a vendor base in India.

Siddhant Dand — Goodwill — Analyst

Okay, great. And my last question is regarding Taneira. So it’s still a relatively unknown brand. Of course I think — I noticed that you’ve doubled your marketing [Technical Issues].

C K Venkataraman — Managing Director

Siddhant, I think you’ve gone on mute.

Operator

We’ll move to the next question, which is from the line of Manish Poddar from Motilal Oswal Asset Management. Please go ahead.

Manish Poddar — Motilal Oswal Asset Management — Analyst

Hello? Hello?

C K Venkataraman — Managing Director

Yes.

Manish Gupta — Chief Executive Officer and Vice President- Fragrances and Fashion Accessories Division

Yeah, sir. Thanks for taking the call. Sir primarily two questions. One is the absolute ad spend which we do annually, if you could just help me understand the broader breakup, what would that be for the jewelry segment and for the other segments?

C K Venkataraman — Managing Director

So, no, we will not able to disclose that, Manish, but businesses are mature, have different level of maturity and scale and that is how they take themselves, how much percentage of their revenue is appropriate for them to do and depending on different product launches, collections, etc., all those things then festivities etc. So we will not able to kind of give you business-wise advertisement details here.

Manish Poddar — Motilal Oswal Asset Management — Analyst

So do you look at the spend as an absolute amount or you look at it as a percentage of sales because this number was roughly about INR522 crores in FY ’19 and FY ’22, I understand there were some COVID bit and stuff like that, this summer was about INR475 crores. So I’m just trying to understand, because INR600 crores is a large sum for a company. I’m just trying to understand, do you look at an absolute number or look at it as a percentage band?

C K Venkataraman — Managing Director

I mean, in a mature business, it is a certainly a percentage of sales because it’s a value chain building thing. In new businesses it’s absolute because we need minimum levels of investments to break through.

Manish Poddar — Motilal Oswal Asset Management — Analyst

Okay. And second bit is, probably early days, but one of your peer set or one of your larger peers is rolling out this franchisee model. I know it’s early days, but any sort of on-ground when you interact with your channel partners or any sort of difference in terms of negotiation or — and just your thoughts on this.

C K Venkataraman — Managing Director

So I think none of our channel partner franchisees from the business will be participating in that. I understand where you’re coming from. There were some statements made by this peer — group of analysts as I was given to understand, but none of our franchisee partners is participating in that. And it’s very clear for them, and for us.

Manish Poddar — Motilal Oswal Asset Management — Analyst

Okay, fair enough. That’s really helpful. Thank you.

Operator

Thank you. The next question is from the line of Siddhant Dand from Goodwill. Please go ahead.

Siddhant Dand — Goodwill — Analyst

Yeah, hi. Yeah, I don’t know why I got disconnected, but my question was regarding Taneira. So it remains quite an unknown brand as of now, relatively speaking. So when do we plan an inflection point where we get a brand ambassador, pan-India marketing campaign, things like that?

Ambuj Narayan — Chief Executive Officer – Taneira

Hi, Siddhant. This is Ambuj. And you rightly — so, we are investing in advertising and building brand visibility and building the brand and we are getting — we are seeing some very good results of that. And looking at whether we get an brand ambassador or not, I mean, that’s not a discussion that we are having right now. We are focused on building the footprint across the country. So now we have 31 stores in 14 cities and we were 20 stores by the end of FY ’22. And so, we are satisfied with the progress and of store expansion and sales growth and maybe just watch a few quarters and we will share more with you.

Siddhant Dand — Goodwill — Analyst

So how many stores do we plan to add this and the next year?

Ambuj Narayan — Chief Executive Officer – Taneira

We plan to close this year which is FY ’23 around 50 stores.

Siddhant Dand — Goodwill — Analyst

Okay.

Ambuj Narayan — Chief Executive Officer – Taneira

And next year we would be opening about 30 to 35 stores.

