Titan Company Ltd (TITAN) Q4 FY23 Earnings Concall Transcript

Titan Company Ltd (NSE:TITAN) Q4 FY23 Earnings Concall dated May. 03, 2023.

Corporate Participants:

C K Venkataraman — Managing Director

Ajoy Chawla — Chief Executive Officer, Jewellery

Suparna Mitra — Chief Executive Officer, Watches and Wearables division

Ashok Sonthalia — Chief Financial Officer

Saumen Bhaumik — Chief Executive Officer, Eyewear

Analysts:

Avi Mehta — Macquarie — Analyst

Nitin Jain — Fairview Investment Advisory — Analyst

Percy Panthaki — IIFL — Analyst

Jay Doshi — Kotak Securities — Analyst

Manoj Manon — ICICI Securities — Analyst

Tejas Shah — Spark Capital — Analyst

Amit Sachdeva — HSBC — Analyst

Latika Chopra — JPMorgan — Analyst

Chirag Shah — CLSA — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Titan Company Limited Q4 FY ’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

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

C K Venkataraman — Managing Director

Thank you very much and good evening to everyone on the call. It was a very satisfying quarter Q4 FY ’23. We passed many milestones through the quarter. INR30,000 crore milestone for jewelry, INR5,000 crore for watches and wearables, INR1,000 crores for eyecare, INR500 crores for international business, INR200 crores for the business. All-in-all a very-very satisfying quarter. All the mature businesses continuing to grow at a very satisfactory and ambitious rate. All the emerging businesses growing at a scorching pace, including the women’s bags and the Taneira business establishing themselves strongly.

Internationally, becoming very prominent in NRI PIO space, in the GCC and in the United States. all-in-all a fantastic quarter and I would like to thank all the employees of Titan Company, team Carat Lane and all other subsidiaries. As well as all our partners in the manufacturing side, their employees. All the partners in the retail and distribution side and their employees. And all of the partners who work in some way or the other in support of Titan Company and its subsidiaries for continuing to deliver exceptional standards in customer experience innovation, operational excellence and through all that to deliver great sales and financial growth — profit growth.

And, of course, my thanks to all of you on the call. As always challenging us, wishing us well, encouraging us and asking the sharp questions that you ask going the time. So I am — my part in this part of the call is concluding and we can move into the Q&A.

Questions and Answers:

Operator

[Operator Instructions] First question is from the line of Avi Mehta from Macquarie. Please go ahead.

Avi Mehta — Macquarie — Analyst

Am I audible?

C K Venkataraman — Managing Director

Yes, Avi.

Avi Mehta — Macquarie — Analyst

Yes. Hi, sir. Sir, my first question was on the jewelry side has the moderation seen any customer demand in March? Has that kind of — because of the sharp gold price hikes has that wained off in April? And could you give us some sense on how the growth trends are behaving?

Ajoy Chawla — Chief Executive Officer, Jewellery

Yes, hi, Avi. Ajoy here. You’re right, March saw a softening and it continued into the first half of April. I think gold price volatility has usually kept many people on the fence. But as soon as the festive period started and the offer started for Akshaya Tritiya, we saw a lot of people come into the market. And thereafter, it was very good. So I think the volatility piece in demand linked to gold price volatility continues. So when the festive season and wedding season and let’s say there’s opportunities and occasions to buy it’s very good. And then if there is some nervousness, it tends to fall. But overall, I would say, it was a very good Akshaya Tritiya for us and it’s in-line with what we think — what our plans are for the year.

Avi Mehta — Macquarie — Analyst

And those would be, sir — would you be able to share some plans for the year. What are your thoughts any numbers over there?

Ajoy Chawla — Chief Executive Officer, Jewellery

No, I don’t think we can share numbers, but you guys are well aware of our longer-term plan and in some ways, our annual plans are pegged to the long-term plan that we had set out during the Investor Day. And in that context, therefore, we are online with that.

Avi Mehta — Macquarie — Analyst

Perfect. That’s perfect. The other bit, sir, on there is this change in the franchisee rates, which was carried out during the quarter. If you could give us some sense on what exactly was it? And give us an idea of what is the impact it should kind of expect on margins and growth?

Ajoy Chawla — Chief Executive Officer, Jewellery

Actually, this is a very operational matter, terms of trade between principal and the franchisees are typically to ensure healthy returns and good profitability for the franchisee, just so that all of us are clear when it comes to the jewelry and Tanishq franchisee, we have best in class returns, and in fact, people make exceptionally good profits and returns on investment. And so much so that most of the franchisees want the second, third, fourth, fifth store, and we are unable to fulfill their desires because we have — even they’re happy to take the next store up 100 kilometers away or 200 kilometers away in another city.

C K Venkataraman — Managing Director

10,000 kilometers away.

Ajoy Chawla — Chief Executive Officer, Jewellery

Yes, even internationally.

C K Venkataraman — Managing Director

20,000 kilometers.

Ajoy Chawla — Chief Executive Officer, Jewellery

Yeah. So we’ve actually had huge requests from all franchisee community to give higher things. So just to share with you, best-in-class returns across all forms of retail that might be there, and I won’t be surprised if it’s across the world. This old structure was about 15 years old, and the nature, scale, product mix of the business has significantly changed in the last 15 years. The slabs have changed, everything has changed. So we need to — we needed to align and innovate, update it.

And the other important piece is, the product mix, which is profitable, which works well for the company as well as works well for the franchisees, needs to be aligned in the same day so that all of us are firing in the same direction. And that is something which we wanted to structurally change. We also wanted to introduce new categories of complexities of products because we are seeing that opportunity to — in a way gain in different complexities of gold. So many structural changes all driven towards aligning growth and profitable growth for both the associate and us.

Also during the last couple of years, the division has invested significantly in both inventory as well as gold rates to deliver terrific growth. And this investment has come significantly from the organization as well. So in a way, this was a kind of a restructuring, absolutely, very limited impact in terms of profitability to us. In fact, many franchises have gained and some may have lost, but actually, we don’t know because the mix they will sell in the current year or in the next year will determine the exact gains or losses. And in our estimate, many of them will actually gain. And there is no significant impact on the company in terms of sheer margins or whatever. So nothing much. It’s an operational piece actually.

