Ladies and gentlemen, good day and welcome to Titan Company Limited's Conference Call to discuss Damas Jewelry acquisition. 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 touch-stone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. C. K. Venkataraman, Managing Director of Titan Company Limited. Thank you, and over to you, Mr. Venkataraman. Thank you, Sagar. Thank you, everyone who's on the call. It's with a lot of excitement that I would like to share the background relating to this development in our life. You're all aware that we have been in the international jewelry industry in some countries starting middle of 2020. Particularly in the GCC, we had some early intentions to start catering to nationalities other than South Asians, other than Indians to start with, other than South Asians thereafter. After some time, we started realizing, which of course, it's not a surprise, but we started realizing that for us to actually make a mark in other countries, other cultures, relevance, brand assets are very, very key. As we started observing the jewelry market in the GCC, the kind of customers were there, the fundamental aspects of jewelry, like in India, this whole thing of gold rate, making charge is such a big part of Indian jewelry purchase because customers give a whole lot of importance to the store- of- value aspect of jewelry in India and the accessory values thereafter. Whereas in most international markets, and in this case, even in the GCC, the accessory value of jewelry is very strong, which means the question about gold rate, the question about making charges, all those are, I mean, just not there. Even the share of diamond jewelry is very high. The share of what we would call value-added premium gold jewelry is very high, where the making charges could be 40%-50%. At that level, you don't even know because no breakup is given. They said it's a true accessory market with multiple advantages coming as a result of that fundamental aspect. We started warming up to this whole thing of becoming a global jewelry company because there are so many things that we do well as a jewelry company after nearly three decades of being here. It would be totally natural for us to capitalize on those capabilities and actually scale inorganic outside India as opposed to take only the diaspora and our own organic brand route, which of course is being at a very, very brisk clip. I don't know if you're aware of the Tamil March outside India. All that was in the backdrop. When this opportunity came our way some months back, and Damas was very well known to us. We had, in fact, worked with them many years back. We were present in some of their shopping stores in the UAE, particularly with small collections of Tanishq. Starting around 2015 or so we were familiar with the brand with a few of the people in the company. We were aware of the checkered history of the company and, of course, the strong lineage and actually the strength and the popularity of the brand in those markets. When this opportunity came, we immediately warmed up to it. Thereafter, many months passed, and here we are. If you go back to the strategic rationale, Tanishq is doing exceedingly well, growing at a very, very high double digit in the GCC over the last few years. We see the momentum of that continue for a while because the network expansion opportunities are still there for two, maybe three years. Thereafter, it will probably slow down a little to a 15%–20% kind of LTL and all that kind of growth. The market for Arab customers is totally open. We do not play there. While we may get one or more customers here and there who are Jordanians or Emiratis or Saudis or Egyptians or other Arab ethnic nationalities, they are few and far between. The brand name is not relevant to them. The products that we make are not relevant. Our sales staff are Indians and South Asians. Every which way, it is not meant for the Arabs. The Arab jewelry market for the Arab segment is $4 billion. Particularly, the UAE and KSA continue to be stable parts of that region. The macro outlook is reasonably strong. GDP growth rates are pretty good. The overall interest in the jewelry category is also strong. It is an accessory market, like I said, very high diamond jewelry, very high share of value-added gold jewelry products as well. Gross margin is very strong. Very strong brand in the UAE, the number one brand in terms of recall, consideration and all that. Pretty strong brand in the KSA, not as strong as UAE, but pretty strong nevertheless, with exceptional distribution in the UAE. Some distribution in the KSA and some in Oman and all that. These two countries, UAE and KSA, make up for 75% of the opportunity. Very strong brand, strong network, good organization, culture fit, and all that. People who know customers, who know those markets very well. We saw it as a good combination of strengths that what they bring to the table, the customer obsession, the deep category expertise in terms of processes and all that, the strong retail ops experience that Titan Company has. Three, four things that the Damas company brings to the table, three, four things that the Titan Company brings to the table. Together, we