Siddhant Dand — Goodwill — Analyst

Okay. And most of these new stores will be franchisee or owned by us?

Ambuj Narayan — Chief Executive Officer – Taneira

So, as I speak, the franchisee store contribution is already 55%, and continue to be largely franchisee stores.

Siddhant Dand — Goodwill — Analyst

Okay, great. Great to know.

Ambuj Narayan — Chief Executive Officer – Taneira

Thank you.

Operator

Thank you. The next question is from the line of Latika Chopra from J.P. Morgan. Please go ahead.

Latika Chopra — J.P. Morgan — Analyst

Hi. Thanks for the opportunity. So I have a few questions, clarifications on the jewelry segment. First one was, if you could share some color on wedding demand through the quarter or how do you anticipate this to play out over the second half of fiscal? You would have some sense on pre-bookings or pre-orders, if you could share that with us?

Ajoy Chawla — Chief Executive Officer- Jewellery

Wedding demand, Latika, has been muted, if you ask me, both in quarter one and quarter two. Even though there were weddings in quarter one, perhaps because of timing of purchase, people might have bought it earlier, etc. Last year quarter two actually had a good incidence of wedding buyers, perhaps due to uncertainty of what may happen coming out of a COVID situation, etc. This year we have seen that it has gone back to the lower contributions that you usually see in quarter two. So given that both the first two quarters have been muted, our anticipation is that there should be a fairly strong wedding demand. Though, early signs are not yet clear, but sometimes we have to just take a punt and be prepared for growth when it comes and this is something that we’ve seen happen time and again in the last 18 months, 20 months.

So we are actually punting and pitching strongly for wedding demand and we have got enough collections and campaigns and on-the-ground events that we are continuing to do because we see a very good potential for this. Even if something doesn’t come up in a particular quarter, it doesn’t matter. Our share — our market share in this is so low that anything we do now will keep on building a strong pipeline for the future. So my — we are hoping — we are hopeful and optimistic of a very strong second half for weddings. But, yes, early days yet. We will wait and watch how things pan out over the next few months.

Latika Chopra — J.P. Morgan — Analyst

All right. The second bit was on new buyer growth, which has been fairly impressive. I just wanted to check that if you exclude the new stores that you’ve added over the course of the past year or so, how does the new buyer growth look like on a like-to-like basis? Is that tracking your expectations? Is the difference versus the 10% that you saw in this quarter significant or is it on similar type?

Ajoy Chawla — Chief Executive Officer- Jewellery

So we are seeing reasonably healthy like-to-like buyer growth. We have seen good buyer growths over — in terms of new buyers, we are seeing healthy both new as well as total buyer growth, including same store growth. I won’t be able to give you a number, but the percentages are fairly good.

Latika Chopra — J.P. Morgan — Analyst

And are these new customers coming for these high ticket, high purchases or are you seeing more of these coming at the entry level for your existing stores?

Ajoy Chawla — Chief Executive Officer- Jewellery

So, usually new buyers will come in at entry level, but this time around, in quarter two, we have also seen adequate number of new buyers come in at the upper end, especially for the high value studded end as well. And earlier on some — a few months ago, we had also seen some new buyers coming for something like the Polki collections, which we had launched, but, yes, the majority still come in the entry point, but now we have started also seeing some incidents of high-value purchases from new buyers.

Latika Chopra — J.P. Morgan — Analyst

The other bit which I wanted more clarity was, you alluded to the fact that price competition in the category has intensified, but have you also participated in this with more competitive pricing? So has your price premium versus the other organized players increased or it is stable because you have decided to match it?

Ajoy Chawla — Chief Executive Officer- Jewellery

It’s a complex question to answer because pricing is — in gold, it’s a function on gold rate as well as making charge. So we have tried to balance it out between the two. Though, it’s difficult to argue whether it’s on an absolute level gone up or low. Very difficult to answer. We have become more competitive on gold rates, but we’re managing product mix, we are managing making charge and as a combination of that. In studded, I think our premiums have gone a little higher because we have kind of implemented price increases as and when we’ve seen the costs going up. I’m not sure if the rest of the market has done that in that manner. So maybe on a like-to-like basis, some premiums have gone up on the studded side.