Avi Mehta — Macquarie — Analyst

So if I make summarize or paraphrase, the way it is, this is to modify the incentives to move product mix upwards and should not result in any impact to the franchisee profitability. Would that be a fair statement to make, sir?

Ajoy Chawla — Chief Executive Officer, Jewellery

It’s difficult to conclude because we have some 200-odd franchisees in the system. So some may lose depending on what makes they sell and many others may gain. Okay. So it’s very difficult to conclude it in one line, and in any case, we’ve been a very fair partner, so even if somebody actually loses, we will invest a lot more in ensuring growth. So that’s not something we worry about.

Avi Mehta — Macquarie — Analyst

Got it, sir. Got it, sir. And so with your permission, just one last bit on the watch side, we saw very strong growth, but margins were below the range that we had kind of were looking at of 13% to 14%. Would you revisit this target or could you kind of share us how do you see this internally?

Suparna Mitra — Chief Executive Officer, Watches and Wearables division

So, the strong revenue growth was also because of a lot of investments, etc. And there were some actuarial calculations which came and hit our overall profit, but we are quite satisfied with the margin and it is in line with what I have indicated in previous investor calls also that margin for the watches business in this year, for example, is likely to be in the 12% to 13%. So it is in that range.

Avi Mehta — Macquarie — Analyst

Okay, ma’am. Okay, that’s all from my side. Thank you very much, sir. Wish you luck.

Operator

Thank you. The next question is from the line of Nitin Jain from Fairview Investment. Please go ahead.

Nitin Jain — Fairview Investment Advisory — Analyst

Hello? Yeah, am I audible?

C K Venkataraman — Managing Director

Yes, Nitin.

Nitin Jain — Fairview Investment Advisory — Analyst

So thank you for the opportunity. My first question is on the jewelry business. So some of your national competitors, like Kalyan Malabar, they have moved to one nation, one gold price policy. So, does that lead to any change in your — in the gold rate premium that Tanishq has been charging historically? And what would be the impact on EBIT margins going forward? And my next question is on the dividend payout. So, while the quantum has increased this year, the payout ratio has actually declined. So any comments on that, please? Thank you.

Ajoy Chawla — Chief Executive Officer, Jewellery

So, on the one nation, one gold rate, actually this is now 16 month-old story. Malabar had started it around Diwali the year before last in FY ’22. And thereafter many players, local players, maybe not one, but lowest gold rate offering that is actually for the customer, it’s been the lowest gold rate offering is that is more relevant. The one India, one gold rate is more, let’s say broader statement. Kalyan also responded in many markets in that way and has eventually figured out that he wants to stick to one because the Kerala Jewelers Association had some kind of conversation and for some reason their gold rates were much lower than the rest of the market.

We have chosen not to go down that path. We have instead looked at what is relevant competitors in different markets. Historically, we have seen there’s a wide dispersion of gold rates across the country. Local jewelry associations actually declare the gold rate and everybody plays according to that. And therefore, we have chosen to optimize along those routes. Now, some of those are getting rationalized over a period of time, and we are in a way ensuring that we remain competitive market-by-market. So consequently, as mentioned in previous investor calls, we have therefore seen a gradual reduction in the gold rate markup side of the gold jewelry margin, but we’ve been managing it through product mix, through making charges and through other initiatives to try and ensure that we still continue to live up to good GCs and therefore good EBIT margins that process is on.

So I won’t be able to come in much on GCs further. We have already taken fair amounts of corrections in the past and yet been able to deliver the EBIT margin that we’ve been committing to, and we still stay by that, that irrespective of the competitive intensity, we are expecting to sustain our EBIT margins. We are not too worried about any further dilution, even if there is here and there mix related and product engineering related and many other operating leverage-related initiatives are in place to ensure that we continue to deliver healthy margins in this business.

Ashok Sonthalia — Chief Financial Officer

Yes, Nitin, Ashok here. Our dividend policy suggests that we will maintain a dividend payout between a band of 25% to 40%, and this year dividend declaration, while it is substantially increased over the last two years, is about 26.6% of the profit margin. And Board consider every aspect of our requirement in growth and what kind of investment plans we have and what is the cash balance on the balance sheet, etc., and then accordingly decide, a number which is within the band. So, it’s a decision keeping all these consideration in mind.

Nitin Jain — Fairview Investment Advisory — Analyst

Okay. Thank you. That’s all from my friend.

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, team. My question is for Ajoy. So Ajoy, congrats this quarter you’ve done a 19% same-store sales growth in the jewelry division. My question is that a large part of this 19% is coming because there is a big inflation in the gold price. If let’s say the gold price going ahead were to stabilize and at some point of time the Y-o-Y gold price inflation, if it comes close to zero, in that kind of scenario, what would be a sort of normal or stereotypical target SSSG that you would sort of tend to have flat goal place scenario? That’s my first question.

Ajoy Chawla — Chief Executive Officer, Jewellery

Yes. Hi, Percy. We’ve had this conversation couple of times once in person and couple of times on the call. So we would still like to suggest that for us volume is not linked to grammage and therefore gold price inflation is equal — the way we look at it is number of customers and the average ticket size just because there’s a 19% like-to-like growth. And even if there was technically a very high gold price-related inflation, it doesn’t translate it exactly that way. Just to give you a sense, if I look at 19% same-store growth in value, we have had an overall buyer growth of around close to 16%. On same-store that number would be closer to maybe 10%, 11%. Okay.

