Resolute, Resurgent. TITAN COMPANY LIMITED 36th ANNUAL REPORT 2019-20 Welcome to the Contents Titan Company Corporate Overview 02 This is TITAN Annual Report 2019-20 04 One Company, Many Brands 05 Financial Highlights 06 Highlights of the Year 08 Letter from the Managing Director 10 Resolute in Driving Innovation 14 Resolute in Strengthening Access 16 Creating a Great Place to Work 18 Resolute in Deepening Our Engagement 20 Resolute in Growing Responsibly 22 Sustainability at Titan To view or download this 23 Integrated Report report, please log on to www.titancompany.in 37 Awards 38 Board of Directors 40 Corporate Information 41 Notice of 36th AGM Statutory Reports 58 Board’s Report & Annexures 90 Management Discussion and Analysis 103 Corporate Governance Report 126 Shareholder Information 129 Business Responsibility Report Financial Statements Standalone Financial Statements 138 Independent Auditor’s Report 148 Balance Sheet 149 Profit & Loss Account 150 Statement of Changes in Equity 151 Cash Flow Statement 153 Significant Accounting Policies 168 Notes to Financial Statements Consolidated Financial Statements 214 Form AOC-1 216 Independent Auditor’s Report 224 Balance Sheet 225 Profit & Loss Account 226 Statement of Changes in Equity 227 Cash Flow Statement 229 Significant Accounting Policies 246 Notes to Financial Statements 295 Financial Statistics Resolute, As uncertainty grips the world, we at Titan Resurgent. remain resolute to find the We are reimagining our customer- Titan has a strong portfolio of brands, experience efforts, pushing forward robust assets and industry-leading opportunities on newly created priorities, driving capabilities. Most importantly, we are innovation to make our portfolio more anchored by the values and ethos amidst the relevant, accelerating omni-channel of the Tata Group which provide us integration and reinforcing our diverse a framework for how we operate challenges and relationships. We are maintaining a and engage as individuals with very agile response to the needs of our customers, business partners, unearth new our customers to deepen connect, colleagues and communities, our values recalibrating our store expansion will be especially relevant to navigate ways to emerge and intensifying our efforts on cost these unprecedented times and ensure management. And while we carry out that we remain a trusted partner to all stronger. all of this, needless to say, the safety our stakeholders. and security of our employees and customers remains sacrosanct. Through the compelling combination of resilience, response and recovery, a resurgent Titan will prevail. TITAN COMPANY LIMITED This is TITAN Founded in 1984 as a joint-venture between TATA Group and Tamilnadu Industrial Development Corporation (TIDCO), Titan Company Limited (Titan) is among India’s most respected lifestyle companies. We have established leadership positions in the Watches, Jewellery and Eyewear categories led by our trusted brands and differentiated customer experience. We have also successfully forayed into the verticals of Indian Dress Wear and Fragrances, underpinned by our deep understanding of evolving customer preferences. Titan brands have endeared millions of people by being an Our Vision embodiment of innovation and quality. We continue to find We create elevating experiences for the people we touch and new and exciting ways to deepen brand engagement– be it significantly impact the world we work in. offering exceptional in-store experience,investing in digital channels, or connecting with audiences through progressive Our Mission and socially relevant campaigns. Passionately striving for We will do this through a pioneering spirit and a caring, value- the highest global standards in all that we do, we embrace driven culture that fosters innovation, drives performance and sustainability, both socially and environmentally. Our steadfast ensures the highest global standards in everything we do. focus is on carving a distinctive place in the hearts and minds of customers through our actions and values. Our Values and Standards Total Customer Orientation In our proud history of over three decades, anchored Customers take precedence over everything else, always. by the TATA ethos, our commitment to excellence has Employee Appreciation permeated every aspect of our business model. Backed by We value and respect Titanians and endeavour to fulfil their our committed employees, exclusive design studios, state-of- needs and aspirations. the-art manufacturing units and our trusted partnerships, we continue to grow and set new benchmarks in our industry. Performance Culture and Teamwork At Titan, high performance is a way of life and is nurtured by teamwork. Creativity and Innovation We continue to grow and set new standards for innovation and quality with each new offering. Passion for Excellence In all our pursuits, we ceaselessly strive for excellence. Corporate Citizenship Titan believes in being a responsible corporate citizen and pro- actively engages in issues concerning community it operates in and the environment in general. 