can really march faster, better, higher than they have been able to do. The owners of the company were also not from the consumer businesses. Therefore, it made sense for them to look for a company like Titan and Tata and all that. They were very particular that Damas gets housed with the right partner. They were also very keen that a partner like Titan and Tata is the right one. That is where we are. I think from an acceleration of the expansion of Tanishq in the region as well, this partnership has got potential to sort of kickstart and take the acceleration to a higher level. One is the role of Titan Company in the management of the Damas business, catering to the ethnic Arab customer segments across the region and scaling that at a faster rate than earlier, bringing to bear multiple capabilities Titan has, fusing it with the strong assets as well as the capabilities that Damas has. That is one part of the benefit. The second is the acceleration of the Tanishq brand in these two countries and even other parts of the GCC countries because of the connection, because of consolidation benefits, some of which are very visible, some of which are under discussion. This is the background to it. Also, the way we operate, you are aware that we create divisions or operating subsidiaries. We create strong leaders, build or bring strong leaders for each one of those business units or subsidiaries. We have a central leadership team, which is MD, CSO, CPO, Chief Digital Officer, Chief Design Officer, and so on. The center gives a fair amount of freedom, operating freedom to the units, and in a way connects at the levels of values rather than on strategy and, of course, on the financial performance targets—both credit, ROSI, cash flows, and all that—and gives a very good freedom to the operating units. Therefore, we were also clear that this would not come in the way of complicating Titan Company's life today. We did think about where are we today, what are the things which are high priorities for us between domestic operations, intensifying of competitive activity in the jewelry industry in India, the scaling- up requirements of the new businesses, which have taken a little longer than we thought, the consolidation of the international businesses to extract the appropriate value, which is not taking time, but that is certainly a priority now that scale has been established. In all these priorities and all these things on our plate, would this be the right time to do this? Finally, these things have never—the markers have never cleared that this is the right time to do anything. I think it is finally an act of judgment that we apply. After considering everything on our plate and some of the things that are starting to play out very well in the domestic market, in the new businesses, as well as the consolidation in the Tanishq jewelry business outside India, we felt that we can certainly—and we should—take this on at this moment and create the same leadership depth, width, and give it the same freedom while retaining, like I said, fundamental aspects of control over values as well as financial performance. This is where I would stop and perhaps leave some space for questions before Ashok comes in. In the next part. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star then one on the touch-stone phone. If you wish to remove yourself from the question queue, you may press star then 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. Our first question comes from the line of Avi Mehta from Macquarie Capital. Please go ahead. Yeah. Hi, team. Thanks for the opportunity. I just wanted to kind of understand the growth opportunity in Damas, especially given if you look at this historic sale overseas by 2019– 2024, it's been largely flattish. If you could kind of just give us a sense on how do you see the opportunity here, what gives you confidence? Because by Tamil, she cited the double digit under 15%-20%. Is that number something that you write here as well? And just a related bit, what I'm trying to also appreciate is how should we look at the acquisition synergies in terms of margins. In turn to appreciate the EPS dilution accretion over the next few years? Yeah. Thanks, Avi, for that question. If you look at the UAE market. The UAE market is where Damas is pretty strong already from a network point of view. I would say it's at a mature level with some scope for network expansion. The opportunity for the acceleration of market share in the UAE is still decent, both from a share of catchment increase at one level as well as the significant improvement potential that is sitting in the retail KPIs in the existing stores. We build our sales in the jewelry business, particularly through metrics called walk-in conversion, ticket size, basket size, walk-in conversion, basket size, ticket size, and the total sales value. When we look at the 140 Damas stores across the region and maybe 60 or 70 of them are sitting in the UAE, the opportunity for maximizing the sales through driving the KPIs in each one of these is that potential is very strong. Therefore, we see a decent sales growth CAGR coming from the UAE. If I look at the KSA, KSA is a much lower