Tanishq completes three-year turnaround story

Company press release, July 3, 2003

New Delhi

Tanishq, the jewellery division of Titan Industries, announced another spectacular year during 2002-03. For the third consecutive year, Tanishq recorded significant growth in revenues and profits, making it one of the fastest growing businesses in the country today.

Speaking at a press meet held in Bangalore to announce the annual results, Mr. Jacob Kurian, Chief Operating Officer, Tanishq, said - "It has been a wonderfully gratifying year for Team Tanishq! Retail sales in our stores across India touched an all-time record high of Rs. 332 crores (at consumer prices), representing a handsome growth of 39% compared to the previous year. In addition, during the year, we also achieved corporate and export sales of Rs. 57 crores. Therefore, total jewellery sales for the year stood at Rs. 389 crores. This means our business has grown nearly three-fold in just three years!"

Mr. Kurian added - "During the three-year period 2000-03, we have achieved an annual growth rate (CAGR) of over 40%. This rapid growth rate has been achieved during a period when the overall jewellery market in India has faced a significant growth challenge and in a time of unusual volatility of gold prices. The best validation of our path-breaking business model is our ability to sustain rapid customer acquisition and strong, yet profitable, revenue growth during such a challenging period."

With continued focus on capital efficiency and merchandise management, the jewellery division has improved its Return on Capital Employed (ROCE) by many multiples. During 2002-03, the net profit of the jewellery business grew dramatically by 318% compared to the previous year. During this landmark year, Tanishq has also generated positive economic value by delivering a return higher than the Company's weighted average cost of capital: an important milestone in its history.

In achieving this dramatic business turnaround, Tanishq has effectively silenced sceptics who had predicted that it would be impossible for an ethical company to make profits through strictly legitimate means in the jewellery business. It is a well-known fact that customers and governments in India are annually defrauded of an estimated Rs. 5,000 crores by unethical practices in the jewellery trade including under-karatage of gold, misrepresentation of quality and tax evasion. On the other hand, as a TATA company, Tanishq has always maintained faith in its belief that delivering outstanding customer value through a fair and transparent business model is the way to sustainable customer loyalty and business success. Our results have begun to validate our belief."

Over the past three years, Tanishq's innovative marketing initiatives have taken the jewellery market by storm. Several path-breaking innovations like the "Impure to Pure Exchange" have enabled Tanishq to break existing customer relationships with traditional jewelers and rapidly acquire new customers. Tanishq has launched a range of exquisite, branded jewellery collections created by its award winning in-house jewellery design team, which is easily the best in the country today. These branded collections include Tanishq Aria, Diva, Hoopla, Collection-G and, most recently, Tanishq Solo. Each of these collections has been an instant hit with thousands of Indian women. Last year alone, more than 1.2 million women shopped at Tanishq stores.

Mr. Kurian pointed out that while Tanishq had focused on new customer acquisition during the past three years, it was also gratified by the high loyalty it had earned amongst its existing customers. Quoting from Tanishq's customer satisfaction tracking research, he said - "78% of all our repeat customers rate the Tanishq experience as very good to excellent. Tanishq has also been repeatedly rated, in several research studies, as the country's most desirable brand of jewellery."

The jewellery business has evolved a flexible manufacturing model, which enabled it to overcome a recent 45-day industrial dispute in its manufacturing plant at Hosur without any significant impact on business performance. "Tanishq's distributed manufacturing model enabled us to continue to service our customer needs, while negotiating a path-breaking settlement with our internal union", explained Mr. L.R. Natarajan, General Manager - Manufacturing & Supply Chain, Tanishq.

The year 2002-03 was also a landmark year for Tanishq in more ways than revenue and profit growth alone. For the first time, a board mandated review of the Tanishq strategy was completed by the world's leading strategy consulting firm. This review resulted in a strong endorsement of Tanishq's business strategy. In addition, the Tata Group's apex strategy review body, the Tata Business Review Committee, reviewed and approved a five-year business plan for Tanishq. This plan puts the jewellery business on an aggressive growth path to reach a top line target of Rs. 800 crores in four years.

The growing stature of the Tanishq brand was recognized by a wide cross-section of industry and trade bodies, many of whom hold the view that Tanishq is at the forefront of professionalising and transforming the large marketplace for jewellery in India. Jewellery consumers paid their accolades by selecting Tanishq as the Images-IFA best jewellery brand last year. During the year 2002-03, Tanishq also became the largest single brand in Titan Industries' portfolio of brands.

"Tanishq has India's largest national jewellery retail network with an outstanding combination of committed business associates; great store locations (numbering 60 stores in 47 towns today); an aspirational brand; a talented and highly enthused workforce; a committed and highly flexible vendor base; a validated asset-light business model and a huge China-proof market opportunity in front of us - which business can ask for more?" said Mr. Kurian, sounding a confident note about the future prospects of the jewellery business.

In a short span of six years Tanishq has become India's Jeweller of Choice. Even today Tanishq is the only national jeweller in India with an unmatched consumer reach through 60 exclusive boutiques in 47 cities. This brand today commands the respect of over one million customers.

The company's constantly evolving range begins from gold jewellery in 22 Kt and extends to very affordable diamond studded jewellery. Tanishq's jewellery prices start from a very affordable Rs. 600/- and has special custom designed high value sets at the top end. Tanishq offers exchange for any jewellery and also offers a savings scheme called "Golden Harvest". A unique aspect of Tanishq's offering is that each piece of jewellery is accompanied by a Certificate of Authenticity, certifying the purity of the gold and the colour, clarity and caratage of each diamond.

For further information, please contact:

Prateek Chatterjee/Piyali Dasgupta

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