Typically if gold price was not to inflate, there’s nothing to say that we can’t continue to gain number of customers because we continue to gain a significant number of new customers. Even in quarter four, our new to repeat is 50-50. So we’ve grown pretty equally in both segments. So gold price inflation may be helping in ticket size, but it’s not necessarily so, people also enrich in terms of product mix. So as long as we are continuing to get more customers and there’s customer growth for every store, especially same-store growth. And then there’s a ticket size increase, which may happen due to product mix enrichment, not just only because of grammage, but the kind of products they buy studded ratios and more complex products, etc. We are not worried about this. Therefore, same-store growth, it is our endeavor, we should continue to deliver double-digit same-store growth. That’s how every store and business can really prosper. And we are targeting certainly much more than this double-digit or whatever we are targeting good double-digit growth going forward for same stores. So, it’s not related to the gold price for us. just to clarify.

Percy Panthaki — IIFL — Analyst

Got it, got it, Ajoy. My next question is on the retail area addition in jewelry, the square feet what percentage of addition are you planning annually for FY ’24 and FY ’25?

Ajoy Chawla — Chief Executive Officer, Jewellery

Okay. I don’t have a square footage number, but I can just share with you that we have added, if I just look at quarter four, we’ve added 11 new stores, but we have also significantly expanded existing 10 stores. And when I say significant expansion of these 10 stores, it is either a 25%, 30% increase in the retail area, or on an absolute level at least a 1,500 to 2,000 square feet. So, effectively, if I look at both these figures together, we seem to have added a lot more square footage than would be evident from sheer number of stores. We have quite a few stores even in the current year where we are looking at significant retail expansion. I think another 15, 20 stores will see significant retail expansion. In addition to that, we expect to certainly add 40 plus new stores. The opportunity is not the limit for us here, our ability to execute, find the right places, ensuring their build to suit and everything is working well.

So the opportunity is much larger than that. But typically we have set out around 40 stores, the opportunity space over the next two years, if you ask me could be 100 new stores as well. But a lot depends on how much we are able to execute. Historically, we seem to have been able to execute 30 to 40 in a year, but in addition to that, we will do this retail expansion program as well, which we’ve commenced strongly from the last 12 months. I hope that answers, I don’t have a square footage percentage to give you.

Percy Panthaki — IIFL — Analyst

That’s very useful, Ajoy. Last question on eyewear. So margin, even if I adjust for that INR8 crore one-time margins are sort of in the mid-single-digits. I thought we had this model now very well established where we would be doing a low to mid-teens kind of EBITDA margin in eyewear. So what really went wrong this quarter?

Saumen Bhaumik — Chief Executive Officer, Eyewear

Hi, this is Saumen. Actually, if you look at the last six, seven quarters, you would’ve realized that what we said mid-teens, I think we have held onto this more or less exception was last year quarter four, and in any way similar case is this year, quarter four. Just to spend a minute on the quarter four, we had a very good month of January, in fact, the second best in our history, but second half of quarter four slowed down and it in a way sort of affected sale. Few other things also happened simultaneously. We needed to clean up a few things. For example, in the last two, three years, many of our franchise store accumulated stock, especially lenses, which are kind of supposed to be used, but discolored we had to take back.

Then in our distribution system also, we needed to make sure that there isn’t any unnecessary stockpile, because we were also making a change in our product portfolio. So we needed to give a month gap really to sort of down stock a bit so that new portfolio of product can go to the trade channel with a restructured margin so that we actually have a greater level of penetration. All that has caused a sale for compression to a level of 70% of what we have budgeted. So that’s one side of the story. And other side is, GCC actually held, on the cost front, there are a few annualized figures came in, whether it is employee related actuarial that mentioned once. We also opened I think 18, 19 company stores, which were not budgeted earlier.

So as a result, both on the rent front in quarter two and mostly in quarter three and quarter four as a result both in rent as well as employee cost, you would’ve seen the impact of it.Obviously, we’ll gain it from this addition significantly in the coming year, both in the margin side and otherwise. And apart from that, we had to shut down about 22 stores in quarter four [Technical Issues] not really working out and few stores that happen in the end of quarter three.

All put together, there are few one-time exceptional cost that has come and this apart we also had to — we decided that it is appropriate to sort of share some of our will that we have created with our franchising who lived with us during the most difficult times of last year. That is the INR8 crore that we have spent. So all put together there is a one-time impacting the PBT, but if we are just for all these things, and if I look at what we did to make FY ’24 to have a great clean beginning, I think thankfully we are seeing it in the month of April. We had our best month in our history.

Percy Panthaki — IIFL — Analyst

Okay. Okay. That’s all from me. Thanks and all the best.

Operator

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

Jay Doshi — Kotak Securities — Analyst

Yes. Hi. Thanks for the opportunity. My first question is on margins, even adjusted for one-off that you had in the first half of this year, you’ve ended the year with a little over 13% jewelry EBIT margin for standalone business. And whatever I gathered from the earlier response is that gold rate is not a concern anymore. So I assume that there is no further sort of margin pressure. Given that backdrop, are you confident of maintaining margins at similar levels in FY ’24, assuming the growth shapes up on your expected lines?

Ajoy Chawla — Chief Executive Officer, Jewellery

Hi, Jay. See, first of all, I think these margins vary by quarter based on the mix. So quarter four…

Jay Doshi — Kotak Securities — Analyst

I was referring to fully year, sorry, my bad. I was referring to FY ’24 versus FY ’23.

Ajoy Chawla — Chief Executive Officer, Jewellery

You are referring to full-year FY ’23.

Jay Doshi — Kotak Securities — Analyst

Yes, sir.

Ajoy Chawla — Chief Executive Officer, Jewellery

Right. So — and that won’t be there next year. Also there is a certain element of stock gains on account of diamond inventory, which is also sitting in this. So this 13.7% has the benefit of almost about a percentage between these two elements, both of which we don’t anticipate to see in the next year. So in a way, corrected or normalized, which adjusted, whichever way you say, it’ll come between that 12.5% to 13%, which we’ve been talking about. And we expect to sustain these given competitive intensity, given the growth opportunities in different categories and markets in which we are growing.

Jay Doshi — Kotak Securities — Analyst

That’s helpful, thank you. And one more, just a follow-up on your earlier comment. So, the demand trends over the past few days, does it give you confidence that the softness that you had called out in the quarter and business update is now behind us and hopefully that this trajectory should — healthy growth should continue going forward?

