Ladies and gentlemen, good day, and welcome to Titan Company Limited Q3 FY23 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. 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, sir. Thank you very much. Welcome to the quarter three earnings call of Titan Company to everyone on the call. As you would have seen from the presentation, on the retail sales growth for the quarter has been very satisfying and across all businesses. The rest of the material is there on the presentation, I presume you have had some chance to look at it and we can straightaway dive into the questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and One on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Avi Mehta from Macquarie. Please go ahead. Hi, Venkat and team. Just wanted to, you know. First of all, congratulations on the performance. Wanted to understand the demand trends, how have they been shaping up in January. In particular, if you could, you know, give us some understanding of the jewelry business, given the sharp increase in gold prices. Hi, Avi. Ajoy here. Yes, January has been quite interesting as gold prices have been shooting up since December and in January as well. Having said that, we are seeing a very good demand in January. We are very happy. We know that last year January was impacted by Omicron, and therefore it was a weaker January month. Despite that, we are seeing a very, very healthy growth in jewellery, including gold jewellery and silver, both, despite the gold price rise. We are quite happy and nimble. Would you say this is on a three-year CAGR basis that you're looking at as in pre-COVID? You know, because obviously YoY base growth rates might be, as rightly calculated, there's Omicron in the base. Yeah. A three-year trajectory, it's broadly in line with what we saw in third quarter. Yeah. No, no, it's good. It's very good. Over a three-year CAGR, it's even better. Okay. On the other segments as well, if it's possible to share, especially in the watches and the eyewear? This is Suparna here, Avi. Watches also, watches and wearables, we've seen a good Jan. Like Ajoy mentioned, this is not only on last year's good base, but on the Jan 2020 base. Quite happy with the retail growth. Okay. Awesome. Avi, this is Somani from IC. We had a good month. On a last year basis, growth is over 20%. If I look at FY 20 January, it is 37%. Good month. Awesome. Okay, perfect. The second bit, also on the margins, especially on the watch side. I mean, last quarter you had indicated that in the near term we will try, you know, we see a 13%-14% margin kind of panning out in the watch business. Just wanted to kind of clarify, was this more, annual expectation or was this? Whether this quarter or with this quarter kind of changes that expectation in any manner? No, this quarter, the margin is lower because of some product channel and category mix issues. If you see the YTD margin, it is in that ballpark of about 13%. Our outlook remains in that in that range. Okay, perfect. Just one clarification, Ajoy. When you say good, is there any range that you could share with us? Any understanding of what you mean by good? It would be useful to appreciate. That's all from my side. I wish I could, but I think there are some pretty stringent regulations on what we can share without having put it out on the stock exchange notes. Apologies for that, but we're very happy. This is the best quote we can do. I'll take it at that. Thank you very much. Thanks a lot. Thank you. We have our next question from the line of Percy Panthaki from IIFL. Please go ahead. wanted to ask on margin. So we've done around 13% in jewelry this quarter. For next year, would you stick to that guidance of 12%-13%, or do you actually think that it's probably going to be sort of at the higher end of that band or might even exceed it? Ashok here. I think, you know, we have been answering this question quite consistently, that it will be 12%-13% this business is targeting. Higher and lower commenting for next year is too premature, but that's the channel where definitely team is trying to keep it while achieving growth numbers which are industry leading. Right, sir. Secondly, just wanted to understand, you did mention that despite gold price going up, the demand is good. What is really driving that? Because in the past we have seen that when gold prices are sort of volatile, the customer stays back and does not purchase. Why is it different this time around? Yeah. Actually it's something which we've been trying to figure out. In the month of November, you know, mid-November or December onwards, we saw a greater impact of that volatility on customer sentiment for gold jewelry. That time the studded piece picked up a bit, and therefore we were able to, you know, see some good growth. Having said that, in the month of January, somehow that has not held back customers. My own hypothesis is that, you know, people might have been deferring their purchases in November, December because of these volatility. Come January, the outlook also looks like gold may continue to remain high, and it might even climb higher. There is weddings, et cetera. I think people have now, kind of decided to get into the market, having waited a little bit in December. That's a personal hypothesis. I really don't have a deep, you know, database insight on this. Right. For the quarter, Q3, basically can you give some color on basically the split up of SSSG between how much of it is due to higher transactions and how much of it is due to a higher bill value? I mean, even if you can't give the exact numbers, any flavor would also help. Sure. Happy to share with you same-store growth. I think that 15% odd of retail growth, which includes Tanishq, Mia, Zoya, okay? The Tanishq retail growth is 14 as in the presentation. If I look at the three brands put together, it's around 15.1%. The same-store