Latika Chopra — J.P. Morgan — Analyst

All right. And maybe the last bit was on store expansion. Our forecast for 14 stores added for Tanishq and about 19, 20 stores for Caratlane, what is the number largely you expect for the full year FY ’23?

Ajoy Chawla — Chief Executive Officer- Jewellery

Okay. So I’ll give a clarity. 14 stores for Tanishq, but what we don’t report here is also the significant expansion in existing stores. So almost another level stores we have expanded significantly by 40%, 50%. Their area has gone up. So each of those expanded portion is like a store, on an average of 2,600 square feet we’ve added per expansion. So, technically, you can say Tanishq has added almost close to 25 or so. Mia has added about 30 odd stores till October, maybe 29 I think or some such number was there. For the quarter, it’s there.

For the quarter, it’s 16, but Mia, if I add, we had a lot of openings in October. So I’m giving you an updated view. And Caratlane also we have added quite a few. We added I think 20 in the first half, 14 in quarter two. But thereafter, we’ve added quite a few more actually. We’ve added another 13 or 14 stores in Caratlane. So overall, each of our brands is on a fairly aggressive expansion spree because the opportunity is there in new catchments as well as new towns. So I think, I don’t know, guidance, Tanishq will probably see totally new stores of 30, 35, but we may also land up expanding about 20 odd stores by the end of the year. Mia will probably see a 60, 70 store additions, and Caratlane also is gunning for an aggressive similar number of stores.

Latika Chopra — J.P. Morgan — Analyst

Great. Thank you so much, Ajoy, and wish you the best.

Ajoy Chawla — Chief Executive Officer- Jewellery

Thank you.

Operator

Thank you. The next question is from the line of Vishal Gutka from PhillipCapital. Please go ahead.

Vishal Gutka — PhillipCapital — Analyst

Yeah. Hi, sir. Congrats on a good performance. Sir, I have two questions. First question is that India has signed agreement with UAE for getting gold loan concessional duty rate, 1% concession they give on import duty. With first tranche being restricted to 200 tonnes, so are we applying to get gold under this scheme? Any sense on that?

Ajoy Chawla — Chief Executive Officer- Jewellery

Yeah. Yes, Vishal. We have done so in the first instalment up for the first quarter when it started, we got 540 kgs license and we are now, in fact, in the process of utilizing that because that was extended to November. In the second, we’ve actually been given significantly larger. We have put an application, so we’ve got again a significant quantity on that.

C K Venkataraman — Managing Director

Just to Ajoy’s, this 200 tonne which you mentioned, it is over five years like it starts from 120 tonne and then it goes up to 200 tonne in the fifth year and then there are quarterly allocations which are happening. So first allocation came in quarter two, but it came very late, so import time has been provided till November end, and then the quarter three reference which Ajoy spoke about, we have got some higher allocations based on our capacity, etc. So it’s a quarter-to-quarter thing, but we are very much participating in that activity.

Vishal Gutka — PhillipCapital — Analyst

Got it. So, indirectly it’s a win-win for organized players because larger organized players will be able to generally get this gold at a concessional rate that 1% concession is there. So overall beneficial for overall organized players because smaller players will find it difficult to procure under this scheme?

Ajoy Chawla — Chief Executive Officer- Jewellery

Many jewelry vendors are also fairly large, so they have also applied and that benefit can translate to other players as well, so I wouldn’t make that assumption entirely.

Vishal Gutka — PhillipCapital — Analyst

Got it, got it. And sir, second question is on, any sense of benefit coming on hallmarking front? Have you seen that benefit coming to us because now almost more than nine months, 10 months that’s since hallmarking become mandatory in India. So any sense if you can provide on hallmarking front, it will be helpful.