penetrated market for Damas. Relatively much less organized as an industry than the UAE. Therefore, the opportunity for the formalization is greater. It is also a country which is sort of poised for a dramatic social change. There are hundreds of thousands of young women, women in general and young women in particular, whose lives are changing dramatically in the KSA. Women are driving Uber taxis at night and taking up jobs in various fields. Therefore, the accessory potential for a new social transformation that is happening in the KSA is very—from a customer's point of view—is very strong. Therefore, not just in the jewelry market of today, but shaping and expanding consumption of jewelry with these social changes happening in the KSA is one. On the jewelry market itself, because the market share is very low, the presence is middling, I would say. Therefore, the opportunity to set up a lot of new stores in the KSA is very high. In the business plan that we have worked with the team, the thrust is actually the KSA expansion in terms of new stores and substantial improvement in the retail KPIs in the UAE. Through these, we expect a pretty decent sales growth that we are looking at. At the moment, we are not sharing the sales growth. Obviously, the Tamil situation is rather different because it is a very new brand to a market full of Indians. Therefore, just by opening stores in so many places, our overall CAGR is at a much higher level. On the second part, Just to add to Venkat, while Venkat spelled out the opportunity, how do we see in the future? To your question that you looked at 2019– 2024 data, I wanted to provide you some context to that. In terms of the refocusing and positioning brand towards more Arab customers, around COVID time, a large part of network was closed down by Damas, in their effort or in the judgment of that management team. About 20-25% of network was closed down and rationalized at that point of time, which is falling under that period of 2019– 2024. The other one also, Damas was while mostly targeted towards Arabs, but it was also doing South East Asian and Indian. There is a part of network which is focused on that. That part now is we are kind of refocusing that that did not be continuing in the same format. That part in the last five years with the increasing world price volatility, a lot of large Indian jewelers expanding their retail was under pressure as far as Damas has appeared. While they are doing very well on the Arab side of it, they call that signature network, that is doing well. This part of it, which was also a significant part in terms of value, was under pressure. This is what you see, the flattest. Number one is the retail network closure. The other one, the Indian South East Asian part of the business under being pressure resulted. We are reaching with it, the strategy of Damas to completely focus on Arab nationals and expats and those kind of premium customers. That is how we are very confident. If you look at only that portion of growth in the last two, three years, they have been growing healthy, double digit, I would think around 12%-14% as far as that part of their network is concerned. So that's just some context on 2019– 2024. Your question of EPS Before that, and just building on what Ashok said, there are some reasonable number of stores of Damas which are focusing on the South Asians with not so much of success that you were describing. Now, in the whole consolidation process, we would be converting them into Tamil stores. Therefore, the whole kickstarting or acceleration of the Tanishq journey in the GCC region will be enabled by this. Fusion. Yeah. Yeah. Now coming to your last point on EPS, what our current estimate of the future is here, which will get further sharpened. We believe CY 2025, they follow calendar year at this point of time. CY 2025 is going to be used for all these restructuring which we have in our mind. The South East Asian focused retail network partly getting converted into Tamil, partly running, partly getting closed down. Some of the inventory refresh actions, etc., would be done. CY 2025 is kind of a restructuring year for us. The real work and the value extraction, I would say CY 2026 onwards would start. CY 2026 would still be EPS- diluted at a consolidated Titan balance sheet level. We believe CY 2027 should become neutral, and CY 2028 onwards, it should be positive. Got it. Got it. Very clear, sir. Very clear. Just to explain me more strategic, do you, I hear you in the start that you want to look at this more, you were kind of looking at an international footprint. Would you see this opportunity, this is more like an attractive opportunity which we are capitalizing or a start of expansion into other international markets? I mean, where I'm coming from is the history, unfortunately, is littered with consumer companies who found it difficult to make international expansions work. Would love to hear your thoughts on how we should look at it from a strategy perspective. That's all from me. Yeah. It's not an easy answer. You're very right in your overall observation about the history. One of the other considerations which was strongly there even before we got