growth during quarter three is around 9%. In terms of what has driven growth, very interestingly, a majority of the growth has been driven through buyer growth. Some part of it is through ticket size growth. Ticket size growth is a function of both the gold price as well as the diamond prices have been on the higher end. Yes, very happy to hear that from our side that it is a growth which is being driven by buyers, and specifically we have gained a little bit more on new buyers. Okay, sir. That's all from me. Thanks a lot. Thank you. Thank you. We have our next question from the line of Arnab Mitra from Goldman Sachs. Please go ahead. Hi, Venkat and team. My first question was again on the demand side. I think last quarter you had mentioned that there was some slowdown in the lower end of your portfolio in jewelry. Has that been a trend which has continued, and anything that concerns you on that side? It's a mixed bag. There is some pluses and minuses, which we are seeing in quarter three. Yes, on the lower price and on studded there was a little bit of a slowing down, but on the gold it was on the positive, you know, it was not slowing down. It seemed to show a upswing, maybe driven by festive. In January, again, I'm seeing that that is no longer a concern. It's kind of come back strongly. It's a bit volatile at this stage. We are at least pushing more aggressively on trying to increase the number of buyers and therefore feed the top of the funnel, in terms of buyer and new customer acquisition, and that's working. Right now not a concern, but yes, it's on the... We are watching out for it more closely. Got it. There were some news reports that, you know, there have been times anecdotally where gold prices have gone at a bigger discount in the local markets. Are you seeing more pressure on gold prices from local jewelers compared to what you were anyways seeing last few quarters, because of possibly the import duty gap having increased six, eight months back? Yeah. I think gold rate and therefore price in, competitive intensity in quarter three in general was very high. National jewelers, local jewelers, you know, everybody put together. To that extent. I don't know, this phenomena of the market being at the discount is very MPX, is more in the last few weeks, in the month of Jan, more than in the month of December and November. Because of that, has the gold in rate intensity in terms of competitiveness gone up in Jan? No, I think it's pretty much the way it was in quarter two. But yes, if it continues like this, there is always gonna be pressure because finally there is a lot of unaccounted gold coming into the country, and there is a 15% +, kind of. 15% CD, and then if you add GST, it's 18% arbitrage. Got it. Just one bookkeeping question, to Ashok. Is there an increase in gold dealing costs because of global interest rates moving up given that these probably are linked to gold titles? Titan, it is minimum, so far. You know, we have not seen impact. 15, 20 basis points, but not more than that so far. Okay. Thanks. Thanks so much. That's it from my side. All the best. Thank you. We have our next question from the line of Siddhant Dand from Goodwill. Please go ahead. Yeah, hi. My question was regarding TEAL. You know, after all this time, you know, it continues to be 1% of revenue and still be loss-making. Is there some long-term vision over that company or is it just going to be like this? TEAL has two distinct businesses, you know. One part of business is continuing to do very, very well. The other part of business, which is automation solution, has, you know, certain icons, certain cost elements, and which kind of came under some thing. If you look at, we are pretty much okay that full-year basis they will still be profitable. The order inflow situation, if you have read about them, that business which kind of struggled from the profit point of view this quarter actually won the highest amount of order in this quarter. Future outlook is okay and stable. They will kind of pick up from here and hopefully deliver reasonable profitability. Okay. Okay. I'm not concerned about, you know. Yeah, like, you know, we're concerned with becoming smaller of, you know, piece of the pie and then it's a distraction, you know. That's the only concern. Siddhant, actually it's not a distraction because the manner in which Titan Company operates, both within this standalone and with subsidiaries, is a full leadership team dedicated to running each vertical. There is no real distraction at all, and there is a board which governs the TEAL company as well. If you look at FY18, FY19, FY20 performance, it was really good. You must recognize that this is a global company dependent on the airline industry, and therefore in the last 2 years, you know, substantial decline happening on travel and all that. Intrinsically, you know, everything is good for this company and for both divisions as well. The last 9 months were not good for automation solutions like Ashok shared, but we are quite convinced about it and committed. Okay, that's perfect. Could you share some numbers or something about the UAE business? You know, it's been there for a while now, so, you know, is it profitable or, you know, what's the top line like over there? This is Vinit here from the international business. UAE, we are up to 6 stores across UAE, 5 in Dubai and now the 6th store in Abu Dhabi. That business, all of the stores that we have launched are doing quite well and growing quite strongly. We are pretty much on track for whatever stores that we have launched. We have had some difficulties in terms of rolling out or expanding the stores. They're a little slower than what we had planned because what we've realized is operating in some of these new markets requires a bit of time, and that is what we are attempting to stabilize. Is it profitable or no? Not