titan company ltd Management discussions

Performance during the financial year 2022-23

The Company delivered a stupendous all-round performance in the financial year 2022-23 with the economy opening up and no lockdowns during the year. The Companys superlative capabilities ensured an excellent financial performance. Some of the key factors that helped deliver this sales and financial performance for the year are:

• The consistent push across the various levers for growth in the Jewellery segment and the continued formalisation of the jewellery industry resulting in increasing the Companys market share gain

• The tremendous growth in the Watches & Wearables segment saw the Division hitting a significant milestone of Rs 5,000 crore of UCP sales

• Rapid store expansion in the EyeCare segment coupled with launch of products in the premium category and focus on correct-selling

• All emerging businesses gaining significant momentum: many Tanishq stores in the Gulf Cooperation Council (GCC) and USA, substantial expansion of the Taneira network and big growth in the Fragrances & Fashion Accessories business

• A slew of digital initiatives that helped the Company create and sustain a large omni-channel business

• The continued deep commitment of all Titanians and all retail, distribution and vendor partners and their employees

"FY23 saw a strong growth performance across our business segments. We made necessary investments in our supply chain, digital data and omni capabilities, retail networks and chosen international markets. With a stronger business portfolio and a healthy balance sheet, we are well prepared to continue to invest and capture vast opportunities that consumer sectors present in the coming years."

- Mr. Ashok Sonthalia, Chief Financial Officer

The financial year 2022-23 saw an outstanding performance with a 43% growth in net UCP terms and in Net Sales Value terms over financial year 2021-22. The year saw an exceedingly good performance, both in analogue watches and smartwatches. The broad trends that fuelled the growth of analogue watches were premiumisation, brand and product innovations, retail expansion and renovations and channel transformation journeys. The watches category overall saw a good growth with the resurgence of weddings, office-work, travel and gifting.

Brand Titan led the way through the outstanding product launches like the Edge Ceramic Squircle and Automatics. Alia Bhat was roped in as brand ambassador for Titan Raga to garner higher brand relevance among young women. Brand Fastrack saw the launch of Stunners collection which helped capture market share in the mid-priced segment. The International Brands portfolio saw impressive growth, riding on the premiumisation wave.

The Division crossed a total of 1,000 stores with a network expansion of a net total of 163 stores during the financial year. This was along with the renovation of 115 stores. The Multi-Brand Retail channel made huge progress in its transformation journey with the establishment of 200 "lighthouse stores". Large Format Stores and Marketplace E-commerce channels also showed good growth and increase in market share for the Divisions brands.

The manufacturing team made good progress in the Make in India journey with more than 85% of the production in India. Significant capability building has been achieved in the premium watches segment in material, movement, plating and finish of watches.

The Division had the highest ever sales in smartwatches, at 10% of the total revenue. A slew of new launches, both from Titan and Fastrack brands were well received in the market and helped to be in the top 5 in the Indian market.

"The year 22-23 was a landmark year in which we crossed the Rs 5,000 cr turnover at consumer price for the division. The wave of premiumization and smartwatches propelled the growth of 42% over the previous year. All brands, channels and manufacturing units performed with passion and alignment."

The financial year 2022-23 continued to be a volatile one like the previous year characterised by disruptions in diamond supply due to the international geopolitical situation, consequent diamond price volatility and the sudden spikes in gold prices on account of international macro-economic environment. Despite that, the Jewellery Division clocked in a 37% healthy growth albeit on the back of a softer base in Omicron-impacted quarter one of the financial year 2021-22. Topline growth in the remaining three quarters has been a healthy 17% driven equally by buyer and ticket size growths.

Further, despite intense competitive intensity resulting in price wars in the gold jewellery segment, the Division has continued to gain market share.

All the engines of growth have been firing well, including the newly developed one, viz., Digital (online commerce and omni-channel) and the deeper regionalisation thrust in the recent years. All brands of the Jewellery Division have seen very handsome growths.

Sudden spikes in gold rates could see temporary softening of customer demand. However, the Division is pursuing an aggressive growth strategy with strong investments in retail expansion, store inventory, new collections and visible marketing campaigns. Volatility in consumer demand may continue due to macroeconomic forces, but the financial year 2023-24 as well as the medium term opportunity for the Division is excellent, driven by formalisation, growth in per capita incomes and significant headroom for market share gains.