seriously into the Damas evaluation was also the distance from India and the cultural. For example, investing in a company in the U.S. targeting Americans versus investing in a company in Dubai targeting Arabs. Both our familiarity with the GCC as a geography, we've been there many times, whichever way. It may be a little easier for us to understand Arabs. Even organizational cultures are perhaps more alignable. It's four hours flight to Dubai versus 14 hours to LA or whatever it is. Those are also considerations and culturally different and all that. It is a first important step. Whether it is going to naturally lead to the second or third, I would say it is. I think it will make us more confident. Obviously, the success of this will also, it's not that six months from now, we'll be talking about another international company in any case. We have to become confident that we can succeed, that we can integrate well, that we can keep it free and then extract the value. The milestones for the EPS thing have to happen. Otherwise, it would be pointless for us to simply look at the second. If we succeed and the milestones are visible, then the question would be, why not some other company? Because finally, it is the capabilities of Titan Company. In a way, a global leader here, a domestic operation here. We would think that we are a global leader of sorts, certainly in some areas, on capability. Why would we not want to use those capabilities globally? Okay. Very clear. Very clear, Venkat. Thanks a lot. I'll come back in the queue with the other questions. Thank you very much for this. Thank you. Thank you. Our next question comes from the line of Devanshu Bansal from Emkay Global. Please go ahead. Hi. Thank you, Venkat and Ashok, for the detailed rationale. Sir, there are some bookkeeping questions. The EV that we are paying is close to INR 2,400 crore. Is there any goodwill component also in this? Devanshu, no? Devanshu, the way we have looked at it, we have, of course, disclosed about AED 1 billion is the enterprise value. You would know the equity value will be derived at the time of closure with the debt and cash and some other adjustment which we have agreed to. 67% equity will entail a certain cash outflow at the time of closure, which will be, of course, less than 67% of enterprise value. It will be further less than that. Tranche O ne is the cash outflow, which is kind of, we have drawn our comfort when discussing or agreeing for the price with what business currently has, what kind of assets it is backing. It is a very, very reasonably priced tranch one, keeping Titan risk at a very, very manageable level. I think both the partners, when we work for the next four years and bring all the Titan excellence, operating excellence, which is more required, brand is already there and retail network is already there at a very, very key location, which is very, very difficult for any other player to get hold of. Over the four years when the value gets created, I think both the partners will actually realize far higher value. Manai, who is the seller, they will also be hopefully rewarded well at the time of Tranche T wo. Yeah. Understood, sir. Where do you plan to raise this debt capital? What is the expected cost of debt for this acquisition? Whatever. May be the capital outflow that we are foreseeing. I'm asking related to that. We believe we will be raising this fund at our overseas subsidiary only, where the asset is in the same geography. We will raise the fund. With the current indication of the interest rates, I think about 6% plus minus, we should be able to raise this fund. Largely debt funded, very small. Titan money would go to that. That's the current thinking. We have time for next three to four months. This acquisition requires certain customary antitrust approval in two or three geographies. We have three-four months to kind of fine-tune our debt raising strategy. That's the thinking at this point of time. If you really want to say about AED 500 million-AED 550 million, about ₹1,200 crore kind of fund raise at 6%, that's the size we are looking at. Fair enough, sir. Just lastly from my end. Damas definitely is a strong brand. In that particular part of the geography, the purity of gold is unquestionable, right? Many retailers sort of sell basic design set via gold making cash as well. In my opinion, design is the only big differentiation in that part of the geography, where Damas has an edge. Do you think that the turnovers typically can be relatively lower? Because obviously, the investment customers may be purchasing from somewhere else. Also, because design is the only component, the brand may have relatively lower margins versus what we command in India? The signature network, we focused on Arab and expat population where the going forward future focus of Damas would be a network expansion also will be there. The ratio of studded and gold is pretty high there. About 50% or more is the diamond jewelry, which is picked up by these customers. Gold also, as Venkat was alluding to, it's not metal plus making charges kind of thing. Mostly per- piece prices happen. Actually, Damas' gross margins are better. Better than certainly in India