as yet. Okay. My last question would be, you know, any thoughts on the lab-made diamonds or the incentives that were announced yesterday, or is it too soon to think on that part? Just repeat the question. On lab-grown diamonds. You know, yesterday in the finance minister, wherein the Prime Minister announced some incentives around lab-grown diamonds. Do you have any thoughts on entering that business? Actually, you will remember that we invested about 7, 8 months back in an American company. Correct. Called Clean Origin, which has a brand called Team Origin, and that is for us to understand the most exciting market for LGDs in the world, which is the U.S. We already developed some kind of an understanding. We are not in a position at the moment to share any other plans to anyone. Okay. Last question would be, you know, what's the outsourcing mix in, you know, in jewelry? Our competitor, ideally, you know, they outsource most of their jewelry. You know, any margin that you can gain by manufacturing ourselves or something like that? It varies between gold jewelry and studded. At an overall level, because a lot of the gold jewelry is outsourced and a lot of the studded we make in-house. I think it's about 70% will be outsourced rough and ready. Okay. Nobody really makes gold jewelry themselves, not even other jewelers in the country. Right. It doesn't make sense. There is so much of innovation that the vendor partners bring to the table. Therefore, between margin on the one hand and innovation and therefore sales growth, there's a balance approach that we have taken for a very long time now. Okay, that's perfect. Thank you so much. Thank you. We have our next question from the line of Shirish Pardeshi from Centrum Broking. Please go ahead. Yeah, hi. Good evening. Thanks for the opportunity, and hearty congratulations to Venkat. Finally, New Jersey store is operational. I'm sure you would have. Shirish, I'm sorry. Can you use your handset, please? Yeah, I'm on the handset. Can you speak louder? Yeah. I said hearty congratulations to Venkat for finally the New Jersey store is operational. I'm sure you could have gone through the pain. Just one commentary. Over the next 12 months or 15 months, what kind of store expansion which we'll see in the U.S. geography? Denise here is Shirish again. After having opened the first store, we are looking at adding more stores. Over the next 6-12 months, we should see ourselves in the US expanding across another 4 or so locations. We are going after the cities which have significant Indian populations, which is what makes sense for us. Similarly across the GCC, we have very aggressive plans. Having established ourselves quite well in the UAE, we are looking at the other GCC countries, Qatar, Oman, Saudi if possible. You mean to say that over the next 12 to 13 months, we should move from 7, 8 stores to maybe doubling or tripling that count? Hopefully more than that. We intend this to get as high as 20. Okay. Yeah. Thank you, Bharat. My second question is on jewelry business to Ajoy. Can you share some numbers? What is the grammage growth out of that 11.2% what you have reported? Maybe new buyer growth number I missed. Grammage growth actually may not be relevant because we don't use that in any of our modeling work, you know, whether in top line build-up. In terms of buyer growth, as I said, we had a higher buyer growth than ticket size growth. That was the bigger chunk. Within that, what I can tell you is that our new buyer contribution is 49%. It was 48% in the last quarter. It's 49% in Q3. The number. Shirish, just one perspective. Yeah. We are a accessory company. We are not a commodity company and therefore while of course we know how many times we bought and sold, that's not a KPI for us. I do understand, Venkat. The only question... I understand. No, I'm just giving a perspective. The number of customers, number of bills, that is what it is. Yeah. Buyer growths are very healthy and, you know, grammage growth we don't really use as a KPI. New buyer growth was marginally higher than the overall buyer growth. Therefore, we are now at 49% new buyer contribution to the total for quarter three. Okay. That's exactly which I wanted to understand from you, Ajoy. You mentioned that January despite the gold prices are up, you have seen that. The question here is that the similar growth is seen in January because I thought that because the winter was delayed, I think there is some spillover which would have definitely happened. In the festive season, there's also some spillover which has happened. At least the trade is saying. Maybe the competition is one angle, but the buyer growth which is coming back to the trusted players is one of the thing which is at least the trade is saying. Just wanted to understand your take on January, whether the same buyer growth, what you have said, 49% contribution is continued or it's come down. I don't have the contribution figure for January on new versus repeat and how it was even last year. Overall buyer growth in January has continued to be very healthy, is what I can say. Okay. Even after you discount for a weaker January last year. New to repeat, I don't have a January data readily available, and we'll analyze it for the quarter. It doesn't make sense to see it only January. Okay. There's activation and therefore inactivation, there is some skew that happen, et cetera. Okay. Wonderful. My second question is on watches to Suparna. If you can break that 811, what is the core watches and the new introduction which has happened over last two to three quarters? Basically if you can say that the core business watches and wearables and the new product contribution which has happened. Sorry, is the question how much is wearables as a% or is the question how much% of total turnover is from new product introduction? We met last time, about 2 to 3 