The breakthrough momentum seen in Zoya and Mia by Tanishq also looks promising. Both brands have built a strong customer preference in their respective segments, a larger retail footprint and are expected to sustain strong growths.

CaratLane has again delivered superlative growth in financial year 2022-23 in both topline and bottom line. The powerful omni-channel approach, substantial retail expansion, innovative product lines and the new-age employee culture continue to combine exceptionally well.

The Division continued to drive "Responsible Sourcing" with 95% of vendor partners now in the "Standard" category on the 4P (People, Place, Process, Planet) framework, driven by a rigorous third party assessment program. 100% ethical sourcing of fresh London Bullion Market Association gold, recycled customer exchanged gold and ethical diamond sourcing is an industry standard set by the Division in the backdrop of opaque industry practices.

Operating Environment

Financial year 2022-23 has been the first full year of uninterrupted operation after two long years of disruption. Overall there has been noticeable change in customer preferences moving from the online platform to offline. Despite the concerns of a possible recession, the category has not seen any impact. In fact, with visible growth in travel sector, sunglasses as a category has seen positive traction.

The year started with a Guinness World Record of single day eye screening reaching out to 1.3 lakh people across the country. The Division continued its drive on the retail network expansion as well as distribution reach.

In its efforts towards sustainability, the Division has introduced frames from:

• Castor seeds which are highly elastic, durable, light weight and Bio based.

• Recycled acetate.

This apart, premium frames made out of titanium and carbon fibre making them light weight, rust resistant, very comfortable and durable were launched. Riviera collection of frames inspired by the spirit of sailing was also well received by the market.

Fashion first has been the guiding principle for Fastrack Frames and Sunglasses. This year, several collections like Crystal Fusion, Retro and Crystal Burst which are youthful, vibrant and in vogue were launched.

The newest launch, Titan Ultima is the top end customised progressive lens. Ultima provides excellent visual comfort and wide zones at all distances - distance, near and intermediate.

180 new stores including 5 Fastrack stores have been added, taking the net count to 900 stores across 379 cities/towns. Financial year 2022-23 marks the year of Titan Eye+ going beyond the shores of India with the first store at Dubai.

Given that formalisation of the industry is inevitable and also likely rise of users due to digital exposure, the opportunities available for the division in terms of focus on top 20 cities, accelerated distribution channels, potential for category growth in sunglasses, digitization potential across the board and focus on youth segment through Fastrack stores will be driven.

FRAGRANCES & FASHION ACCESSORIES DIVISION

The Division focuses on two distinct categories: Fine Fragrances and the Womens Bags.

FRAGRANCES

The Fragrances business has succeeded in creating a wide range of "Exceptional Quality at Affordable Price" Eau de Parfum fragrances starting with Fastrack perfumes at Rs 895 to SKINN Nox at Rs 3,995 per 100ml and many options in between. Through these offerings, the needs of millions of aspiring Indians who find International perfume brands out of their reach is fulfilled. With Elite, Affluent households (Average annual income > 10 Lakh) expected to double by 2030, this category is expected to leap frog into an annual growth of 13% for next 7 years, which therefore, will leverage this platform to contribute meaningfully to the Companys financials overall.

SKINN brand has been quite successful in terms of democratising usage of fragrances in India and making fragrances an essential part of everyday dressing and grooming rituals. The brand continues to build credibility and advocacy through consistent, meaningful associations with influencers, celebrities and master perfumers. SKINN Brand has led the category over years, by being at #1 Rank across department chains and online channels.

This business has registered over 60% annualised growth rates over financial year 2021-22 with increase in reach to dealer universe of 3,800 and 9,000 pin codes coverage through online marketplace.

Womens Bags

With category size of nearly Rs 4,500 crore and organised players contributing to only 1/3 of the market size, this segment is expected to explode with 10% overall category growth rate and organised growth premium to be around 3-4% above the category growth rate.

Until last year, the youth were targeted through Fastrack Girls bags through online marketplace and presence in Department chains. The "Wear your Attitude" campaign along with the trendy, fashionable designs with exceptional quality pitched FT Girls bags as a wearable fashion accessory to the target audience. FT girls bags is present in Department chains, Online marketplaces, Fastrack stores and multi-brand outlets.

