Titan : Investor Day Material

ANNUAL INVESTORS AND ANALYSTS FORUM 2022

Speaker: C K Venkataraman - Managing Director, Titan Company Limited

We have two more colleagues here among us and Rajeshwari Srinivasan, our Chief Strategy Officer and N.E. Sridhar our Head of Sustainability. It is wonderful when I came to know that Titan company is sort of first of the block in having an in-person investor meet. It's always been a pleasure meeting you in small groups on the earnings call and in forums like this over the last, you know, close to two decades for me at least and we have benefitted so much through these interactions, you have raised the bar, you have made us think about our strategies, our competitive advantage and made us a much better, more responsible company, so thank you very much all of you here, all of you on the call for keeping us on our feet and making us a good performing company all the time.

Now, when we think of companies we often think of them most often from our capability lens how good is the strategy of that company, how good is their execution. There are some parts that we do not really think about, you know, it may be somewhere, you know, below the surface in our consciousness some of us maybe thinking about it a lot. This presentation is about sharing some parts of that so that the whole of Titan is something that you can perceive better, than this meeting today, and also the businesses which we represent are wide, but from a shareholder investor point of view often it gets, you know, focussed on to businesses which typically on the face of it appear to create a maximum shareholder value and also I wanted to spend some time in my presentation on that. The whole is greater than the sum of its parts is the message that I want to give and also talk about some of those parts which are just below the surface which certainly from your point of view have a lot to continue.

The first part is what I call capability, culture and commitment. I am just using a still from our most recent blockbuster television digital commercial on Mother's day to illustrate this. You know, people used to ask us overtime particularly with reference to the large competitors in the jewellery industry that we have, in the watch industry that we have, from, you know, they also have money, they also have, you know, large organizations, so how can you compete? And one of the things that we used to say is that you know people love to work for Titan. Titan is a talent magnet, the best people in the industry across functions love to work for Titan and work for Titan. The result is an example like this and I am choosing marketing communication example to illustrate but this is equally, for example, the watch I am wearing, it is the slimmest mechanical watch in the world which is created by Titan company designers, engineers and manufacturing specialists, a product like this at this price is impossible in the world to actually get. So, that capability magnet that Titan is, we need to appreciate, it does not, money can't buy everything. Other competitors may have a war chest which is half as big or as big as ours but their ability to attract people who can create stuff like this is low.

The second is culture, and there are some aspects of the culture I wanted to just, you know, talk and leave it with you, a culture which encourages a free flow of ideas without the hierarchy stifling it. We can have the most junior person joining the company today and in a meeting where I am present or any of the CXO is present, make a point of view which is countering the prevailing view in that room and actually nobody would, you know, take offense. That is the liberating democracy of ideas. A culture which enables dissent and debate to generate the most effective solution, there is, you know, group think is not, you know, that easily, you know, happening in Titan. There is a lot of debate and discussion because we are different personalities, we bring different stuff to the table. A culture that emphasises individual accountability even while it sort of enables what we call a family environment, in fact sometimes I joke that we are the world's largest family concern. A culture that encourages a very good sense of humour, you know, we have often said that if you are a fly on the wall in a Titan management council meeting, you will wonder how these people are actually running, you know, what is the reason of the successful enterprise like this because we you know, crack up all the time about something or the other but in the midst of that a lot of serious work is happening, lot of innovation, cutting edge stuff is being created. A culture that makes us all care for each other. There is no concept, you know, I have been in Titan 32 years now, the concept of a rat race. I do not even know what it means, but I know many of my classmates from college, you know, they talk about it, take a premature retirement, say, man this rat race is, I am sort of fed up I want to be alone. We just do not know what rat race is because Titan is a company where there is no ego. We do not have to win by climbing on top of somebody else. We can together win and a culture which makes us all not take ourselves serious. You know when there is a crisis, we do not know how to get all worked up about it and pass that anxiety and tension all the way down, but we take our work, that gives us the mind space to actually look at the work seriously.