what we get. As long as some of the synergies and cost things are being worked on and sourcing efficiency, inventory efficiencies are brought in, actually their margin can improve quite a bit. Also. The best practices of Titan Company in what we call merchandising effectiveness, which is understanding the requirements of customers in every catchment, and creating what we call category price band structures for that store, populating them with the right bestsellers, keeping buffers for supplying so that things are not stocked out. That entire machine, the principles as well as the machine, once we bring in and the scale economy from a superstore sale, that opportunity will directly kick into the margin expansion also. That's the potential that is waiting to be unlocked. Obviously, we have to execute well, but I'm saying in principle, those levers are very much there. Thank you, Venkat. Ashok, thanks for taking my question. Thank you. Thank you. Our next question comes from the line of Videesha Sheth from Ambit Capital. Please go ahead. Yes, hi. I hope I'm audible. My first question was, are there any changes in the business model of Damas that can be expected? Because based on the existing numbers, it seems that it is following an asset-heavy model. I just wanted to know, how will the operating model evolve post-acquisition? Are we looking to convert any COCO stores into franchisee- owned? It is too early to comment on this, Videesha. Videesha, yeah. Yeah, Videesha. Too early to comment on this, actually. The franchising model is not a common model in those parts, even though we are running a pretty robust franchising model in Tanishq as well. That is because we are used to it. No view yet. We need to get into the business to conclude on those things. Maybe a year from now, we will be in a much better position. Got it. The second question was on the sourcing bit. Just wanted to understand how is the sourcing managed for Damas? I mean, since 40% of Titan sourcing is coming through the GML facility. Just wanted to get an understanding from that market. Okay. Videesha, because as we are saying that going forward, their product portfolio mix will undergo some change because we are focused on South Asian Indian diaspora, will reduce and gradually keep coming down and go in favor of Tanishq, etc. Right now, all the sourcing of gold, they have been, GML is available in those markets also. They have been extensively using GML. As time progresses, I believe their reliance on GML will keep coming down. The non-working capital loan to support the diamond jewelry, etc., will go up. GML is available, and as much as gold you want to carry, it can be supported by GML at a very, very attractive price there also. You want to add? Just one sec. My colleague is there and wants to add something. I would like to make a question on the seller of GML. In India, we have a 180-day seller, whereas there we continue to go forward and continue to carry the GML system. Yeah. Yeah. Ashok, just wanted to understand. If I look at the finance cost or the finance charges as a percentage of sales, it was pretty steep versus the India operations. Just wanted to get a sense on, can that reduce going forward? With the Titan credits coming into play, we definitely expect all these facilities can be further fine-tuned. They have been also running their ships nicely. I would not say, but some possibility to bring down finance costs because inventory more comes through asset turn, inventory optimization. Some of the inventories which we discovered can be actually through asset turn can be improved and capital can be brought down. Through that, finance costs will come down. From the rate perspective, opportunity is minimum, but that also will be exploited. Got it. Just a last bit, the signature network that you're alluding to, how much percentage of sales does that make up for Damas? In terms of number of stores, they were about 60-70, 65-70%. In terms of top line, about 50%–55%. 50%, roughly half up between gold jewelry and signature network. It was there, but this mix is going to change as we progress. Because the gold jewelry stores of Damas typically target South Asians and Indians. There, the ticket sizes are high. Per- store sales is high, but it's all gold-led. Those are the ones which are waiting to be converted or closed, or a few of them continue with including the support of Tanishq. Some Tanishq merchandise can also come into those stores to strengthen it. Got it. Got it. That helps. Thanks, Ashok, on my side. Thank you. Our next question comes from the line of Arnab Mitra from Goldman Sachs. Please go ahead. Hi. I had a couple of questions. First was, as you're trying to grow Damas in these markets, what is the market structure here in the sense that the share gain will be organized and organized shift, or you would have to gain share from large organized chains which are already there? Just wanted to understand the main source of growth and also what's the industry growth in these markets, if you could give us a broad sense of? Hi, Arnab. Venkat here. The growth would certainly come from a shift from unorganized to organized, rather more in the KSA and relatively less