Irth Bags, a new brand was launched in October 2022 that targets women customers aged between 25-45 years. The customer value proposition of Irth is giving organised styling solutions to women who are leading active lifestyles, to elevate their everyday life. There has been an excellent response over last 4 months.

Entry of new brands that can disrupt the market, price cuts by existing and new players to capture market share and delay in launch of new products due to the restricted vendor base remain some of the key risks, but plans are in place to address them.

INDIAN DRESS WEAR DIVSION

Operating Environment

An integral part of Indian culture, there has been a renewed interest in preserving and celebrating local traditions, which has led to an increase in demand for ethnic wear. Sarees occupy 40% of womens ethnic wear market and is growing at a CAGR of 6%-8%. An age-old garment, sarees is a large industry but is still mostly in an unorganised sector with very little modernisation, underserved in many ways. The past few years, however, have seen the competition intensify as more organised players have entered the saree market.

Wedding-related purchases, followed by festivals and cultural occasions, are a significant driver of the saree market in India, accounting for approximately 40% and 30% of all purchases, respectively. In addition, sarees are increasingly worn as a fashion statement with experimental styling.

During the year, the Division made significant progress in all business areas and delivered an all-round performance. Overall, sales grew stupendously driven by new store openings and healthy growth from existing stores. The brand made substantial investments in marketing, and creating brand love strengthened its relationship with weavers through its

industry-first "Weavershala" initiative, and most importantly, introduced exquisite product collections that consumers across the country much appreciated. Taneira was awarded as the winner of Vegan Fashion Awards 2022 by PETA India for its "Vegan Visions" collection.

During the last year, Taneira scaled up its operations with 21 new stores, thus doubling the retail footprint to 41 stores. The brand expanded its presence from 9 cities to 22 cities covering 100k sq. ft of retail space.

Taneira@Home program was started during the year to provide customers with the comfort of shopping while being at home and the first all women staff store was launched in Gurgaon.

Structured training program for all store staff ensured a consistently high level of expertise and delivery. Net Promoter Score of 89 and Google rating of 4.8 reflect the confidence and trust customers repose in the brand.

The brand continued to introduce key collections from across the weaving clusters of the country. In addition, it showcased a fine assortment across bridal and wedding, festive, and formal wear occasions.

Some key campaigns run during the year include "THE HOMECOMING," a campaign run during Diwali and rooted in the consumer insight that women like to return to their traditions and roots during key festivals. The brand built impactful visibility leveraging print, digital, and outdoor media during the Puja and Diwali festive period.

Through a unique Saree Run conducted in Pune and Kolkata, the spontaneous awareness of the brand went up by 50%. In addition, the Google trends interest indicators showed significant growth of 350% over the last year.

During the year, the brand has added significant number of vendors and dedicated looms across India to weave products

designed by Taneira. This has impacted the lives of several thousand direct and indirect artisans by providing them with continuous flow of orders, technical and product expertise, fair remuneration and timely payment for their services, etc. "Weavershala", a sustainability initiative started by the brand last year, to preserve the weaving crafts and uplift working conditions of the weavers gained momentum during the year. The Division has also started exploring sustainable raw materials like regenerative fibres and is working on several initiatives for developing environment friendly products like eco-friendly cotton which is responsibly grown.

During the year, the E-commerce channel grew by 50% in sales and the foundation for a seamless online and offline customer journey was laid.

Navigating the unorganised textile sector, Taneira aims to grow by providing customers with authentic products, accessible retail, and responsible practices.

The rising input costs and the traditional weaving communities moving to other professions could pose a risk to the business.

Despite potential risks, Taneira welcomes the entry of prominent organised players in the sarees segment as it expands the category. In order to remain competitive in the coming year Taneira has several plans in place - sustained focus on strengthening design centricity and utilising authentic traditional weaves to create contemporary designs is the first lever. Additionally, the brands effort is to bring to life its strong customer value proposition by building an emotional connection with consumers while empowering the weaving community.

Design Excellence Centre (DEC) is focussed on consistently building design leadership and product differentiation for every brand across the Company. The DEC excels in building design as a unique and compelling differentiator in the sustainable growth of the various businesses. User centred design is one of the key strengths of the DEC which is supported by deriving insights through continuous design research and understanding fashion trends across categories.