Ajoy Chawla — Chief Executive Officer- Jewellery

Difficult to estimate whether we have got any direct benefit by virtue of hallmarking specifically. Yes. The broader theme of migration of customers from unorganized to organized continues to be a secular trend, but frankly, on hallmarking, I can’t really say. Whether we are getting any specific, it’s very difficult to arrive at that view.

Vishal Gutka — PhillipCapital — Analyst

Okay, thank you so much and wishing you all the best for the future.

Operator

Thank you. The next question is from the line of Anush Mokashi from Yadnya Academy Private Limited. Please go ahead.

Anush Mokashi — Yadnya Academy Private Limited — Analyst

Yeah, thank you for the opportunity. My question is about this Zoya segment. So like what is the growth we are looking in this segment on quarter-on-quarter basis or year-on-year basis and some plans about expansion if you can share some guidance on this?

Ajoy Chawla — Chief Executive Officer- Jewellery

Yeah. So just to give you a flavor, Zoya, a few years ago, three years back, if I’m not mistaken, was around INR66 crores, then it went to some INR70 crores, INR80 crores. Last year, we did about INR135 crores. This is all consumer price, so not NSV and this year we have completed that INR135 crores of last year in the first seven months. So we are looking at anything between INR230 crores to INR250 crores. And given the fact the base being so small and a few stores that we have and a very small customer base right now out of the very significant HNI population that’s growing, I think the opportunity is very large.

And on that very small base, you can take any growth you want. It won’t materially alter the jewelry division or the Company’s top line, but for that brand, yes, can we see it to be a INR500 crore, INR700 crore business over the next few years? Surely. Can it go beyond that? Perhaps, but don’t have a view on it right now.

Anush Mokashi — Yadnya Academy Private Limited — Analyst

Okay. And my second question was about region-wise contribution in the jewelry segment revenue mix. So how much is South region contributing, if you can share that data?

Ajoy Chawla — Chief Executive Officer- Jewellery

South region. Yeah, we will probably give it to you later. I don’t have the exact fix, but it’s beginning to get to its fair share among the four regions. I think by the end of this year, probably, it may be a fourth or maybe slightly less than a fourth, but I don’t have the exact fix now.

Anush Mokashi — Yadnya Academy Private Limited — Analyst

Okay, okay, sure. Thank you. Thank you so much, sir. That’s it from my side. Thank you so much.

Operator

Thank you. The next question is from the line of Vijay Gala from Gala Consultancy. Please go ahead.

Vijay Gala — Gala Consultancy — Analyst

Hello?

C K Venkataraman — Managing Director

Yes, hello.

Vijay Gala — Gala Consultancy — Analyst

Hello? Can you hear my voice? Hello?

C K Venkataraman — Managing Director

Yeah, we can hear you.

Vijay Gala — Gala Consultancy — Analyst

Sir, regarding — everything asked from the jewelry point of view where — congratulations first for the good result. Tata is a brand name and we hope so that. I think on the one point –one of the point of view subsidiary Titan Engineering & Automation Limited, so defense portfolio is there with you. How much order position is there in aerospace and automation point of view I’m asking?

C K Venkataraman — Managing Director

Could you just repeat the last couple of sentences?

Vijay Gala — Gala Consultancy — Analyst

We have the one subsidiary Titan Engineering & Automation Limited.

C K Venkataraman — Managing Director

Yeah.

Vijay Gala — Gala Consultancy — Analyst

So what is the aerospace division you are doing and what is order position?

C K Venkataraman — Managing Director

No, we are not in a position to share the order position.

Vijay Gala — Gala Consultancy — Analyst

But doing very good, no?

