Titan: Apart from many firsts... - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Titan: Apart from many firsts...

Dec 19, 2007

From starting out in a joint venture with the Tamil Nadu Industrial Development Corporation in 1984 for manufacturing and marketing of watches, to being one of the firsts to foray into branded jewellery, Titan Industries is one of the early entrants into the lucrative prescription eyewear business to cash-in on the retail boom in a burgeoning economy. Over a period of time the company has leveraged its assets and capabilities by venturing into jewellery business, precision engineering, sunglasses and now prescription eyewear. Although Titan launched its eyewear business in 2007, the company had actually forayed into the business way back in FY05 itself by launching sunglasses under the Fast Track brand. This segment has clocked revenues worth Rs 250 m in FY07 (1.2% of consolidated sales). The first prescription eyewear store (the pilot project) was opened in 4QFY07 and now has 5 Titan eye+ outlets (end of September 2007) and expects to take its total no of stores to 14 by the end of FY08.

Rationale behind the foray
India is the world's second most populous country with over 1 bn people. The current Indian prescription eyewear market is sizeable with nearly 30% of the over 1 bn population requiring vision correction. However, this immense market is characterised by a few indigenous optical brands operating in the mid to premium segment and several other unorganised players who offer low-priced products. As such, the category offers a huge potential in terms of brand recognition, style and consistent quality to consumers.

The scope...
The actual market for prescription eyewear comprises of the people who have recognised the need for vision correction amongst the total population who need vision correction. This cluster works out to only 25% of the total potential market translating into approximately 85 m users of prescription eyewear product.

This segment of lifestyle business is comparable to watch industry as the consumer typically change their glasses or frames once in three to four years. Repeat purchases are made owing to adolescence or old age. Every year 25 to 35 m units are sold in the range of Rs 1,500 to 1,800 and this market is growing at the rate of 15% to 20% annually. Almost everyone over 40 years of age needs vision correction.

The demand drivers

  • According to 2001 census of India, the population of India is growing at a rate of 2.1% approximately. This only indicates the incremental demand for the eyewear products as new consumers get added to the existing huge base of 1 bn people.
  • On account of changing lifestyle and improper diet the need for vision correction is rising day by day. Penetration of TV and computers has further fuelled the demand for eyewear products as more people now require vision correction owing to continuous stress to eye or as a precaution. Owing to literacy and the urbanization, a new cluster of consumers are getting added to the existing base, leading to incremental demand for eyewear products.

Where lies Titan's role in the value chain?
The business, which is comparable to watch industry, is a high margin business at retail level. As it is profitable to be a retailer, the company will not indulge in manufacturing of lenses and frames. Thus Titan will focus on its core competencies, which include designing retailing, servicing and marketing the product. It will outsource its eyewear requirements such as lenses, frames and accessories from reputed domestic and international vendors on long-term contract basis. While frames for lenses and sunglasses will be designed in-house.

In order to gain a dominant position in the optical solutions market, the company also plans to showcase eyewear products such as sunglasses of leading international brands. For the same, the company has tied up with Essilor, the world's largest lens manufacturer, for supply of optical lenses.

The way forward...
The foray into prescription eyewear business is Titan's third major line of consumer business, after watches and jewellery. Titan has envisaged plans to be a dominant player in the mid-priced segment offering optical solutions for varying consumer needs. The stores will carry frames bearing the Titan brand as well as the Eye+ and Dash brands (for children). Apart from this, the Titan Eye+ stores will also sale frames and sunglasses from a host of fashion brands and owned labels.

As per the company's outlined plans it will eventually open (mainly in A and B segment towns) 150 Eye+ stores and 100 franchisee outlets by 2010. Thus initially the company would be investing approximately Rs 150 to 200 m for setting up the Eye+ stores and expects the stores to clock business worth Rs 150 m in FY08. Going forward, i.e. by 2012, the company expects this business to contribute 15% to the total revenues and account for 20% of the market share.

Through this eyewear business, Titan will try to gain the first mover advantage and acquire a leadership position by leveraging its well-established retail network and design and marketing capacities.

Equitymaster requests your view! Post a comment on "Titan: Apart from many firsts...". Click here!

  

More Views on News

TITAN Announces Quarterly Results (3QFY21); Net Profit Up 11.7% (Quarterly Result Update)

Feb 11, 2021 | Updated on Feb 11, 2021

For the quarter ended December 2020, TITAN has posted a net profit of Rs 5 bn (up 11.7% YoY). Sales on the other hand came in at Rs 76 bn (up 16.7% YoY). Read on for a complete analysis of TITAN's quarterly results.

V-MART RETAIL Announces Quarterly Results (3QFY21); Net Profit Down 17.8% (Quarterly Result Update)

Jan 25, 2021 | Updated on Jan 25, 2021

For the quarter ended December 2020, V-MART RETAIL has posted a net profit of Rs 479 m (down 17.8% YoY). Sales on the other hand came in at Rs 5 bn (down 16.4% YoY). Read on for a complete analysis of V-MART RETAIL's quarterly results.

TRENT 2019-20 Annual Report Analysis (Annual Result Update)

Dec 11, 2020 | Updated on Dec 11, 2020

Here's an analysis of the annual report of TRENT for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of TRENT. Also includes updates on the valuation of TRENT.

TITAN 2019-20 Annual Report Analysis (Annual Result Update)

Aug 7, 2020 | Updated on Aug 7, 2020

Here's an analysis of the annual report of TITAN for 2019-20. It includes a full income statement, balance sheet and cash flow analysis of TITAN. Also includes updates on the valuation of TITAN.

More Views on News

Most Popular

It's the Beginning of a New Bull Phase in Smallcaps (Profit Hunter)

Feb 24, 2021

Last time the smallcap index crossed 19k a big correction followed. Here's what makes it different this time.

Make Rs 5,000 Per Day Trading the Market (Fast Profits Daily)

Feb 25, 2021

In this video, I'll show you how to get started on the path to daily trading profits.

The Hidden Tesla in My Great Indian Wealth Project (Profit Hunter)

Feb 23, 2021

An Indian company founded three decades ago in a garage caught my attention...

Gold 65,000 and Silver 84,000 in 2022

Feb 26, 2021

In this episode of the Investor Hour, India's #1 trader, Vijay Bhambwani, talks to us about the stock market, his new targets for gold and silver, the best long-term investment opportunity, and a lot more.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get this Special Report,
The Secret to Increasing Your Trading Profits Today, Now!
We will never sell or rent your email id.
Please read our Terms

COMPARE COMPANY

MARKET STATS