quarters before. Yeah. You showcased a lot of new products. I'm more interested on a nine-month, if I look at this number. What is the contribution of the new products which has happened? Contribution of new product is about 20%-22%. Which is quite healthy. Now we are seeing that new product contribution is across all channels. Typically new product contribution is high in retail channels. Now we are seeing that even in multi-brand outlets, new product contribution is actually around more than 10%. That's really where the pipeline, the power of the pipeline of new products has kicked in and given us growth. Okay. Wonderful. Thank you. My last question on the emerging business. I think finally we have women's segment accessories which is back, I can see that, and you have introduced very good models and the products. Any color, any number, what are we doing? Where we have reached and what is the distribution we have done? Maybe if number, if you can quantify. Hi, this is Manish. We're talking about the IRTH brand. In the women bag category, we have two brands, IRTH and Fastrack. IRTH is what we've launched in October. Currently it's available on Shoppers Stop, Nykaa, Tata CLiQ and Myntra. We have about 25% coverage of Shoppers Stop store, like 2,508 stores. The response has been really, very good in the last 60 days. We're trying to expand in the future across various board markets, and, we are getting great response right now. Is it managed strategies that we will try and look at the large format stores firstly and then maybe try the e-commerce space and then maybe get into retail? Maybe I'm looking for a strategy over the next 12-15 months. Basically we want to be present in department stores as you said. Online we're already there. On the vertical fashion portals like Myntra, Nykaa, Tata CLiQ, AJIO, different portals. We also want to be in the retail network as well. We'll also have a retail with a store in the quarter one. I got that. I think, what I'm referring that in the vision, discussion when we came and met, Venkat and Keith, there is a strong vision over the next five years. If from the modeling purpose, maybe another 15, 20 months, one year or two years, what kind of revenue this business will drive? That's what, I'm looking for your help. You know, like the FY27 target, you are aware, I think, in that condition. I know. This business we want to take to 1,000 crores. I think business is pretty confident and comfortable about and preparing themselves. This is very initial phase and preparing themselves to reach to that. Next year, while there are internal targets, I don't think we are willing to share at this point in time. Sure. keeping an eye on FY27, the internal preparation and targets are being worked on. Okay. Thank you, Ashok, and thank you, the team. Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer queries from all participants, kindly restrict your questions to two at a time. We have our next question from the line of Nihal Mahesh Jham from Nuvama. Please go ahead. Yes. Thank you so much, and congratulations on the strong performance. My first question was on the jewelry business. If I look at your growth in the festive period, which you highlighted was 17%- 19%, is it fair to say that November, December saw muted performance and then we've seen an uptick again in January? Has that been the trajectory over the last few months? In a simplified form, perhaps you can come to that conclusion, but the answer is a little more complex because the like to like period of 35 days this year, last year, this year included last week of September and so on and so forth. Actually the growths can't be derived in an additive form, you know, weighted average or whatever. Somehow when you look at the entire quarter, that is the reality of this year versus last year. It is true that our festive period growth was around that 17%, 18%. It's also true that the quarter three figure turns out to be around 15.1%. December itself was very close to the quarter average. Yeah. December was close to the quarter average. Jan is continuing at a, you know, if somebody asks the CAGR of Jan, three-year CAGR of Jan is in fact better than the three-year CAGR of quarter three. Understood. This is helpful. The second question was on the jewelry margin. I know it is in range, but just to reconstruct it versus last year on a higher revenue base and a similar stubble share, there has been a YoY contraction. Just to understand, would that be because of the store addition or the contribution from the international business or any other aspect you could just help highlight? couple of things. one is we knew that the market is volatile and choppy and therefore when the going is good and customers in the market, we said we will go aggressively after growth. if that meant that we needed to invest in growth by way of competitive offers, by way of, you know, higher marketing investment and overall, in general, a higher growth-oriented approach to the market, we've gone ahead and done that. for the quarter, we've also actually ramped up some investments in digital and talent, et cetera. That has also contributed to some extent. some of these things have possibly, you know, shown a slightly downward sense on the EBIT as you are gauging. Having said that, you know, we had always maintained that it is better to look at a 12%-13% range, it's pretty much in that range. Compared to last year it looks a little lower, last year also had some significant one-offs which we had mentioned in the earnings call as well. Absolutely. Just one final question if I may, that this quarter I see a significant difference between the UCP and our reported sales in jewelry. Any specific reason? Maybe stocking to the entry channel in the Q2 quarter? Actually if I just look at UCP to UCP, it's a 15% growth for all our brands for the quarter. When you look at