Ajoy Chawla — Chief Executive Officer, Jewellery

Yes, I mean, if I think about it, volatility is here to stay. We’ve seen it now over the last three or four quarters. It’s almost, when the going is good, it’s really good, and then when there is no reason people kind of hold back, if gold prices spike, there is some degree of nervousness, etc. But we’ve kind of learned to play that game and we think we are broadly on course for what we see. It’s difficult to give you an accurate view because, as I said, first-half of April was dull, but second half was fantastic. May and June promises to be good because there’s a lot of good wedding dates. So, yes, we are hopeful that we should be able to deliver to the plans we’ve laid out volatility notwithstanding.

Jay Doshi — Kotak Securities — Analyst

Understood. Thank you so much and wish you the very best for FY ’24.

Ajoy Chawla — Chief Executive Officer, Jewellery

Thank you.

Operator

Thank you. The next question is from the line of Manoj Manon from ICICI Securities. Please go ahead.

Manoj Manon — ICICI Securities — Analyst

Hi, team. Some of the questions which I have part of — I got some part answers, so allow me to repeat actually. Ajoy, the first thing is on the 15 odd percent buyer growth, 10% customer growth at the same-store level could you help us have some time series understanding of these numbers, let’s say, over the last decade?

Ajoy Chawla — Chief Executive Officer, Jewellery

Time series over the last decade?

Manoj Manon — ICICI Securities — Analyst

Yes, what I mean is, this 10% would be — would you call it in the top quartile, bottom quartile, mid quartile in terms of your own historical customer growth numbers?

Ashok Sonthalia — Chief Financial Officer

Actually, on the call Manoj, I don’t have that for the last decade like that. But we can come — we’ll come back to you on that.

Ajoy Chawla — Chief Executive Officer, Jewellery

Yeah. And also Manoj, the other piece is this is an average figure across so many stores. Okay?

Manoj Manon — ICICI Securities — Analyst

Right, right.

Ajoy Chawla — Chief Executive Officer, Jewellery

If you look at it, newer stores will have much better same-store growth until they stabilize. But if you ask me a 10% customer growth for a mature store, I would be very happy. I mean, whether top quartile or no, I don’t know which decile, which quartile, I don’t know. But generally, we’ll be happy, but you made us think, we’ll think about the data and come back.

Manoj Manon — ICICI Securities — Analyst

Fair enough. Sir, the only reason I ask because based on historical understanding, let’s say, your retention power is very, very high of the customer. So, actually means that when you have recruited new consumer of this magnitude, would it be fair to say that the customer — so, if it actually affects my DC very positively, and we will have a conversation separately. Sir secondly, on the gold price premium bit, we also done some primary research on it. And look, I think, is it fair to say that with all the discussions about, let’s say, you having a nuanced approach, competition playing a price card, etc., is it fair to say that there is already an equilibrium, which exist because end of the day, if your 20% growth is with this, let’s say, quote-unquote headwind?

Ajoy Chawla — Chief Executive Officer, Jewellery

Yes, I mean, you could say that because our growth — the competitive intensity on gold rate and pricing has been pretty intense over the last 15 to 18 months. So to some extent you can say there ii equilibrium whether it’ll intensify further, don’t know, can’t say. By and large, no. And just wanted to clarify on the previous one. When we talk about customer growth or buyer growth of 10%, it is not — all are not new customers. Many of them will be repeat and many will be new. It may — the ratio will vary. So it’s just to…

C K Venkataraman — Managing Director

We’re not acquiring 10% on the total base. On the new base, we may be acquiring 10% more.

Ajoy Chawla — Chief Executive Officer, Jewellery

Yes. I mean, new-to-repeat growths are the same in the sense we are still getting 50% of our contribution on the overall chain from new customers and 50% from repeat. That percentage will vary based on older store and newer store and all that is what Venkat clarifying.

Manoj Manon — ICICI Securities — Analyst

Fair enough. Secondly, on the recycled gold of the gold exchanges has been stable at around 40-odd percent for a while. And I do recall you are dialed up or you use this to dial-up, let’s say, to counter the customer, middle customer clearly pass to low range [Phonetic] product, etc. The context to what I’m trying to understand is do you think directly this should go to 50 over the next few years or do you think it can — which direction I should take it stable, up, down?

Ajoy Chawla — Chief Executive Officer, Jewellery

So it’s been pretty stable for us around — between 30% to 33% has been the contribution of gold exchange, which is non-Tanishq gold and about 9% to 10% is the Tanishq exchanged. We are actually seeing a correlation between exchange gold and wedding. And we are trying to use that lever to further increase the excitement around wedding. Therefore, we think it should go up, but whether it is going up dramatically, we don’t know. But certainly we think it’ll be greater.

C K Venkataraman — Managing Director

The more we are able to increase the share of the gold exchange program, the GEP actually it’ll push the growth of the brand, because the size of the exchange, the extent of upselling that happens with, when people discover the value of Tanishq exchange itself as well as the products and all that, the upsell potential is also high. So there is a good correlation between the increase in the share of exchange and the growth of the brand in total. So we will continue to push that, but it’s a very complex final thing to actually happen. And therefore, the result only when we actually see it.

Manoj Manon — ICICI Securities — Analyst

Understood, sir. Not only this I ask because at this rate of 40%, because there is a cost aspect also there because you’re buying and selling gold at the same price versus selling on cash, which will help you get that extra bit of, let’s say, brand premium. Okay. So the third, and if I may just one quick one, Ajoy, you mentioned about the, let’s say, focusing again or rather even more doubling down on the wedding part of the business. Where do you put the inventory at the store at this point in general? Is it optimal or do you think there is a requirement to, let’s say, work with a slightly lesser turn or higher inventory for you to drive this wedding business?

Ajoy Chawla — Chief Executive Officer, Jewellery

You’re right, wedding business requires us more inventory, especially because it is so regional, and optimizing that doesn’t become easy. And the more we go deeper, which we are already quite deep in many markets. So, in general, given what is required, it is turn dilutive and we believe that we have not yet reached the optimal. We are — wedding hardly contributes to around 20% of our business. So there is scope and we are in fact doing it selectively in select communities and select markets and seeing the result of that and then progressing to the next set of communities and markets, and therefore we are phasing it and learning along the way.