Some of the very successful collections launched this year across businesses pushed the boundary of design and brought in differentiated looks, techniques and innovation.

DIGITAL AT TITAN

The Companys vision is to create elevating experiences for the people it touches: digital and technology are used to delight and create an amazing experience for the vast network of stakeholders including customers, tens of thousands of dealers, hundreds of franchisee partners and vendors, and the Companys own employees.

The DigITal functions support to the brand portfolio plays across product categories and diverse customer segments with a comprehensive mix of technologies and solutions best suited for each business and customer segment. The increasing variety of customer solutions has only been matched by their exploding adoption - 13 lakh digital interactions through the Companys contact center system; ~ 60 million visitors across websites annually; 2 million downloads of the Tanishq app; 1 million downloads for the Watches & Wearables app with a consistent rating of 4.5+ on Play store and App store. The Company has launched its first dark store with live video for Irth, the youngest brand.

On the partner side, technology solutions are continuously evaluated and made up to date. Direct2Dealer system enables the Companys multi-brand retail partners to place orders online seamlessly; new Logistics Management System

in jewellery helps with end to end visibility of consignments; franchisee stores are continuously being on-boarded to the automatic replenishment systems to optimise store assortments, to cite a few examples.

The ever expanding technology play yields enormous amounts of rich data as well as places demands on integration as well as fortifying the network digitally. All of this data on the cloud is harnessed using AI, ML algorithms to embed intelligence into systems. Examples include: forecasting for sales planning, customer lead scoring, customer targeting based on propensities, store assortment planning, smart conversational bots, mining text data for next best actions at stores to name a few. Data and information democratisation manifests in many forms including building blocks for stores to prioritise efforts and achieve targets, as well as various dashboards across the organisation. Low code platforms are used to accelerate time to market for different solutions and drive agility. Multiple proof of concepts are being evaluated to leverage ChatGPT. As the Company expands nationally and internationally, the DigITal function is ensuring industry leading levels of infrastructure quality, information security and compliance with relevant local laws, while delighting customers and partners with ever improving experiences.

Technology is being used to drive sustainability - implementing of digital warranty certificates to reduce environmental impact as well as save costs and sensors at manufacturing plants to help manage utilities more efficiently are some of the key initiatives taken towards sustainability.

Customer adoption of multiple technologies has meant that shopping journeys will get even more complex and provide numerous touchpoints. The smart watches and connected devices ecosystem provides rich customer and device usage data. Expanding international presence, increasing diversity and complexity of supply chains across categories means that the Company continues to evaluate and adopt the best in class to create a strong technology backbone.

INTEGRATED RETAIL SERVICES GROUP

The Integrated Retail Services Group (IRSG) function of the Company is primarily responsible for opening of new stores, revamping and relocation of stores, creating a vendor network for implementing the aforementioned activities and, in general, maintaining the quality of stores as per the Companys standards. With retail expansion being a focal point for the Company during the year under reporting, the Companys IRSG function delivered its highest ever number with 727 projects being completed as compared to 464 projects in FY 2021-22 across all the businesses of the Company. With the foray of the Companys brands into international markets, the Company projects for opening the first Titan Eye+ store in Dubai and the first Tanishq store in New Jersey, US were executed by the IRSG function which received high customer appreciation for the store designs and interiors. The IRSG function has played a vital part in the sustainability initiatives of the Company and implementing the same at a store-level. To achieve this, the function has taken a slew of initiatives such as adoption of Centralized Remote Energy monitoring and Renewable Energy, Digital LED screens for fagade, etc.

PEOPLE

The Company had 7,857 employees on rolls of which 2,182 were women as on 31^st March 2023 and recruited 1,138 new employees which is the highest number of recruits. The Company also had attrition of 534 employees. Of the total headcount, 3,193 employees were engaged in manufacturing, 2,650 in retail, and 958 in corporate and support functions. Of the total base, 129 employees are differently abled.

Diversity in Titan begins right at the top; the Company is currently at par with some of the best companies to work for women with 16.7% gender diversity in its Top Management and 31.6% gender diversity at the entry levels. While the Company is at par at the Entry and Top management levels, the efforts at this point are focused on increasing gender diversity at mid-management levels. The Company has also been successful in maintaining pay equity for both genders across levels ensuring that it builds an equitable workplace. The efforts were recognised by the Economic Times as they awarded the Company, the "Best Organisations for Women" in 2023.