2 Annual Report 2019-20 CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS One of the 11k+ multi- Largest brand outlets Watchmakers globally selling our watches #2 by volume ranking in the smart wearables 4 times category in India in Forbes Asia Fab Fifty $2.8 bn ~7,500 annual revenue employees 1,700+ stores ~$12 bn with 2.2mn+ sq.ft. retail space market capitalisation as on 31st March 2020 Our Strengths and Differentiators Brand Building Design and Development • Tanishq: India’s leading jewellery brand • 800+ New time products every year • Titan: Our flagship watch brand • Red Dot Award to 2 Edge watches • Raga: Exclusive women’s watch brand • Differentiated jewellery collections • Fastrack: India’s largest youth brand • Sonata: India’s largest selling watch brand • Customised lenses with 3D visual mapping • SKINN: Leading perfume brand in India Manufacturing • Taneira: Special occasion wear saree brand • 15 Manufacturing and assembly facilities • Titan EyePlus: India’s largest optical retail chain • State-of-the-art Karigar Centres for jewellery Retail and Customer Service • Components exported to Swiss watch makers • Exceptional customer experience • 3600+ employees engaged in factories • Merchandising effectiveness • Impactful retail identities • Engagement of store staff • Extensive after sales service network Annual Report 2019-20 3 TITAN COMPANY LIMITED One Company, Many Brands Our Brands Luxury Premium Mid market Mass market Associated Brands Joint Venture Licenced Brands 4 Annual Report 2019-20 CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS Financial Highlights Revenue from operations ROCE ` 20,010 crore 35% ` 19,070 crore 36% FY 2018-19 FY 2018-19 EBITDA EPS ` 2,564 crore ` 17.09 ` 2,181 crore ` 15.48 FY 2018-19 FY 2018-19 ROE PBT 23% ` 2,105 crore 24% ` 1,997 crore FY 2018-19 FY 2018-19 PAT Market Capitalisation ` 1,518 crore ` 82,893 crore ` 1,374 crore ` 101,372 crore FY 2018-19 FY 2018-19 Annual Report 2019-20 5 TITAN COMPANY LIMITED Highlights of the Year Inaugurated our new “Design Excellence Centre” at the Corporate Office ‘Taneira’ opened its first store in Pune Held the biennial franchisee ‘Taneira’ opened flagship and dealer meets across store in Hyderabad jewellery, watches and eyewear divisions The Watch Case Manufacturing Plant at Coimbatore, Tamil Nadu, achieved Gold rating in IGBC certification by Cll Fastrack strengthened its offerings by launching a collection of perfumes with Bollywood actress Ananya Pandey as the brand ambassador Tanishq launched the well-received Swayahm collection of both plain and studded jewellery, to give women elegant new reasons to indulge and celebrate her moments of successes 6 Annual Report 2019-20 CORPORATE OVERVIEW STATUTORY REPORTS FINANCIAL STATEMENTS Tanishq launched the ‘Virasat’ collection, inspired Fastrack brand launched by the rich heritage and artistry of the royal city ‘Reflex Beat’, a smart watch of Udaipur, in the plain gold category for the having activity tracker festival season of Diwali with heart rate monitoring functionality Acqui-hire and technology purchase of HUG Innovations to propel our growth in the category of smart wearables Expanding our physical footprint Number of stores Number of stores as Number of towns added in the year on 31st March 2020 where present Tanishq 40 327 204 Zoya 1 4 3 CaratLane 37 92 33 Mia 8 38 19 World of Titan 13 499 221 Fastrack 11 183 85 Helios 16 92 42 Titan EyePlus 47 584 229 Taneira 8 12 5 Annual Report 2019-20 7 TITAN COMPANY LIMITED Letter from the Managing Director Against a tough operating backdrop, we delivered a fairly satisfactory financial performance. Revenue from operations grew to ` 20,010 crore in FY 2019-20, up 4.9% from ` 19,070 in FY 2018-19. Dear Shareholders, This is my first letter to you since succeeding Mr. Bhaskar Bhat as the Managing Director on 1st October 2019. I would like to begin by acknowledging Bhaskar’s immense contribution to Titan over the past 30 years. Notably, serving at the helm for over 17 years, he has been the architect behind creating a one-of-a-kind institution in the world of business. On behalf of the Board, management and all our employees, we extend our deepest thanks and appreciation to Bhaskar for his stellar stewardship and for building Titan into a company that is deeply rooted in values, passionately delivers on its commitments, and brings real value to all stakeholders. Reviewing the year gone by, it was challenging