Titan: A Golden Case in Indian Retail - [Business Breakdowns, EP. 105]

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Apr 5, 2023

Saurabh Mukherjea, founder and Chief Investment Officer of Marcellus Investment Managers, delves into Titan, India's leading jewelry brand with a rich history as a watchmaker. He discusses Titan's unique position in the jewelry market, underscoring the cultural significance of gold for Indian consumers. The conversation highlights Titan's innovative retail and marketing strategies, including regional design adaptations and e-commerce integration through brands like Carrot Lane. Saurabh emphasizes Titan's operational efficiencies and its effective capital allocation philosophy.

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INSIGHT

India's Gold Love Affair

India's gold market, including a large unofficial market, is worth roughly $100 billion annually.
This stems from Indians' preference for gold as a savings vehicle due to inflation and distrust in the formal financial system.

INSIGHT

Gold: Savings vs. Aesthetics

Indians buy gold primarily as a savings and investment tool, though aesthetics play a role.
Titan's success stems from catering to both savings and aesthetics, especially with diamond jewelry for working women.

ANECDOTE

Titan's Journey

Titan, a joint venture between Tata Group and Tamil Nadu, started as a watchmaker in 1984.
After a failed European expansion, Titan pivoted to jewelry in 2003, leading to its current success.

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Today we’re breaking down India’s largest jewelry business, Titan. Titan began life as a watchmaker in 1984 through a joint venture between India’s biggest conglomerate, Tata Group, and the Tamilnadu state government. Today, the vast majority of its $4 billion in revenue come from its collection of jewelry brands, and Tanishq in particular.

To break down the business, I’m joined by Saurabh Mukherjea, the founder and Chief Investment Officer of Marcellus Investment Managers. We cover the importance of jewelry to Indian consumers, the intricacies of retailing across India, and how Titan stands head and shoulders above its competitors in terms of profitability. Please enjoy this breakdown of Titan.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.

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Show Notes

(00:02:45) - (First question) - What Titan is, where it operates, and its size and scale

(00:06:50) - The bulk of the demand when it comes to Indians buying gold

(00:08:24) - Getting their start in watches in the 80s and evolving into what Titan is today

(00:14:52) - What a typical Tanishq store looks like and overview of store economics

(00:18:58) - How their return profile is changing and what types of stores they want to open

(00:23:51) - What gold on lease is and the implications of it for their business model

(00:25:33) - Why make jewelry when they could just be selling gold for savings purposes

(00:27:36) - Managing inventory and keeping costs under control at the store level

(00:31:54) - Whether or not they have artisans spread out across the country and difficulties of shipping and freight at their current scale in India

(00:33:38) - How they’re attracting customers to stores and store-level marketing strategies

(00:37:57) - Splitting their business into middle class, premium, and wedding jewelry

(00:39:22) - Where e-commerce figures into the scope of their business

(00:42:47) - Thoughts and philosophy on allocating surplus capital and acquisitions

(00:45:38) - Additional competitive advantages Titan has

(00:48:42) - Building brand trust in a low trust economy in such a short time period

(00:50:22) - Where future growth will come from and if they can sustain their current growth rate

(00:54:04) - The bull case for their business and what a Saree is

(00:57:03) - Risks the business faces as they look out at the future

(01:00:12) - What he’s learned as an investor studying Titan’s business