The Companys contemporary and inclusive policies on travel and non-metro posting benefits for women, parental support policy which is gender neutral and recognises adoption and

surrogacy for single or married parents or same-sex partners, assets at residence policy which allows the purchase of health assistive and fitness equipments have been very well appreciated by the employees.

Career Development

Aligning with the philosophy of growing our own timber, this New Year, a program named Dream, Discover, and Design was launched which presented Titanians with avenues to their career by launching the Titan Career Vista. This grand initiative allowed employees to experience Titans ecosystem beyond their Division or function. A platform like Titan Career Vista is our first step towards building a Talent Marketplace and promoting internal job mobility.

Tell Me 2023

Tell Me is a benchmark process through which employees get a chance to communicate directly with the Managing Director of the Company. Tell Me was established in the year 2003 and has proved to be an honest representation of the Voice of the Employee. It has been recognised as one of the best practices by the Tata Business Excellence Model (TBEM).

The 2023 version of Tell Me is continuing with the revamped format of the financial year 2021-22 to meet small homogenous groups of employees across different locations and businesses of the Company, including virtually, and the Chief People Officer was included as an active listener, along with the Managing Director.

The format of the sessions has been kept simple, they are purely listening sessions. The qualitative inputs from the employees are taken into cognisance.

Capability Building

The Company continued to invest in leadership development programs across the 4 tiers namely Top Management Development (TMD), Senior Management Development (SMD), Emerging Leaders Programme (ELP), Young Leaders Programme (YLP), and the newly launched Sales Excellence Programme (SEP) which focuses on building a talent pipeline

for sales management roles. The Sales Excellence Programme (SEP) was recognised as the best employee engagement practice by the Retail Association of India (RAI).

The Company further strengthened its capability-building by developing and deploying 350 digital training modules. Several blended developmental journeys through TitanU were launched, which encompass Digital Learning, Virtual and Classroom Instructor-led Learning, and project work. We are also focused on our manufacturing capability through various programmes which are Sourcing Excellence Programme, Procurement Excellence Programme, Quality Excellence Programme, and many more.

Business Partnering

The People function has partnered with business Divisions closely to build both capacity and capability across existing and new businesses. Some key highlights have been exploring alternate models of employment in retail to address challenges of attraction and retention in EyeCare, scaling our footprint overseas with employees from 8 nationalities in our ecosystem, and changes in organisational design to align with business needs. We are also focused on providing support to our vendor partners and business associates through various initiatives spread across more than 350 cities and towns.

Employee Relations

The Company continues to build on its relations with unionised employees with the mantra of trust, transparency, and togetherness.

INTERNATIONAL BUSINESS DIVISION

International Watches business grew 22% despite the market for Analogue Fashion watches not having fully recovered from the pandemic. During financial year 2022- 23, the Division entered Consumer Electronics channels with Wearables receiving a positive response. The Wearables Push and the Premiumisation Drive being undertaken by the Companys Watches & Wearables Division will provide a stream of internationally relevant products that will drive future growth.

The financial year 2022-23 saw the International Business Division (IBD) revenues growing at a rapid pace with the number of international Tanishq stores growing from 2 to 7 during the year. All Tanishq stores including the first one in the United States in New Jersey are receiving a rousing reception from enthusiastic NRIs and PlOs validating the

Division and the Companys belief that the Tanishq brand is etched in their consciousness. Both tanishq.ae and tanishq.com, the international websites went live during the year and are doing well. While opening stores in unfamiliar territories has been operationally complex, given the obvious consumer demand for Tanishq, the Division will continue to expand aggressively in the financial year 2023-24 across the GCC Region and the US.

During the year 2022-23 the first international Titan Eye+ store opened in Dubai to a positive response from both Indian and international customers. This pilot demonstrates that the frames, lenses and superlative EyeCare Solution are creating significant value compared to competition. The Division will add more stores in the coming year establishing the Titan Eye+ first in the GCC region and then across the world.