primary, it may look like, you know, 10, 11% growth, 10% growth on the domestic business. The difference is entirely with the timing of stocking, down stocking of LC channel between Q2 and Q3. Thank you so much. I wish you all the best. Thank you. Thank you. We have our next question from the line of Sheela Rathi from Morgan Stanley. Please go ahead. Yeah. Thanks for the opportunity. Congrats on a great set of numbers, especially when I look at the World Gold Council data for the quarter, it suggests that jewelry demand was down 18%. In that context, the growth has been very strong. I just wanted to understand, and just picking up from the presentation itself, that, you know, the company is pursuing market share growth through high visibility marketing, inventory infusion and competitive offers. Just wanted to understand what exactly are we doing that has resulted in such stellar performance versus the industry? Quite a few things actually. There has been expansion of existing retail stores as a program which has been on for some time, which is as big as the new store additions itself, you know, for the year. That has helped. Inventory infusion and specifically in markets, where we are, we are low on market share and the opportunity is high, some south markets, some east markets, et cetera. Even in some of the mega stores, we have a bunch of large stores which we are pursuing more aggressive growth since we've infused inventory there as well. We have also done a lot more work on the high value side, both on studded, solitaires as well as on Polki, and that has also given us very good traction. Lot of theme design collection launches during the quarter, you know, whether it is Alekhya for the rest of the country or Chooda for Tamil Nadu and several other, you know, introduction, Kalani Joy, which was in December. All of that design collections have also played a very big role. Combination of many things, very difficult. We've also seen very good traction on gold exchange program and Golden Harvest enrollments. We are now back, you know, to pre-COVID levels kind of contributions for these two growth engines as well. Pretty much most of the growth engines are firing very well. Just a follow-up here, and sorry if I'm wrong in terms of my understanding, if I'm wrong. You said that south and east have done well, probably that would have helped you with respect to the growth. With respect to the market share gains, is it any particular market where we are gaining market share? Is it the large cities, tier-1 cities or something of that sort? Across regions, I would say I didn't say South and East have done well. I said we have launched specific collections in those areas. East has been a little muted as it has been for the rest of the market as well. Perhaps driven by some amount of rural demand still kind of catching up. This year, metros have done particularly well. I would say we have gained share certainly in the South, certainly across metros, most definitely across certain markets of the West. In East, I think might be we have sustained our market share, but East overall has been a little more muted this year. Understood. Just one more final question I have is, what was the share of wedding demand this quarter? Also, you know, in the presentation you have mentioned that high value share has gone up in the overall pie. If you could just give us some quantitative number there, and is it to do with wedding demand or anything else? high value studded has gained a percentage point from what it was, and it is now, as I said, pretty much as it was pre-COVID levels. high value studded has done well. Solitaires have done well. wedding specifically has been little more muted in the quarter. I am personally expecting it to become better in quarter four, and perhaps some of that is showing up in January. wedding has been a percentage point lower in terms of contribution, so we are at around 19% as opposed to the 20% that we were last year. Thank you. Thank you, Ajoy. Thank you. Thank you. We have our next question from the line of Nillai Shah from Moon Capital. Go ahead. Thank you. Hi. Am I audible? Yes. Please go ahead. Hi. Okay, so the question essentially is on the demand again. Ajoy, you know, you are reluctant to give the actual numbers for January. Can you benchmark them to a certain sort of medium term growth target that you have? Are they in line with those numbers? Essentially over the past few quarters, you have been giving some of these numbers. Even last quarter you spoke about 17%-19% growth, festive to festive. Given that we are in this uncertain environment, can we be a little more precise in terms of what the Jan growth was? Or if you don't wanna give numbers, just a benchmarking versus the 3%-20% that we've spoken about in the past? They are certainly better than what have been there if I look at the CAGR, you know, over three years. It is difficult to conclude on Jan purely on a year-to-year basis because of last year being. When I look at a CAGR, as I said, it is certainly better than the 3-year CAGR of Q3. Therefore, is it in line with what we are hoping to grow going forward? Certainly, yes. I would hope it's even better as we go forward into the quarter. Actually it's pretty positive. We are absolutely happy with Jan. Perfect. Thank you. That was very clear. The second question is on the margins in the jewelry business. Now I know that, you know, you kind of, it is down at about 13% margins. If I think out the next 2, 3 years, given the way we are growing, if this 20% growth rate is sustained. How do we think about operating leverage going down into the margin line for the jewelry business? It's a good question. We are also trying to put our heads together on this for an upcoming board meeting in which we are going to discuss the next four years. It's ultimately a conversation around growth, profitability