Ashok Sonthalia — Chief Financial Officer

That numbers are there for you to see. I think they have done well in quarter two. They have two businesses. One is the manufacturing services we call where aerospace, defense and some of the newer tech area equipment, they are supplying and the other one is automation solutions services. Both businesses are quarter two, particularly they have done well and they are expected to continue to do well while the end customer environment is not so certain at this point of time, they serve to U.S. and European customers as well as Indian customers. So it is more linked to cyclicality of economy, this business, but currently they are doing well. Good order inquiry, good order bookings. So, yeah, all okay.

Vijay Gala — Gala Consultancy — Analyst

Okay. Thank you, sir. What about that? That is continuous division will be going on concern or what will be otherwise will be demerged in another company?

Ashok Sonthalia — Chief Financial Officer

This is too premature to start discussing anything on that.

Vijay Gala — Gala Consultancy — Analyst

Okay, sir. Thank you. Congratulation on future. Tata is a great brand. Thank you, sir.

C K Venkataraman — Managing Director

Thank you very much.

Ashok Sonthalia — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Sheela Rathi from Morgan Stanley. Please go ahead.

Sheela Rathi — Morgan Stanley — Analyst

Thank you for the opportunity. I just had one question. When I just draw the conclusions from what you have said, the point you made was that the entry-level demand was weak, wedding demand was weak for second quarter in a row, and the new buyers are coming at the upper end. Of course, this was an activation quarter where the results have been phenomenal, but going ahead, is there something we are worried about, especially with respect to weakness in wedding demand and as well as the entry level demand?

Ajoy Chawla — Chief Executive Officer- Jewellery

Yeah, hi. I’ll answer this. So first of all, when I say weak, it is relatively weaker. It is still healthy growth, but the growth in the higher end is better. And therefore I think in the relative terms, perhaps I didn’t clarify, growth is coming easier upper, but it is coming, but it’s not as easy and free flowing as it is in the upper end. Secondly, even for new buyers, I would like to moderate that comment and say that a few new buyers are now coming at the higher entry price point, but the bulk and the majority still come at the entry-level, sub INR1 lakh.

Thirdly growth of new vis-a-vis growth of let’s say repeat customers continues to be well balanced. And in fact, both in activation period of quarter two as well as in the festive season, we have seen new buyer growth outstripping total buyer growth. So, therefore, we are not worried about it at all. And whatever little bit of pressure is there at the entry point, we are anyway addressing it in many different ways because the opportunity continues to be large. So, nothing to be worried about.

Sheela Rathi — Morgan Stanley — Analyst

Understood. And just a follow-up here. Is there a divergence with respect to the regions? I mean, are we seeing stronger growth coming from Western region and weakness coming from the Southern region? Is there any divergence there?

Ajoy Chawla — Chief Executive Officer- Jewellery

Not really. See, when you look at it point-to-point, year-to-year, you will always find some ups and downs. When you look at it over a three-year horizon, South continues to grow for us because our penetration and our own market share, there is much lower. So the — and the headroom is much higher. Certain bigger cities — let’s say, last two years, metros went through a tough time because of COVID. So it may look like, oh, in this quarter, metros have done better and Tier 2 might have done slightly lesser, but both have grown. And to draw some long-term conclusions on that, I would be wary off. So overall I would say certain pockets, yes, there have been — which have been a little bit under lower growth, some parts of the East and some parts of Eastern UP, they have been affected by floods, etc. But really you can’t draw large conclusion based on that and therefore we are powering and chasing growth on all the fronts and we see that some of these ups and downs are like noise in a volatility situation. But secularly, I would say that there is no clear trend emerging.

Sheela Rathi — Morgan Stanley — Analyst

Understood. Thank you so much, Ajoy. That’s it from me.

Ajoy Chawla — Chief Executive Officer- Jewellery

Thanks.

Operator

Thank you. The next question is from the — participant has left the queue. [Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Venkataraman for closing comments.

C K Venkataraman — Managing Director

Thank you very much everyone, for all the piercing questions as always, and the encouragement given to the Company and all of us. Thank you and see you soon.

Operator

[Operator Closing Remarks]