in the UAE. Also, I mean, this is a little difficult for me to be that clear at this stage. When I look at the potential for extracting value from the operations of the network, that offer all those people who are coming into every store every day, are we maximizing the build value from each one? Are we maximizing the number of people who are coming in who should go out with a bag in their hand? That opportunity is reasonably visible. Where they are finally going and buying today is not that clear to me yet for me to totally confirm on this. In both countries, certainly, there is a nature of the industry. I would think that the maturity of the South Asian jewelry industry in the GCC is perhaps at a slightly higher level than the maturity of the jewelry industry which is targeting the Arab segments. I'm not talking about the luxury brands, international luxury brands who are there. I'm talking about the local brands. Therefore, from an opportunity for converting unorganized to organized in both the countries, the opportunity is there. Any broad sense of what share of the market is unorganized? Any broad range of number there? I think UAE has become organized quite a bit. To my mind, about 60%, I would say 60%-65% organized. The reverse would be GCC. GCC is 30%-40% organized maybe and 60% unorganized. Quite fragmented. Sure. Thanks for that. My one last question was, given the higher studded share, the obvious question is, is LGD a bigger factor in GCC than it is in India? Any insight on that? And is solitaire a large part of the studded share? Those were the two related questions on the studded part. Damas themselves have a brand called Gaia. Gaia, which is an LGD brand, which sells inside their stores. They have actually managed to create a very good synergistic or consolidated portfolio strategy. Gaia continues to do well, but so does the natural diamond line of Damas. It is a good symbiotic relationship. No issues there. From an LGD presence, to the extent that I can recollect and remember, it is rather more active here. I mean, the number of brands and stores which are today in India seems to be rather more than what we could see or notice there. Solitaire is not a very big thing in Damas. In fact, it may be a little more pronounced in Gaia than in the diamond jewelry of Damas. Okay. Thanks. Thanks, Ashok, from my side. All the best. Thank you. Our next question comes from the line of Harit Kapoor from Investech. Please go ahead. Yeah. Hi. Good evening. I just wanted to ask a couple of things. One was, you did mention over the recent GRAFF, is the Graff portfolio, you will not be taking issue. Just wanted to know, how material is it from a revenue standpoint? Okay. GRAFF is, you must be aware that it is an ultra-luxury jewelry brand, global brand. They had three stores as a franchisee partner, Damas was a franchisee partner. That is going away. It is not part of our core transaction. GRAFF would like to run those from their own. It was roughly, in the post-COVID era, GRAFF stores started doing well because a lot of influx of expats were happening in UAE. That is about 20% of the revenue, which we have also reported. About 20% was on account of GRAFF. Got it. Got it. Profitability-wise also similar to Damas? Yeah. While it was a franchisee, the profitability was quite healthy, and gross margins were almost same as Damas' own business. We do not know the details because then the rest of the costs were common, and we were not able to call out the rest of the profitability. It was a healthy gross margin business equal to the rest of the business. Right. This revenue that you reported in your release includes GRAFF, y ou have to expect to see the real size of the business, right? Yeah. It includes GRAAF. It includes GRAFF, and that 20% roughly is on account of GRAFF. The second part was on the synergies. You did mention the revenue-led synergies. Are there any kind of OpEx synergies also, rather OpEx costs that, given that you are such an efficient player and you run your OpEx in such a clockwork manner, is there a possibility to, in terms of synergies on that side also, cost reduction possibilities? I mean, my question stems from the fact that the OpEx cost in Middle East is high, but just looking at the numbers, the OpEx numbers are reasonably high, the percentage of sales. Is it a function of the market, or are there some opportunities there where you can streamline a little bit? On the face of it, there is very much an opportunity. For example, if I were to just look at sourcing, so the consolidation of sourcing, the best ways that vendors give Titan on diamonds, on making charges for labor charges for jewelry, all that is a possibility. Titan factories making for Damas is a possibility because we have very deep expertise in manufacturing of diamond jewelry in Hosur. We have plants. We have plants in Tanishq, etc. So the sourcing, and of course, the GML rates, stuff like that. Talent, difficult to say at the moment in the sense that could we sort of support from India, and the talent costs could be lower, could we consolidate? Possible, but I will not venture there till we really get deeper into the business to understand all those synergy