and ROCE, and how do we prioritize these three different metrics. Sorry to confuse you in some ways on that front, but it is a function of what choices we make. I'll leave Ashok to kind of say something. Let me add on this, like, while we may plan, but market is always very dynamic, where we need to respond almost on week and month and quarterly basis. Whatever you may have planned, and it looked like that this kind of operating leverage should be coming in, actual may be slightly different than that. Your question and logic is right. As we are growing at the pace we are growing, there should be some amount of operating leverage coming in, and we should have a positive bias towards improving margin. As I told you, market is very sometimes, you know, dynamic and quantitative. I understand. Yeah. That's where I will leave it rather. We will play it as we go. We are mindful that, yeah, we need to kind of deliver that. Ashok, I'm not talking about the next one or two quarters, in fact the longer term. Your predecessor basically used to say that if we are able to get this 20% growth, we'll be very disappointed if the margins don't expand. Over the medium term, do you still hold the same view that if you are able to grow at this rate and the market remains generally buoyant, you'll be disappointed if you don't get the operating leverage coming down significantly? Yeah. The point is that is what I'm trying to explain you and Ajoy tried to explain you, that we need to make certain choices. You are right that market competitive intensity and our kind of investments will decide that actually. We have been maintaining that in next 12 to 18 months we want to deliver growth at 12%-13% EBIT margin back, and that is staged. It's staged, and that's a 12 to 18 months view. Nillai, since I was party to the predecessor's comment, let me just give a perspective here. Finally, the sales growth coming at the same gross margin levels in a business helps you deliver expanded EBIT margins. The competitive situation in 2017 and 2018 of a certain level. The competitive situation on the jewelry industry in 2022, 2023 is at a much higher, more intense level. Therefore the same sales growth may well come at a gross margin damage. That is the dynamic situation that Ashok has gotten into. Therefore if that happens, then the same leverage which was possible, which Subu could, you know, state it in that manner, is may not be possible today and for us to state it with that much of clarity and certainty. Got it. That is clear. Thank you very much, sir. Thank you. We have our next question from the line of Manish Poddar from Motilal Oswal AMC. Please go ahead. Hi. Thanks for the call. Just two questions. One is, if I look at the presentation, I think there's been a 1% market share improvement from the previous quarter. I believe, this you generally do when you do some market study. Would you like to highlight any other, you know, data point or any other, you know, analysis which came out from the data set? Yeah. Actually it's an internal estimate. you know, when we were looking at the deck, it looked like we had not reviewed that number. Last year's number looked like a 6% share based on an estimate of about INR 400,000 crore. There are multiple views between INR 380,000 crore to INR 430,000 crore. Our internal estimate is about INR 400,000 crore was last year's jewelry market size overall, and we were around 6%. It looks like if I look at the trailing 12 months, we are 6.8% based on our internal estimates again. We keep doing this constantly and a competitive assessment month-on-month, quarter-on-quarter. It's not a one quarter phenomena that you should read into. I think it's more like taking the last previous 12 months. Likely to be this fiscal kind of number. We may creep up towards 7% from 6.8% or whatever. A lot depends on the next few months as well. Would you have also done any, let's say, you know, slice and dice, let's say for wedding market share or let's say studded market share? Any sort of analysis on that front? No, not really. It's not easy because the industry quotes a lot of figures when it comes to wedding, you know? They keep claiming 60%, and frankly I've not been able to figure out how do they get 60%. It is tough. How they calculate it. On studded, certainly our share is higher. On high value studded it is certainly lower. Yes, we have some estimates, but I think we would not, you know, share a segmented kind of market share because it's all heavy internal estimates, and we would rather share with you more qualitatively. Yeah. Just a second, Pritish, then, would you be able to help me understand what is the pricing inflation which you're seeing in diamond prices? What is the pricing inflation in diamond prices? If I look at Rapaport prices, they are up roughly about, you know, 35%-40%. I'm just trying to understand, you know, what is the sort of inflation which you are addressing. Our estimate is around 14, 15%, but this is a mix between solitaire and smalls. Smalls have gone up and have not come down, and they remain higher, so smalls could be 20% higher. Solitaires went up and then they have corrected back down and but they're still a little bit higher. The average between the two, I would say, is around 15%. A lot depends on your buying efficiency as well as when you bought it. We did take some calls on diamonds pretty early on and bought them early, so therefore that's the number we are seeing. This is for this quarter? This is for nine months? Do you think I think it's a nine-month number? This is as it stands for the quarter, but it is the effect of the input cost will be based on what we bought over nine months, actually. Right. This is cost of goods sold, if at all you want to look at it from that angle. In those, in this period, I would think it's about 15%, rough and ready. Got it. Great. Thanks. Thank you so