The last is the commitment and this is the picture on the annual report of FY-21 and this lady who represents all the staff in our stores, there are 15,000 of them nearly across all our brand stores. All of them wore masks, double masks, shield through much of FY-21, much of FY-22 so that the company can actually recover fast, prosper. They give back to the company, that kind of commitment. So this combination of capability and commitment is really something difficult to be, so this is the first part of Titan that I want to leave you with. You would not know this, I mean of course you would know us, but I am talking about thousands and thousands of people who combine capability and commitment and thrive in a culture of that nature. The second is lifelong partnerships. When I was in Banaras on Saturday and coincidentally Banaras was my first market visit in Titan way back in 1990 and one of the partners I met, I met his son, that son was 33 years old or something like that and I was recollecting that he was a 1-year-old baby when I first went to Banaras as a Titan employee way back in 1990 and I have been going to Banaras every 2-3 years ever since and I have seen that boy grow up and he is now, you know, strapping 32-year-old person and I joke that the babies that sometimes we used to carry around

way back in the mid 90s are asking tough questions on store ROA to me today because they are running the businesses of their fathers today. That kind of relationship which is over time, now if you take some of my colleagues here, they are all 30 years, 25 years, 20 years in the company. So, there are of course many companies where people spend that kind of time, but the kind of deep relationships that we establish with our franchise partners, distributor partners, vendor partners is unique and therefore the whole ground swell of a feeling for Titan company that this generates among them and among their employees is invaluable, so that is the lifelong partnership, you know part of it. You must, you know, sometime come to a Karigar Meet that we have, or a vendor employee meet that we have. It is something else, some 400-500 employees who work in Bombay for example we took them to this, what is that outside Bombay that, like Disney world, yeah, so we took them there and full day of water slides and all that, so that deep engagement of those people, and we are there with them, that is the second big part of Titan.

The third is portfolio vibrancy. You know, I remember many years back, when I was a Jewellery CEO on one such annual investor meet somebody asked, I happened to be on the stage, somebody asked why can't Titan just focus on the Jewellery business? you know, from a shareholder point of view, so I said no and I was the Jewellery CEO at that time, I said no. Titan is a multiple stakeholder company. When that lady steps out of the shower, dresses up and then sprays that Amalfi Bleu on her, in the morning, that feeling that it generates for her is no less than when she puts on that 80 lakhs solitaire in the evening when she steps out for a party. So from a customer impact point of view, that Amalfi Bleu and that 80 lakhs solitaire, honestly is no different if you really think of it and when I wear a 1,000 rupee Fastrack sunglass, I mean, I am suddenly the handsome guy who otherwise perhaps, in my own view I was not. So how do you value the impact of that product's benefit just by, you know, taking its 1,000 rupees versus 80 lakh rupees. The impact is different. Sure, that 80 lakh rupee generates a gross margin which is maybe 30 lakhs or 40 lakhs or whatever it is and maybe you are all looking at that, but we are looking at, you know when the person is wearing that or spraying that or wearing that, therefore, the portfolio which is a wide portfolio is a beautiful thing for us and we are going to build on that and this part of what I am going to talk about is that, which is our most recent baby, the women's ethnic wear and our dream is to become India's most loved women's ethnic wear brand by FY-

27. We are looking at 100 plus stores of course a huge omni thrust, more than 1,000 crores of sales, 1.5 million pieces and a transformation of the supply chain like what we have achieved in other businesses and most recently in the jewellery business which is also of that kind. How are we going to do it? Revibe and we have used the word 'vibe' instead of revive because we want to really target the young women, you know, the saree is no longer attractive for the young women because of lifestyle, because of convenience, but even though young women, I have two daughters 29 and 25, I know how they feel and how we feel when they dress up in a beautiful saree and it is our duty, our responsibility and it is going to be the task of Titan company to make the saree exciting for the young girl, and using forms which make it easier for her to wear, revive

the saree. Contemporary, elegant, differentiated designs. India under one roof, we have brought so many clusters across the country. Many of them so unknown and we are giving in a way reviving the craftsmen's or the craftswomen's situation and by bringing all that in a way giving honour to all that you know creating a differentiated proposition. handmade, authentic, very immersive retail experience and those of you who come to particularly some of the villa you know retail format strategies that we are doing, you know we have one in Bengaluru, the other one we are inaugurating next week in Hyderabad. So, that is a very different you know ethnic wear saree in my experience and of course the sort of Tata trust and everything that comes with it.

So, this is the new baby of a Titan company, the Bangalore store, in fact we have set up a loom, a full loom as part of the Bangalore store, again to give, you know honor to the bunkar, to the weaver and get customers to immerse themselves in this. We are also transforming the supply chain and giving the izzat and the income to the weavers, so this we were there, Ambuj and I were there in Banaras last week. So this, before and after is the weaver's shala as we are calling it and how, you see the looms and the infrastructure and all that. Therefore, transformation which, is a strategic aspect of it as well as responsibility aspect.