Manoj Manon — ICICI Securities — Analyst

Sure, sure.

Ajoy Chawla — Chief Executive Officer, Jewellery

But definitely, it is — it requires a little bit more inventory, whichever community or market we choose to go deeper in.

Manoj Manon — ICICI Securities — Analyst

Fair enough, sir. Thank you.

Ajoy Chawla — Chief Executive Officer, Jewellery

Thanks.

Operator

[Operator Instructions] The next question is from the line of Tejas Shah from Spark Capital. Please go ahead.

Tejas Shah — Spark Capital — Analyst

Hi, good evening. Thanks for the opportunity. Sir, a couple of questions both pertains to jewelry. So first, could you please provide us revenue share of wedding jewelry for fiscal ’23? And considering the backlog of weddings that occurred during F ’23, what is your outlook for the wedding calendar for FY ’24?

Ajoy Chawla — Chief Executive Officer, Jewellery

Okay. So for the year, FY ’23 weddings have actually relative under performer, it’s around 19% of the total jewelry that we have sold compared to 20% last year and actually, 20% has been a steady. And this is largely linked to quarter one of FY ’23, not really hiring as well for wedding. And we have to pivot towards other product mix. In the second half wedding response…

Tejas Shah — Spark Capital — Analyst

Okay. And then, would we have lost market share in wedding jewelry this year?

Ajoy Chawla — Chief Executive Officer, Jewellery

I’m not so sure because we’ve gained overall market share and therefore internal contributions may not give you a better picture. In fact, I would believe we may have either sustained or marginally gained because in certain markets we have seen good growth, and in those markets, we get actually decent betting share. So I wouldn’t say we’ve lost share, but I would say the scope to grow much faster is there. But opportunity in FY ’24, certainly, we’ve taken a much more aggressive growth target on wedding, not just for this year, but over the next three, four years. And therefore, we hope to gain further. We are, as I said, investing in select markets and select communities to dilate up even further, including exchange, etc., besides inventory. So right now we would say this year was a percentage lower on contribution. We would like it to be a couple of percentage points higher in the coming year.

Tejas Shah — Spark Capital — Analyst

And sir, how’s the wedding calendar for FY ’24?

Ajoy Chawla — Chief Executive Officer, Jewellery

So far, so good. Quarter one is certainly looking good, and H2 is always reasonably good because it has also a lot of NRI weddings, a lot of metro weddings, etc. So, so far the calendar is looking good. And quarter one is always a little bit of a googly because it’s very heavily dependent on these dates specifically because a lot of rural wedding, etc., is there.

Tejas Shah — Spark Capital — Analyst

Sure. And the second and last question, if you can share some insight of the profile of the new customers we are recruiting as in which region it’ll be highest or in which category they normally get recruited, is it wedding studded or low at diamonds?

Ajoy Chawla — Chief Executive Officer, Jewellery

Regionally, I don’t think I can share because a lot depends on the expansion across different regions. So newer stores also gives us a lot of new customers. But typically, you — we tend to get new customers in the sub-50,000 price band or sub-1 lakh, because gold prices have gone up. Secondly, we get a lot of new customers in gold because we are gaining share from other players and typically they could be buying gold from there. And the studded ratio is very low for other players. Off late, we are also seeing a lot of new customer growth in the sub-50,000, both for Tanishq, for Mia, and for CaratLane because there’s an emergence of a younger audience, who’s buying into fine jewelry. So that is more in the last maybe one year it’s a little more prominent. But typically, yes, it’s price band and more gold if you were to ask me. Wedding — new wedding buyers are rare, though, not entirely absent, but the median is sitting in the daily wear category.

Tejas Shah — Spark Capital — Analyst

Got it. Very good, thanks a lot, sir.

Operator

Thank you. The next question is from the line of Amit Sachdeva from HSBC. Please go ahead.

Amit Sachdeva — HSBC — Analyst

Yes. Hi, good evening. Thank you so much for taking my question. So, my question is for, Ajoy, I see that bullion sales is in this quarter was quite large, nearly 50% of the fully year bullion sales, but full year bullion sales is nearly twice that of — more than twice that of FY ’22. So it seems like it’s a bit of a — is it like an assortment intensity rising, or refresh rate is rising? Is it — my question is whether there’s a part of old inventory being melted or excess gold being sold, and whether that jewelry margin is it accounts for all that value loss that may have happen if you have melted the jewelry back? And are you doing it increasingly more as you — maybe refresh rate is higher? Can you sort of describe what is the specific intent here and how we should read it in terms of growth acceleration or inventory being refreshed and things like that? Or is there something I’m digging too much into it?

Ajoy Chawla — Chief Executive Officer, Jewellery

Yes, Amit, good question. I’ll clarify, there are two observations which might help you follow it. See, this is the year where we have started importing CEPA goal. There’s a agreement between UAE and India and there’s a 1% custom duty benefit for taking in CEPA gold. There’s a quota and you have to apply. So in the current year, and most of it in the last four, five months, we imported close — we imported a substantial quantum of CEPA gold, okay, in several tonnes. And that gold is imported on spot basis and then there is some contango, etc.

So consequently our — to manage the capital employed, we have been now following a strategy of ensuring that we try to maintain GOL as a proportion of the overall inventory at a certain percentage. And because a lot of this got kind of came in as a lump towards the last four, five months, we had to do a little bit more of bullion sale to manage the capital employee. Yes. So it’s nothing to do with the previous set of doubts or thoughts you had. We also did a little bit of proactive spot buying in quarter three, where suddenly CAD deficit, etc.was seem to worry and we thought let’s protect ourselves from any gold-related restrictions. So that also maybe added a little bit.