potentials. Certainly, in terms of negotiating with landlords, we will have two brands now opening stores. We go to landlords with more square feet and therefore next to each other and all that, that consolidation thing. Yeah. Marketing budgets. I am talking media agencies and all that. Great. Those are my questions. Congratulations once again, and wish you all the best. Thank you. Thank you. Thank you. Our next question comes from the line of Gaurav Jogani from JM Financials. Please go ahead. Thank you for the opportunity, sir. Sir, my question is relating to the 146 stores that you have announced. While we have seen in the annual report that they earlier had some 300-odd stores. What is the difference between these 300-odd stores versus 146 stores that you are reporting? What all are not included? That 300-store number, to my mind, would be 2012, 2013, when Damas went into huge difficulty and a bankrupt-led transaction happened when Manai, the existing owner, came in. Of course, the different management who were trying to kind of bring Damas out of a certain difficult situation. That has been continuously coming down. In December 2020, it was 182 stores. I was referring to another 40 stores during COVID time got closed. That is where 145, 146, in the last three, four years, something got added, something got closed. That is the number which kind of we have now with them. Again, we are saying out of 146, we have planned to kind of rationalize some of the Southeast Asian-focused stores, convert some of them into Tanishq. Some of them will continue as Damas. The Damas signature part, which is right now about 110 stores, they will continue to grow and add in KSA and other parts of UAE. Targeting the Arabs. Sure. Thanks. That is very helpful. For the second question, if we look at the reported numbers in terms of the EBITDA margin to the PAT margin conversion, while they make around 10% odd kind of an EBITDA margin, however, the PAT margin is lower at 1%. What is that goal then related to the financials that you can possibly help to bring it down and improve the profitability? If you look at pre-IFRS, then EBITDA is just breaking even, 2%-3%. IFRS adjustment makes it look much better than if you just deal with the rent without distributing into depreciation and interest, which IFRS forces you to do. They are just breaking even and slightly positive on EBITDA. All the finance costs, etc., which are real finance costs, keep below that, and that makes whatever number you are seeing. That is the right way to think about it. Got it. That is helpful. Thank you. That is helpful. Thank you. Our next question comes from the line of Jay Doshi from Kotak. Please go ahead. Hi. Congratulations on this acquisition, and thanks for the opportunity. Ashok, could you explain to us a little unit economics as of today versus an advanced store of Tanishq? Because you did mention that 50/50 is the mix between studded and gold, and gross margins are better. If pre-index EBITDA margin is 3% despite no franchising, then what is the big cost item in their OpEx, which is very different from what it is for you in India? Is that more of a geographic thing or specific to that geography, or is it something that you will be able to sort of bring it to India levels? The gold jewelry business, which was right now contributing about 50%, has a very low gross contribution for them. Our focus is now completely on the signature part of the network where very healthy gross contribution is there. My comment is with reference to that signature part of gross contribution. Because we are going to focus on that and expand that, I see definitely potential of their margin going up. That is also the reason because when you compete only on the gold jewelry, UAE is a very, very competitive market. I think Damas has been trying to respond to the onslaught of large Indian jewelers coming in and the local jewelers. That is where I would say that there was a difficulty with them, their overall profitability. I think that has been now identified and will be acted upon as we get more involved with the Damas operations and execution. The signature part of the business, EBITDA pre-index EBITDA margin is much higher than 3%, is what? Yes. Yes. Yes. Yes. Okay. There are many common costs, and you have to get into allocations, etc., which sometimes also can. This is why I would not venture into giving you an EBITDA margin for signature because corporate costs, many costs are common costs, and then you end up allocating them, and then you get a picture which may not be the right picture. Gross margin-wise, the rest of the business, signature business is a healthy gross margin business. Understood. I know it's early days, but is there something which India business can benefit from Damas' either designs or something that is different which you think is. You did talk about that there are a lot of things that you do well which you will be able to sort of improve the operations of Damas. Any cross-learning opportunities for you? Certainly, the immersion that the Indian teams will get through this acquisition to a whole new, different world of customers and the kind of things that they buy. Like, stuff