Coming to the second big baby, women's bags we have been in it for about 7-8 years now. We are going to take off in FY-23 on this category. Market leadership is what we are gunning for. Bag as utility, bag as expression. Wearing a bag, people are no longer carrying bags. Young women wear a bag. So we want to make it possible for young women to wear more and more exciting bags. Of course, multichannel 3.5 million pieces, 1,000 crores. To enhance the styling and mobility needs of girls by creating a unique wear a bag brand that helps them to express authentic style and these are about one-year-old and exceptional response particularly in department stores and we are going to build on it and we will have more to share by September of 2022 on our real big thrust into this category.

The next part is international significance, you know despite you know going into Dubai way back in 1990 or 1991, the share of international sales to Titan has remained very small, under 1% or maybe under half percent of total sales, but at the same time, you know, when you think of it, India is one country yes, but it's not one economy, I mean it's a 5 trillion economy, come on. If you put together half of Europe, you know, that is that, so therefore we never looked at you know going outside India as something you know, from an emotional or a ego point of view, we looked at it purely from a market opportunity point of view. So, if India has got so much of opportunity, why do we go abroad and that is the last you know many years ever since we decided to close our operations in the US of Tanishq in 2008. That has been our thinking, it has really you know helped us to consolidate, grow in the Indian market, but at the same time there is this large NRI/PIO opportunity. So, the brand of choice for the Indian diaspora is large opportunity for Tanishq and of course for Titan brand as well and the diaspora opportunity is

actually quite strong. It has been becoming stronger in the last decade, I would say, affinity for Indian tradition and culture very, very strong. You know people who are living outside India are more Indian than we are because it helps them to stay emotionally connected, stronger and of course all the successes of Indians and various areas in the US for example, running so many companies is giving that confidence to them, pride in India and you know various reasons the jewellery category in the US in the west Asian countries is more underserved than in India itself and therefore from a competitive play point of view, it gives us a lot of opportunity. So big ambition here, brand of choice of Tanishq becoming the brand of choice for the Indian diaspora in North America and West Asia looking at 30 stores Omni Channel, 125k volume, 2,500 crore plus sales. Of course, we will not be a global company at this scale, because the domestic opportunity for Titan company is so large especially because of the jewellery industry in India being what it is and the runway for Tanishq and other brands of Titan company being what it is. But, from where we are, you know some time back to where we will be, 2,500 crores is a significant presence, but who knows it is a, you know beachhead for our next leap international. This is our Al Barsha you know the mall front where our Dubai Al Barsha store is, it is an exquisite store and the kind of feedback that we have got from, not just NRI/PIOs but other nationalities like Jordanians, Emiratis, Egyptians, Saudis, Filipinos, Pakistanis, Bangladeshis and therefore the opportunity that is sitting for Titan company through this to start with and of course we are also taking you know bigger steps in the watch business and establishing even Titan Eyecare soon in West Asia. This is the design of our New Jersey store which is going to open July of 22, just about two months away. So that was the international significance.

The next is the digital expertise. You know Titan has become a very very strong probably the most accomplished assisted E-commerce company in India today with multifarious initiatives that it has rolled out. You know from next to nothing, in fact nothing I would say in 2019 calendar, we are in the 900 crore ballpark for video assisted sales of Tanishq today in a year. From nothing we are at 1,100 crores of Assisted Commerce, 750 crores of Endless Aisle. You know people are going to store-A looking at the Endless Aisle, deciding on a piece which is somewhere else, getting that piece to be, you know delivered there, most often only one piece and they buy on trust and on the overall visualization that we have been able to do in the Endless Aisle application. Boundaryless engagement and service, we have done a lot of propensity models and recommendations based on our deep understanding of customers, their journeys and all that, and we are reaping the benefits of investments that we made in 2016, 2017 about 100 crore plus in various digital technologies.

Leading with data, democratizing data access, so we have more than 890 users in the company using data and very very vivid simple KPIs which tell us, tell them what to do, 320 dashboards, 50 plus models. So, if you see the digitalization of the front of Titan today, including CaratLane it is sort of very very high sophisticated evolved level. We have also started experimenting using AI for design. There is a fair amount of design work that we do, which is very, very you know