On the broader point that you mentioned that with refresh rates changing, etc., we typically tend to look at melting and provision as two line items and we try to relate that as a percentage to the NSV. It has been fairly stable over the last four or five years and it’s not significantly changing upward or downward. So the melting as a percentage of the total and therefore potential value loss, etc., is broadly consistent. Nothing much to worry about and I don’t think it’s something which is going to affect our margins for sure.

Amit Sachdeva — HSBC — Analyst

Got it, thanks so much, Ajoy, for clarifying this. Very helpful. I was just wondering whether there’s some bigger intent here, which is not visible in general, but it might have implications. But thank you so much for that. My second quick question, if I may ask about, which you have obviously clarified in terms of trade issue between L2, L3s and things, but is this larger intent is to sort of since you have to make the gold price competitive, it is sort of an effort to pass it along to all the channel partners and everybody mitigate costs and sort of navigate it. Or what is the genesis of it? Or it is like they’re just — value capture is too high since the gold price is high that it needs to be balanced out. In that case, are you investing the gains back into the business for growth? Or what is the real intent here? Just wanted to understand.

Ajoy Chawla — Chief Executive Officer, Jewellery

So, again, two comments. One is that we have invested ahead in terms of both gold rate and inventory even before we made these changes. So our investments over the last couple of years has been high and will continue to be high. So we are all investing for growth, even not trying to recover. The second piece is, we are actually trying to moderate the product mix in a different way to manage the gross margin. Because, let’s say, if you’re losing out on gold rate, the best way to gain is by being able to give a richer mix or a more higher complexity mix, etc., and do some product engineering.

So if we have to do that, then we have to ensure that both us as well as the partners are aligned in the same direction. There’s no point in my supplying it if that doesn’t sell. So, if the incentives are better or the margins are better on higher complexity or medium complexity products, then we are aligned in the same direction. So that will give better margin to us and better margin to them as well. And therefore, this entire exercise was aligning us and then the same direction going forward. And we are seeing a lot of work going on in product mix. And as I said, it was a 15-year-old POT at that time, we didn’t have any of the products at all that we are today selling.

Amit Sachdeva — HSBC — Analyst

Got it, got it.

Ajoy Chawla — Chief Executive Officer, Jewellery

So, actually, there is nothing about trying to share and capture value. It is purely about aligning towards a more profitable future.

Amit Sachdeva — HSBC — Analyst

Understood. Just very quickly, Ajoy, if I may ask about the international expansion piece and it seems that domestic is 21%, but overall it’s 23%, which means international is already adding two percentage roughly growth rate to the overall mix. So it seems to me that international is going pretty well. And can you share the number of stores you plan to open this year and whether is L2 or L3 format is gaining momentum there as well or is largely L2 in your own store? Can you give us some color on international peak, the ambition for this year?

Unidentified Speaker —

Hi, Amit. This is Binny [Phonetic] here. You’re right that international is going pretty well. Whenever we’ve been able to open stores, the response has been quite overwhelming and very, very positive. So we are up to seven stores now, six in the UAE and one open in the U.S. since December. And in the coming year, we are looking to add quite a few more. We are planning to expand to roughly around 25 stores cumulative by the end of FY ’24. Large number of them across the GCC region, in UAE, as well as other countries around Qatar, Bahrain, Oman are all possibilities. And also, expanding our footprint across the U.S. that is the plan.

Amit Sachdeva — HSBC — Analyst

Got it. And is L2 or L3, which is the kind of format you’re essentially using, or is it like your own capital?

Unidentified Speaker —

We have all three formats. We started out with L1 in the UAE, essentially for us to sort of get our hands dirty and understand how the business works because we are doing this for the first time in an international geography. But we also have L2 in the U.S. and now we are opening some L3 as partners gaining greater confidence. Like Venkat said earlier on the call, a lot of our partners are franchisees in India are asking for a chance to be given to them to operate a store in international markets. And that we are also now finding a lot of local partners, meaning people who were not in any way connected with Tanishq or Titan earlier were also coming forward on the strength of what they’ve seen.

We recently announced a tie-up with Sharaf Group who runs the Sharaf DG chain of stores in the UAE. They have come forward as a partner to work with us as franchisees for stores that will be Tanishq branded. They will be like any other partner operating a store for us.

Amit Sachdeva — HSBC — Analyst

Got it. Well, that’s very, very useful. Thank you so much for sharing this. And I am sure the qualitative strategy will emerge eventually for non-Indian population as well. But is there a plan towards that end as well that you — when you go to U.S. market, there’s a large very different kind of mix as well that exists very high margin. So are you — is still an Indian diaspora and what the reason of being there is it, is the customer mix and product mix going to be very different or is very different already?

Ajoy Chawla — Chief Executive Officer, Jewellery

At this point it is almost 98% Indian. We get a lot of South Asians in our stores in GCC, but predominantly Indian. And that’s the beachhead that we are attempting to establish. But like you said, obviously, the market in many of these geographies for the non-Indian consumer is much larger, much bigger and hopefully much more profitable, and therefore we would certainly want to go after that. But at this point in time, the primary focus and objective is to develop a very, very strong competitive and high-quality offerings for Indian consumers. Give them a really super experience. But just to give you an indication in the Titan Eyeplus format that we’ve launched in Dubai, we are getting up to 25%, 30% non-Indian customers. So, that’s because we are present in a mall location and certainly the products that we have to offer and the strength of value offering from India seems to be working very, very well. So early indications are very, very popular.

C K Venkataraman — Managing Director

Amit, Venkat here. The other opportunity is that all the Indians that we are currently acquiring as customers also have a pretty decent non-Indian jewelry that they buy, not just the Indian jewelry that they buy to wear with Indian clothes, Indian occasions and all that. So, for example, brands like Cignet and Ks and Jareds and why not even Tiffany and brands like that. So, we want to become a one stop shop for all Indians, apart from the point that Binny made about non-Indians, but even among Indians. With the product lines that we are currently going with from Tanishq, Mia and Zoya and all that satisfied substantially the Indian — needs of the Indian consumers. But the non-Indian needs of the Indian consumers is also a pretty decent opportunity. And Binny and team are working to understand that better, create product lines to cater to those needs and therefore maximize the share of wallet and the total share of jewelry purchase as well.