which is made in Turkey, stuff which is made in Italy. All those are very ultra-niche in India, and therefore they're drowned by the abundance of the Indian jewelry in our stores. You do not see the green shoot potential of things like that. When I make a visit, I'm a merchandiser. I'm a category person from Tanishq in India, and I make a visit. Today, when I make a visit to Dubai, I go to the Tanishq store typically. When I go to, even if I go to a Damas store, it'll be like a story. I can't sit there. I can't probe. I can't get deep. Now it's a company, it's a partner company. When our teams go, they'll go deep. They'll go talk to the store manager who may be a Jordanian, and they'll pick up those pieces in their hands and then find, "My God, so beautifully finished. They're very modern." Yeah, sure. The making charges are high, but then they fabulously and they're light, and therefore the total budgets are low. Therefore the confidence in trying these out. Our standards will certainly be lifted by that kind of exposure, which today we won't get. We'll get only like a tourist. Just to add, Venkat, the other piece also, and again, only as we get into, we will know for sure, they have good association with some of the international brands. Some of them sell through their boutique there. When our team visits that and it defined relevance because India is becoming more and more relevant for some of a little bit premium to luxury kind of. Like Roberto Coin, Mikimoto. All these are sold in some of the Damas stores. We have met some of those leaders ourselves. Yes, I missed that, and thanks, Ashok, for that. One last thing. Which are the brands that Damas competes with for the signature stores, right? I think there are two jewelry markets that exist in Dubai. One is basically catering to South Asians where making charges is lower than what it is in India. The other one is where making charge does not matter. The signature part of the business, which are the other brands, which competing there? There is a brand called Jawhara. Jawhara in the UAE, and L’azurde is a well-known name in the KSA. There are actually some independents whose names are not top of mind for me yet in the UAE as well. They are like what I would call the better independents in India who are not unorganized or organize themselves very well, branded themselves, delivering a pretty good product quality and very good customer experience. There is a fair amount, the 40% that Ashok was referring to in the UAE, that 40% is not small also, which is unorganized. Understood. Sure. Thank you very much, and wish you the very best. We will take one last question. Thank you. We'll take one last question from the line of Nihal Mahesh Jham from HSBC Securities. Please go ahead. Yes. Thank you so much, and congratulations for this acquisition. Sir, I have two questions. The first one was on the competitor sector. You did mention a couple of names. Just to get some clarity, would you say some of the international design-led brands also be a part of the consideration for the Arab population that you're serving, or there's a different market for that? See, finally, these things would be defined by the price premiums that the international brands charge. Typically, the international brands that are popular, and popular maybe is not the right word, but desired across the world are the luxury jewelry brands, and they are out of reach for a large part of the population. Now, the UAE and the KSA are being much better off than India. From a per capita GDP point of view, obviously, the role there is no Graff store at all in India, but there is a dedicated Graff store in the UAE. It says something about the ability of the Arabs to buy brands like Graff. There is a very large, I mean, relatively speaking, of course, but there is a very large upper-middle-class equivalent in the KSA and the UAE, which would be looking for brands of our type. That is where Damas would play. We have Cartier, we have Graff, we've got Bulgari stores in Dubai, but those are the really rich Arabs. Whereas at the next level, you have brands like AlZayn, Samra, Liali, and all that. Like I said, I had to look at a slide and read those names because they are not yet top of mind for me. We are not talking about Cartier and Bulgari and Montblanc. They are there, but they cater to the rich Arabs, whose percentage is there, maybe 7%, 8%, as opposed to 1% in India, yes. It is still high single digit as opposed to high double digit. Got that. Final question. Last year in our analyst meet, you had given a target of $500 million for the international business USD. Does this acquisition be over and above that, or is it a part of that target that you are looking at? I would certainly like this to be over and above that. Yes. Wonderful. Thank you so much, Sagar Jyotnam. Thank you. Thank you very much, Sagar. That brings us to the end of this chat. Thank you. Sir, any closing remarks that you would like to give? No, nothing. Just that all the questions were so clearly supporting, encouraging us on this venture. As always, grateful to all of you for that. Thank you. On behalf of Titan Company Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.