much. Thank you. Thank you. We have our next question from the line of Aditya Gudibande from Piper Serica Advisors. Please go ahead. Good evening, team. I have two questions regarding the watches and wearables segment. What kind of contribution does the smartwatches bring to the revenue of the watch and wearable segment? Right now, for this quarter, it was 10% of the total sales was from wearables. I see. What kind of growth do you expect in this segment and what is the strategy for the company to compete with other pure tech competitors in this space? We are looking at double-digit growth numbers in this segment because the opportunity is huge. The smartwatch market in India has exploded in the last maybe 18 months and fueled by a lot of new product introductions and a lot of tech features from all the competitors. Our strategy at a broad level is to play with our two brands, Fastrack and Titan, at with the best of features and enhanced with better design and our own our own tech team that actually puts together the apps and the experience. Going forward, the strategy will involve customer propositions that go beyond the mere device play that is currently going on, you know, in full scale. Thank you very much. Sorry? I'm sorry, you were not audible, sir. Can you repeat? I said, thank you very much. That was insightful. Thank you. Thanks a lot. Thank you. Thank you. We have our next question from the line of Vishal Punmiya from PhillipCapital. Please go ahead. Yeah. Hi, team. Vishal here. I have just two questions. First is what is the contribution of gold exchange during this quarter, and has it gone up because the gold rates have been going up? Generally, what we have seen in the past that contribution of gold exchange keeps on moving in the month of January. Have you seen that? Does gold exchange earn similar margins or margins are bit different versus the normal business? Gold exchange contribution is up this quarter over last year's same quarter. It's around 30%. It has gone up in the quarter also partly because we have driven some aggressive gold exchange related offers in the market, which is part of the investment I spoke about. Mm-hmm. Especially given the fact that we saw gold prices going up, we are continuing that this, at least the next couple of months. January has been part of that. Yes, that has contributed to the growth. You are right, the cost economics, unit economics are different for gold exchange. If we get a certain quantum of upsell. Mm-hmm. You know, people come in with X grams and they buy extra Y grams. Right. When the upsell is at a certain level, it breaks even. Mm-hmm. So far so good. We are seeing that. It has some impact on capital because we are buying on spot instead of GSF. Got it. Got it. Got it. Otherwise, yes, we are happy. And you are right, when gold prices go up, there is a tendency, and we have also pushed for that. Got it. Sir, my second question on gold-coated silver jewelry. Our ground check suggests that a lot of jewelers have started gold-coated silver jewelry. I just wanted to hear your thoughts on this segment. Are you into this segment? If you are not in this segment, then what is your thought with respect to entering into this segment? No, we are not really into this segment, and I don't think we will be in that segment. In Tanishq, the brand, I think it's better that we stick to what is authentic and direct. If it's gold, it's gold, and if it's not gold-plated silver. Yes, there is an opportunity. A lot of jewelers do that. Price points are low. We are not operating in that segment. I don't have a comment on the size of that market. Got it. My last question on the franchises and expansion. Even the gold prices are going up, so the working capital requirement for every kind of franchises goes up in a very significant manner. Are we expected to see, bit lower store addition with regards to franchisee expansion happening in the upcoming 12- 18 months? L1, L2 can continue, but L3 format, it could slow down a bit. Actually, not really. because ultimately even the sales is a function of the gold price. no, it's not a big deal. I mean, there are enough and more franchisees very keen to open up Tanishq. In fact, L3 sometimes more than L2 because the margins are sweeter. no issues on that. We see a lot of opportunity out there for franchisees who are wanting to come in L2 or L3. Okay. We are not seeing that. Thank you. Okay. Thank you, and wishing you all the best for the upcoming quarter. Thank you. Thank you. We have our next question from the line of Sabyasachi Mukherjee from Centrum PMS. Please go ahead. Yeah, hi. Thanks for the opportunity. I have two questions. First, can you comment on the reason behind gross margin decline? Gross margin at company level you are talking about or any particular business? I think we spoke at great length in the beginning of the call about jewellery segment margin performance in this quarter, and that being the dominant business, it reflects at the company level. In this quarter we talked about our pricing growth invest offers, etc. We also talked about that in last quarter, too, there was a one-off 1% sitting. You need to make comparison accordingly. Some of the benefits which we are sitting in earlier quarters were also, you know, like diamond pricing gained the kind of significance which was there in quarter two our custom duty. They are also tapering off quite substantially in this quarter. Okay. Understood. Second question, I wanted to understand a bit more on the like for like to like growth of 9%. If I were to break it down between, let's say the, you know, the sales is basically a product of the average unique price of a jewelry and the number of items or articles sold. If I look at the gold price movement, it is approximately 9% of year-on-year in your presentation that is mentioned. Comes your comment on that the