Amit Sachdeva — HSBC — Analyst

Great. Again, thank you so much and all the best. That’s all for me. Thanks a lot.

C K Venkataraman — Managing Director

Yes, thank you. And one last point on — many people have spoken, asked questions relating to the terms of trade change. And I would just request all of you to sort of step back on and see the subject as which Ajoy has said, but I’m just saying it again to reinforce it. It’s an operating aspect of the business and frankly, the questions are sort of ending up making it look like a strategic or a business model kind of subject, which it is not. It is an operating aspect. As long as we continue to deliver best-in-class returns to our partners, which even after this we are delivering, I would wager that in the Indian retail industry, Tanishq would deliver best-in-class even after this. So, therefore, it is just an operating matter and not — does not merit the kind of level of conversation, perhaps it is going into.

Amit Sachdeva — HSBC — Analyst

Great. Thank you, Venkat. Thanks a lot.

Operator

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

Latika Chopra — JPMorgan — Analyst

Hi, thanks for the opportunity. I had a question on Mia, what did you understand, what is the revenue size for this brand for FY ’23? And what is the split coming from the standalone stores? There are about 111 stores now. And how are you thinking about the store addition plans?

Ajoy Chawla — Chief Executive Officer, Jewellery

Hi, Latika, Ajoy here. So Mia has done exceptionally well. It’s gone up almost 3x in the year and it’ll — I mean, just to give you a sense in consumer price terms, it is about INR730 crores, INR740 crores this year growing rapidly. And we expect Mia to hit INR1,300 crores, INR1,350 crores in the coming year. About 40% of the business is coming from Mia standalone stores. The rest of it is coming from Tanishq stores because it’s a brand of Tanishq, and right now very negligible is coming from online. So the opportunity headroom on online is huge because the ticket sizes are bang on.

In terms of the 110 stores or whatever that you talked about, we expect to double that by the end of this fiscal. So we are going aggressively on expansion. The opportunity is huge. And this is still within the top 30, 40 towns not really going too deep. In fact, most of it in the top 25 towns. We see a large opportunity from Mia and fine jewelry is kind of coming of age. CaratLane has also seeing that, Mia has also seen, and this is the emergence of a segment, which is very exciting.

Latika Chopra — JPMorgan — Analyst

Thank you. And I just wanted to also check for CaratLane, is there a timeline or a thought process or even if there is something that you would want to acquire rest of the stake in the company? Is this something that could happen in the immediate future? Or you are happy with the arrangement or ownership that you have currently?

Ashok Sonthalia — Chief Financial Officer

You are well aware, you have asked, I think earlier also that this matter cannot be commented upon until we become obliged to inform with stock exchange and which we will do. Right now, we would not like to comment on that kind of question.

Latika Chopra — JPMorgan — Analyst

Sure, sure. The last bit I had was on watches business. I think, if I heard it correctly, you mentioned 12% to 13% target margins for this segment. Could you share what has been this revenue salience of wearables in FY ’23 revenue mix? And what kind of margins does this operate at and is this a reason that probably margins for this segment could be in this ban?

Suparna Mitra — Chief Executive Officer, Watches and Wearables division

Yes, Latika, the quarter four, we were about 13%, but for the overall year, we were about 10% of the total turnover. And the margins in this are slightly lower than watches. It is also reflective of the three decades of leadership that we have in watches that we are able to command that kind of premium. Having said that, in wearables, we are at a premium to similar comparable products from other brands and doing well. Over a period of time with various other business decisions, including make in India the margins will only improve. But yes, long-term wearables present a huge business opportunity where inherently the margins are of a lower profile than watches.

Latika Chopra — JPMorgan — Analyst

All right, thank you.

Suparna Mitra — Chief Executive Officer, Watches and Wearables division

Thanks.

Operator

Thank you. The next question is from the line of Chirag Shah from CLSA. Please go ahead.

Chirag Shah — CLSA — Analyst

Yes. Hi. Thank you for taking my question. Ajoy, I just wanted to share your — wanted your thoughts in a phase of rising interest rate environment and higher gold prices, how would this interplay impacts our business, one, from a perspective of the spread in borrowing cost between gold leasing and informal sector borrowing cost? Fair to assume that this spread would widen, because the working capital cost increases for the informal sector should outpace the increasing gold leasing rates. And then, how did this impact franchise economics? This is of course beyond the franchise sharing agreements that you kind of alluded to.

Ajoy Chawla — Chief Executive Officer, Jewellery

So you’re right that informals or unorganized sector will find it more difficult with rising interest costs as it is bank borrowing is not easy for them, jewelry sector is not very favored by banks. So higher interest costs and tougher financial conditions will impact. From a customer point of view, we are not seeing — in the sense once gold rate stabilizes, customers are actually comfortable coming in. But yes, in terms of maintaining certain quantum of gold, let’s say, kgs of gold, it does impact.

Having said that, the informal sector also does not in a way — they have gold, which is historically they’re not on debt and they typically view that as well. So — and their quantum of gold holding is also quite significant compared to us in terms of stock turns, we are much better than most. They don’t look at stock turns. So, I don’t know, maybe if it sustained for a long enough time, it does create pressure. And certainly, those who are weak tend to become weaker and many of the independents who are strong become stronger. And we’ve seen that happen over the last two to three years. I’m not sure if I answered all parts of your question. Is there something else…

Chirag Shah — CLSA — Analyst

Right. And on franchise economics, how does the rising interest rate environment impact them?

Ajoy Chawla — Chief Executive Officer, Jewellery

It — well, for L3s it can affect because L3s are on buy and sell and therefore there is an impact on them. But there is enough. the margins and the returns of L3 are very high and their returns on investments are pretty strong. And many of our L3s are also quite older in the system and they’re doing — getting fabulous returns. Their scale economics are very high. So for the lower L3s who might have come in the system, yes, there is impact, but there, in fact, our new structure is enabling them even better. So as I was telling some franchisees may have lost, but many have gained. Any of the smaller, newer, and lower-scale franchises are actually going to gain in some of our changes that we made about, structural change. So no, it’s not a big concern for us if that’s what bothering you.