KEY RISKS AND MITIGATION MEASURES AT ENTERPRISE LEVEL

The Company being a prominent player in the retail sector with presence in multiple lifestyle products categories is exposed to certain risks at the enterprise level which may impact the Companys operations and growth plans. Considering the same and in order to be agile and to ensure sustainability of the businesses, the Company periodically reviews risks at the enterprise level and also puts in place mitigation measures to address the fallout of such risks. The Companys Board of Director and the Risk Management Committee frequently review these risks and necessary action plan is put in place. Readers are also advised to exercise their own judgement in assessing the risk in their own judgement as risk related information provided in this section is not exhaustive and is for information purposes only.

Nature of Risk

Potential loss of sensitive data or disruption to operations due to cyber-attack or hardware/ software failure, compromise of Customer data, Defacement of Titan website, social media profile, etc.

Key Mitigation Measures

The Company has adopted the best available cyber security framework and deployed a number of Industry leading Cyber Defence Technological Controls. Periodic Security Assurance Validation by an external party is also carried out. Continuous cyber awareness programs for employees are also ensured.

Nature of Risk

Probability of breach of customer/ employees Sensitive Personal Information in violation of laid down country specific privacy regulations.

Key Mitigation Measures

The Companys business systems are continually upgraded/updated to continuously mitigate data privacy risks including carrying out privacy impact assessment, defining data privacy framework, usage of privacy enhancing technologies and a regular independent assessment of data.

Nature of Risk

As the Company uses third party agencies for carrying out various business related activities, there could be a probability of loss of business sensitive data and sensitive customer data managed by third parties.

Key Mitigation Measures

All the IT Vendors being engaged by the IT function undergo Vendor Risk Assessment. Further, data protection requirements are embedded in contracts for agreements signed with the agencies. In addition, only Tier I vendors are engaged for cyber security practices in compliance with Titan cyber security policies especially for business critical applications handling sensitive customer/business data.

Jewellery - Industry Trend

Nature of Risk

Lab Grown Diamonds (LGD/synthetics) manufacture increasing and detection becoming more difficult

Key Mitigation Measures

All the loose diamonds are inspected before issuing the same for production for their authenticity and also after the jewelry is made to ensure the pipeline integrity by using the right set of equipment.

To ensure that all the diamonds used are responsibly sourced and manufactured at the respective sight holder location, the Company follows the Tanishq Supplier Engagement Protocol.

^ Watches & Wearables - Geopolitical risk of & dependence on sourcing from other countries

Nature of Risk

High import dependence for specific product groups like plastic watches, digital watches and wearables with risks associated to delay/disruption in supply due to sudden geo-political developments and cost of imports owing to currency fluctuations

Key Mitigation Measures

In order to mitigate risks related to geo-political risk situations, the Company has planned to strengthen In-house/Indigenous vendor capability/ capacity to bring down imports from 49% in March 2020 to 35% in March 2023 and further to 30% by March 2024 and standardise many of the components/manufacturers. Consolidate annual demand & confirm orders in advance to lock prices & supplies and develop complete products through Indian ODMs, Assembly by Electronic Manufacturing Services companies in India.

Currency fluctuations are mitigated through hedging the foreign currency.

Watches - Wearables & technology led disruption

Nature of Risk

Impact of Wearables on Watch category, emergence of technology driven competitors, new biz models that need very new capabilities to succeed in this category shift trend

Key Mitigation Measures

Technology, Platform & Product Development capability have been significantly strengthened with the acqui-hire of Hug Innovations, with a product pipeline & roadmap of continuous investments in people & technology to succeed in wearables

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

During the year, the Company has reviewed its Internal Financial Control (IFC) systems and has continually contributed to the establishment of a more robust and effective IFC framework, prescribed under the ambit of Section 134(5) of Companies Act, 2013. The preparation and presentation of the financial statements is pursuant to the control criteria defined considering the essential components of Internal Control - as stated in the "Guidance Note on Audit of Internal Financial Controls over Financial Reporting" issued by the Institute of Chartered Accountants of India (ICAI).

The control criteria ensures the orderly and efficient conduct of the Companys business, including adherence to its policies, the safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Based on the assessment carried out by the Management and the evaluation of the results of the assessment, the Board of Directors are of the opinion that the Company has an adequate Internal Financial Controls system, operating effectively as at 31^st March 2023.