buyer growth has mostly delivered this 9% growth. Is it fair to conclude that the buyer growth was there, but then the average item bought by a particular buyer had fallen this quarter? Is it a correct assessment? No, let me clarify. At the overall 15% growth, the larger contributor is buyer growth. When you come to same-store growth of 9%, I don't have an exact fix, but I think both ticket size and buyer growth are there. Now, normally when the gold prices go up, let's say in this case 9% or 10%, the ticket size does not go up in the same proportion. People do adjust because they have a certain budget, so they do adjust grams that they purchase. May not be units, may be units, may be grammage, depending on whatever works. We operate with a certain budget. Therefore, you know, in that sense, we don't. There is buyer growth and there is ticket size growth, but the ticket size growth may not be exactly equal to the gold rate increase. Between these two, the buyer growth and the ticket size growth, out of the total 9%, is it evenly poised, evenly split between two or there is a skewness in one of these two? It's good. Both are good. I wouldn't be able to go further on that. Let's say it's a mix of both. It's not one or the other. Any guidance on this, same-store growth for the medium to long term that you would do call out? In what? In guidance? Long term. Medium to long term same store, so like to like. We changed, certainly every store has a business plan and there's a same-store growth plan. We hope to do better than that in the future. We, you know. Yes, there is, and depending on the age of the store, of course. Overall like to like growth has to continue to grow because stores have to be continue to remain as profitable, if not more. Safe to assume 8%-9% kind of a growth you would be able to achieve in the medium to long term? Should be better. Why only 8%-9%? Okay. Better. Great. Great. Thank you. That's all from my side. Thank you. We have our next question from the line of Devanshu Bansal from Emkay Global Financial Services. Please go ahead. Sir, hi. Thanks for the opportunity. We are making inventory investments through additional infusion at stores. While this is reflecting in a stronger growth profile, do you expect working capital to increase from current levels? Working capital has gone up. In our case, because of GOL, the capital employed is still under control and pretty much where it was. Yes, of course, we expect our inventory to go up. It may not go up to the same extent because on capital employed we might be able to do a more efficient play out there. There are two, three levels. You know, like, one is of course gold rate and diamond rate, you know, also contributes to INR value of inventory. So while that's the number which kind of you see in the reported numbers, not this quarter but last quarter and in the process where you will see that number. So one is that INR value and then the term part of it. We keep our eyes on the term, but it will drive some of these places, and we are taking conscious call of some inventory intensity going up. Overall basis, we are keeping a close eye on our inventory efficiency overall. That trade-off decision also sometime again, growth margin carrying cost is done meticulously. Got, the incremental growth, et cetera, should not necessarily result into increase in ROC profile for us. Is that a good understanding? Right now, idea is not to kind of significantly improve on again inventory terms, but over the medium to long-term period, some improvement can be expected. Got it, sir. Thank you. Thank you. We'll take a last question from the line of Latika Chopra from JP Morgan. Please go ahead. Yeah. Hi, team. Thanks for the opportunity. I have just one, you know, question. Sorry, it's again around the demand scenario. I wanted to know what's your read on the consumer sentiment at a broader level. You know, for jewellery I can understand there are various nuances, you know, probably there are more wedding dates. There is, you know, anticipation of gold prices going further up. You know, of course your own initiatives to drive market share gains. When you look at other categories, you know, and you do now operate across those discretionary categories, how are you sensing demand, consumer sentiment? You know, most of the other companies are kind of calling out some caution on urban discretionary demand. Hi, Latika. This is Venkat here. I think the biggest advantage that Titan and other companies like Titan have is the consumer segments from which the bulk of the business emanates. Those consumer segments are sitting in the top half of the income class pyramid in the country, and they are much of the time substantially removed from these episodes of inflation. Therefore, from a near term and a FY 2024 point of view and even further, that is an advantage that, you know, Titan has. One. The second is that the exceptional database that we have got, +20 million Encircle membership with a deep understanding of their preferences, of their purchase history. On top of that, many millions of them personally known to our staff and therefore, a sale is a telephone call away in a sense because of that relationship. The intrinsic ability of these segments to buy things and the relationships and the understanding that we have with many millions, is the difference that Titan Company has in this overall situation that you're describing. Therefore we are quite, positive about, calendar 2023 and, FY 2024. Great, Venkat. Thank you so much and wish you the best. Okay. Thank you, Latika. Thank you. I now hand the conference over to Mr. C.K. Venkataraman for closing comments. Over to you, sir. Thank you very much for all the probing questions and all the best wishes as always. See you in the next quarter. Thank you. On behalf of Titan Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.