Chirag Shah — CLSA — Analyst

Got it. And can you just give us a sense on the trend of Golden Harvest registration? And secondly, on the studded jewelry side, of course, this was an activation quarter, we have also mentioned that the lower-cost inventory of diamond is kind of behind us. Can you explain how does the inventory buying cycle really work on the diamond side?

Ajoy Chawla — Chief Executive Officer, Jewellery

Golden Harvest, we’ve had fabulous enrollments, quarter three — quarter two, quarter three, quarter four all very healthy double- digit enrollments. And we have a metric called enrollment to buyer ratio, which is driven across different stores and placing fabulous percentages there all-time highs. So that is very good from a lead metric for future intent to buy jewelry to at least from us. So we are very happy with Golden Harvest and it’s actually firing very well for us.

Regarding diamond studded, yes, the activation quarter was good, therefore, we had a better mix than last year, but it was still slightly below. If I go pre-pandemic year, that year again, last 15 days, there was a lockdown and gold got affected. So I’m not able to comment. But yes, we have come close to what we used to be pre-pandemic in terms of studded ratio. We expect to drive faster growth in studded. I mean, that’s always been the intent, but this is an — we have delink the two in the sense we no longer worry too much about the ratio as much as each segment growing at a certain pace. I didn’t follow the question on the inventory cycle, but typically studded inventory turns are lower than the gold ones, pretty much because that’s the pace.

Latika Chopra — JPMorgan — Analyst

Yes. My question was more from a perspective of — on a slide you’ve mentioned that the consumption of older, lower cost diamond inventory got over in Q3, and we are now getting into the newer inventory buying cycle. How does a diamond inventory buying cycle work?

Ajoy Chawla — Chief Executive Officer, Jewellery

Okay. Okay, I got it. See, we had some gains on account of buying — we had opening stock of diamonds at a certain price. And then because it had gone up, we had increased the selling prices, which was ahead of the cost hitting us. Now the consumption of all those low-cost diamonds is over and done, and therefore there’s a normalization of the started margins. So that diamond inventory gains are no longer there. How does it work? We typically work on some consumption cycles and we have to predict three to four months ahead of time to buy diamond. And it’s one of the most challenging questions you’ve asked. We figure out whether we can do it better.

Chirag Shah — CLSA — Analyst

Got it. And what exactly do you mean by digitally influenced sales, which is now at about 18%?

Ajoy Chawla — Chief Executive Officer, Jewellery

Digitally influenced — in CaratLane, you’re referring to each particular segment?

Chirag Shah — CLSA — Analyst

There is a — on one of the few slides earlier, I think on Slide number 9, you have mentioned digitally influenced sales in Q4 was close to about 18%. Slide 9.

Ajoy Chawla — Chief Executive Officer, Jewellery

Okay. Slide 9. Okay. We just need to — okay. So, when we look at digitally influenced sale, actually there is online people who come online buy online. Then there is people who come online, engage in a conversation with our live agents, etc., and thereafter, we do an omni that is we hand them out to the store buy. And then there is a third element, we also do a lot of endless [Phonetic] style video call base selling, etc., that also we are in a way — so the customer may have walked in in some store might see products lying in some other store. So all of that we also look at in terms of digital influence. We — and there are some other indirect attribution that we also look at in terms of people who were reached out on social media and digital, and then how many of them actually came in and bought. That is some data that also comes to us from our partners.

Okay. And I think a lot of that 18% that you’re seeing number there, it is about joint closure of omni and online. And I think that 18% is a weighted average of between CaratLane, Tanishq, Mia all put together.

Chirag Shah — CLSA — Analyst

Got it. If I may just slip in one more to, Saumen, what is the revised rollout target for the Eyewear business now? And can you dwell a bit more on the distribution model expansion going forward, please?

Saumen Bhaumik — Chief Executive Officer, Eyewear

Hi.

Chirag Shah — CLSA — Analyst

Hi, Saumen.

Saumen Bhaumik — Chief Executive Officer, Eyewear

Chirag, we would open another 100 stores in the coming 8 to 10 months, hopefully in the first six months. But we are not going beyond the top 20, 21 cities. Okay. That’s the change that we have made. So therefore in the — around the first half of the FY ’24 or around that period October, November, I think we should be around the number that we spoke about two and a half years back. On the distribution front, I think, we have taken some aggressive goal here. I think, we have altered our product portfolio. We have also re-engineered the terms of trade for our dealer fraternity. With this, we believe that we’ll be able to reach out to a lot more booklets across the length and breadth of the country. And therefore, we should cater to lot more customers. In the areas, in the district, in the towns where let’s say a retail store by itself may not be most viable proposition.

Chirag Shah — CLSA — Analyst

Got it. And on — you explained the margin part for this quarter, but if I can just get in a bit more there. So, you’ve mentioned the [Technical Issues] this quarter was about 61% versus lenses at about 20%. So has the product mix also impacted margins and do you think the competitive intensity last quarter was much higher with your key competitor getting more aggressive?

Saumen Bhaumik — Chief Executive Officer, Eyewear

I think competition wouldn’t have affected our overall number, both the top-line and the final thing. I think some of the things that I explained on the top-line side, one channel did not really make any contribution toward the last month. And we also had to make certain correction in order to prepare ourselves for the FY ’24 on the cost front there are a few one-time thing has hit us. So I would broadly place the quarter four results in that space rather than saying that external factor has impacted our numbers.

Chirag Shah — CLSA — Analyst

Sure. Thank you very much and all the best, guys.

C K Venkataraman — Managing Director

Time for us to close. So, Faizan.

Operator

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. C K Venkataraman for closing comments. Thank you, and over to you, sir.

C K Venkataraman — Managing Director

Thank you very much, everyone, for all the probing questions as always, and look forward to seeing you three months from now. Bye-bye.

Operator

[Operator Closing Remarks]