There is an internal audit function carried out partly by the internal resources and the balance activity outsourced to chartered accountant firms. As part of the efforts to evaluate the effectiveness of internal control systems, the internal audit department reviews control measures on a periodic basis and recommends improvements, wherever appropriate. The Internal Audit department is staffed by qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as adequacy and effectiveness of the internal control measures.

SEGMENT WISE PERFORMANCE

(Rs in crore)

Segment Results	Year Ended 31st March 2023 (Audited)	Year Ended 31st March 2022 (Audited)
Net Sales/Income from Operations
Watches	3,296	2,309
Jewellery	34,105	24,313
EyeCare	689	517
Others	295	154
Corporate (Unallocated)	184	163
Total	38,569	27,456

Segment Results	Year Ended 31st March 2023 (Audited)	Year Ended 31st March 2022 (Audited)
Profit/(Loss) from segments before finance costs and taxes
Watches	413	108
Jewellery	4,363	3,027
EyeCare	98	50
Others	(78)	(36)
Total	4,796	3,149
Less: Finance costs	240	195
Corporate (unallocated)	(91)	(22)
Profit before taxes	4,465	2,932

Segment Net Assets	Year Ended 31st March 2023 (Audited)	Year Ended 31st March 2022 (Audited)
Watches	1,764	1,351
Jewellery	6,376	4,998
EyeCare	256	194
Others	168	117
Corporate (unallocated)	3,430	2,713
Total	11,994	9,373

HOW THE COMPANY FARED

Some of the key financial indicators are as below:

(Rs in crore)

	Financial Year 2022-23	Financial Year 2021-22	Financial Year 2020-21
Sales to Net fixed assets (No. of times)	32	25	20
Sales to Debtors (No. of times)	42	55	71
Sales to Inventory (No. of times)	2.6	2.1	2.6
Retained Earnings - Rs in crore	8,771	6,104	4,279

	Financial Year 2022-23	Financial Year 2021-22	Financial Year 2020-21
Return on Capital Employed (EBIT)	44%	38%	26%
Return on Net Worth	31.2%	26%	12%
Interest Coverage Ratio	299	1,049	57
Current Ratio	1.8	1.7	1.7
Debt Equity Ratio	0.1	0.02
Operating Profit Margin %	11.5%	10.8%	6.7%
Net Profit Margin	8.7%	8.0%	4.3%

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

During the year, following are the key financial ratios of the Company where there was a change of 25% or more as compared to the immediate previous financial year

	Financial Year 2022-23	Financial Year 2021-22	% change
Interest Coverage Ratio	299	1,049	(71)
Return on Capital Employed (EBIT)	44%	38%	26

CHANGE IN RETURN ON NET WORTH

The details of change in Return on Net Worth of the Company as compared to the previous year is given below:

	Financial Year 2022-23	Financial Year 2021-22	% change
Return on net wotrth	31.2%	26%	31

*Note: The performance of the Divisions were better during financial year 2022-23 as compared to financial year 2021-22. This was due to aggressive store expansions in the financial year 2022-23. Hence, this has resulted in an increase in the profit before tax by 50%, which in turn impacted the respective ratios having a variance of more than 25?%.

OUTLOOK FOR FINANCIAL YEAR 2023-24

The outlook for financial year 2023-24 remains very positive for the Company on account of the following factors:

• The strengths of each our brands, the low market share in almost all our categories and the acceleration of formalisation that we see in every category

• The higher growth in the number of households in the top half of the income pyramid and the alignment of Titans fortunes with those households

• The increasing affinity for Tata brands

• The entire Titan "family" of committed employees, retail/distribution partners and vendor partners and their own employees

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which it operates, changes in the Government regulations, tax laws and other statutes, any epidemic or pandemic, natural calamities over which we do not have any direct/indirect control.

Ratios given in notes as part of Financials differ from ratios given in Discussion & Analysis as the ratios in Financials are computed purely based on formulas given in the Guidance Note issued by the ICAI.

The figures in the Management Discussion and Analysis are commentaries by the Businesses and are basis business metrics which may differ from the Financials in the Annual Report.

Corporate Governance Report

The report on Corporate Governance is pursuant to Regulation 34 (3) read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the SEBI LODR). The Company has complied with the applicable requirements of the SEBI LODR and amendments thereto.