00:00 for tuning into this conversation with Titan. You know, they're a smart company. If they
00:04 are paying multiple times the valuation that they played, that they paid for the asset
00:09 that they bought the first time in 2016, there has to be a reason. They're paying 7.8 times
00:15 price to sales for Carrot Lane in this transaction that they've announced over the weekend. Mr.
00:20 Ashok Sonthalia joins in to tell us the reasons for the consolidation of the whole state.
00:26 And what does it mean for the upper crust consumption and the view that Titan has on
00:30 the same? Mr. Sonthalia, thanks for taking the time out. Hope all is well.
00:34 Yeah, hi. Hi, Neeraj. Good morning.
00:37 And please tell us the rationale for doing this. I'll come to the valuations in a bit.
00:42 But why have you decided to consolidate the entire thing into Titan at this stage?
00:46 You see, we kind of, while we have been partnering with Carrot Lane long before our acquisition,
00:53 first acquisition in 2016. But after that, another two tranches we did in primary and
00:59 secondary and we were holding about 72%. And I think in the first phase of last five years,
01:05 six years, you know, what both partners, you know, Methun and Titan company had been building
01:10 up has come up a very, very nice omni channel player, focusing on fashion, diamond jewelry
01:17 light for young women. And it has come to a stage where we believe that it is a multi
01:25 decadal opportunity for Carrot Lane and together Titan to serve this market and keep growing.
01:32 We have done this transaction at this stage, because with an individual and corporate at
01:38 some point of time, these kinds of exits have to happen. And I think it is the right time
01:44 for Titan to increase its stake and keep capturing value as we move forward. At this point of
01:50 time, we have done a fair valuation share, I would say with the founder who has equally
01:57 and more contributed, you know, in creating this company and bringing it up to this stage.
02:02 Of course, Titan partnership has been very, very important reason for the last five, six
02:07 years of growth. But I think it is only fair that valuations are shared equally with the
02:14 founder.
02:15 Just wondering, Mr. Sonthalia, for another asset, which might not have been under your
02:20 fold already, would you be comfortable paying seven and a half times price to sales? I'm
02:26 just trying to understand if you foresee the growth numbers over the decadal opportunity,
02:31 as you said, to be so strong that you'd be comfortable paying such a premium valuation?
02:36 You see, we have been insider to this company, you know, we have, so that gives you comfort
02:41 and confidence that what can be done in future. When you go and do an outright acquisition,
02:47 you have a certain level of information. Here, we were completely deep inside the company
02:52 and that made us comfortable to pay this kind of valuation.
02:55 Got it. Now, I heard you say a decadal opportunity. I've seen Mr. Venkat talk about how we are
03:01 just getting started in this organized space. And while you are the leader by a huge margin,
03:09 the organized to unorganized difference is still very large. Is that what prompts you
03:14 to think about this decadal opportunity part one? Part two, is it also the fact that as
03:19 the per capita moves up, you would have envisaged that the spends on branded jewelry and the
03:24 kind of stuff that you're doing will only increase?
03:27 So all of that what you said Neeraj is true to some extent. But from the Titan point of
03:32 view, you know, these four brands, which we have Taniska is also, of course, mother brand,
03:36 but Zoya on the premium end and Mia and Carat Lane on the more spontaneous gifting, kind
03:45 of more towards young women, working women. And that itself is a kind of phenomena in
03:51 India, you know, how the women empowerment is happening, they are coming out and they
03:55 are buying, taking their own purchase decisions. And of course, the young, you know, people
04:01 gifting each other those kinds of jewelry item. So all put together and organized versus
04:06 unorganized and Indian consumer story unfolding for the next 10-20 years. So all put together
04:13 gives us a lot of confidence that consumer story and in particular, the jewelry segment
04:19 where we are operating has a very, very bright future.
04:23 Can you reckon I mean, are there some numbers that you're liberated to share about the expectations
04:27 that you have for what Carat Lane could do as an entity now that it's entirely yours,
04:31 but individual brand or an entity over the course of the next few years?
04:34 I would give you some like for Titan, we keep talking that a very large jewelry market where
04:41 we are 7% and we are likely to inch towards 10% by FY27. I would expect Carat Lane as
04:49 our jewelry portfolio, maybe about 6-7%. This should also become 10% of our jewelry portfolio
04:55 by FY27. That's a very, very rough indicative number Neeraj, but that should give you an
05:01 idea how, you know, like they are certainly going to grow faster than the rest of the
05:05 jewelry portfolio of Titan and that is how their share should move up.
05:09 Now, a fair call. My final question and it's not as much about Carat Lane, but as your
05:15 view on this discretionary consumption rise, we're seeing, for example, a luxury watchmaker
05:23 seeing some stupendous growth and we've seen in your watches division as well, select proofs
05:28 of that. There is a car maker or a car distributor, which is luxury cars, talking about some stupendous
05:34 growth, a winemaker talking about this. Is this a trend that you guys at Titan also believe
05:41 is set to unfold in India over the course of this decade?
05:45 So definitely this is the current reality, you know, and this has been playing out for
05:50 last, I would say 12, 18, 24 months, you know, where the premium segment is doing well, premium
05:57 price points are doing well, but the entry point and lower mid points of the whole spectrum
06:05 may be inflation interest rates are pinching their discretionary budget much more than
06:11 the people who are well off, you know, on the upper economic pyramid. I would not suggest
06:17 that that's a long term trend. But that's the reality at this point of time, of course,
06:22 premium is going to do well for next 10-15 years, the whole luxury premium thing, but
06:26 the value part of this thing will also do well for in India is $2,000 to $5,000. I'm
06:34 not thinking that it will only happen by the income going up for the upper segment, a lot
06:40 of people will come in the middle class income group, and then they will start fueling the
06:46 value segment as well. But yeah, temporarily, it looks like for next one year, 18 months,
06:52 this is going to be the way market or consumer space is going to behave.
06:57 All right, well, we would love for everybody to kind of participate in this Mr. Sonthal,
07:01 it's great for your business and great for the economy. So that happens. But congratulations
07:05 on this transaction. I was happy to hear the nuance why you paid so much what you did.
07:10 And that aspect about you being the insiders was very interesting. So thank you for that.
07:14 Much appreciate you taking the time out.
07:15 Thank you.
07:16 Thank you.
07:17 Thanks for tuning in.
07:25 [BLANK_AUDIO]
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