New Delhi: Tanishq, the popular jewellery brand from the stable of Titan, was caught in the eye of a storm this month over its advertisement that sought to celebrate the coming together of Hindus and Muslims.
The video ad sparked a controversy with many on social media accusing Tanishq of promoting fake secularism and ‘love jihad’. This forced the company to withdraw the ad — which, in turn, triggered fresh outrage from another section of critics who questioned the company’s move to back down.
The controversy pushed the Tata Group into the spotlight, with Tanishq being identified with the conglomerate. While many Right-leaning people sought a boycott of all Tata Group companies and its products over the ad, others questioned the giant for yielding to what they said was social media trolling.
Clearly women on twitter have far more spine in dealing with trolls than @TataCompanies @TanishqJewelry. You couldn’t take the heat for even a day and caved into the hate mob. As for the bigots, they can never defeat what India really stands for- plurality and diversity
— Nidhi Razdan (@Nidhi) October 13, 2020
This is really sad! How can a brand as strong as Tanishq from the House of Tata's chicken out based on trolls? In fact the trolls were helping you get more visibility for your ad. #Tanishq #Advertising . https://t.co/kNiuvJunUu
— Raj Nayak (@rajcheerfull) October 13, 2020
I don’t want my child to inherit an India built on hate, says Rajiv Bajaj. Kudos to Mr Bajaj for standing up for his principles. India Inc. needs to raise its voice against the tsunami of hate unleashed by BJP & not succumb under pressure like the Tatas did on the #tanishq ad!
— Shama Mohamed (@drshamamohd) October 13, 2020
But a lesser known fact about Titan is that its largest shareholder is not the Tata Group but a state government entity.
Tamil Nadu Industrial Development Corporation (TIDCO), the industrial development body of the Tamil Nadu government holds a 27.88 per cent stake in the company, according to the shareholding pattern on the Bombay Stock Exchange (BSE). The Tata group is the second largest shareholder with 25.02 per cent holding.
The shareholding pattern is reflected in the board representation as well.
The chairman of Titan’s board — N. Muruganandam — is an appointee of the Tamil Nadu government and so are two other directors Kakarla Usha and Arun Roy. All three are officers of the Indian Administrative Service (IAS) and are from the Tamil Nadu cadre. C.K. Venkatraman is the managing director, who along with former MD Bhaskar Bhat and vice-chairman N.N. Tata, represent the Tata group on the board.
Titan, a JV set up in 1984 but without the Tata name initially
Titan was set up in 1984 as a joint venture between the Tata group and TIDCO as the latter was one of the few in the 1980s with a licence to manufacture watches.
However, wary of opposition from civil servants in the central government, Tata’s name was not associated with the project at the beginning. The initial JV agreement was entered into between TIDCO and Questar Investments. Among the promoters of Questar Investments were Xerxes Desai, who went on to become the first MD of Titan, and Minoo Mody, the first chief executive officer (CEO) of Tata Sons.
After the central government gave its final nod to the project, Questar was taken over by the Tatas via a rights issue, according to a book on the company — Titan: Inside India’s most successful consumer brand — authored by Vinay Kamath.
“The joint venture was entered with the understanding that the state government will appoint the chairman and the private sector company the managing director,” said a former chairman of the Titan board who did not wish to be identified.
“The day-to-day management was with the MD and his team and the state government appointed two-three people on the board of the company,” he added.
It was set up at a time when licence raj was the norm and joint sector projects were encouraged as a middle ground between migrating from a fully government-owned firm to becoming a private company.
Titan, actually, is an acronym for Tata Industries and Tamil Nadu.
Some well-known IAS officers of the Tamil Nadu cadre who have either led the company as chairman or were board members include current Reserve Bank of India (RBI) Governor Shaktikanta Das and former Department of Economic Affairs secretary R. Gopalan.
When Titan came into existence, state-owned HMT was the only firm that manufactured watches in India. Titan introduced analogue electronic Quartz watches to the country and has since then grown to become the fifth largest integrated own-brand watchmaker in the world.
The company started production in 1986 and the brand Titan was launched the following year. In the subsequent years, the company has launched many watch brands, including Fastrack, Sonata and Xylys.
The company also launched its jewellery brand Tanishq in 1996 and then went on to explore the eyewear and perfume market as well in later years. Taneira is the youngest brand of the group focussed on handmade sarees.
In all, the company has over 16 brands under its fold.
The name of the company has also changed over the years to reflect its diversification. What was initially known as the Titan Watch Project is now Titan Company Ltd.
ThePrint reached Titan’s public relations firm for a comment via email but there was no response until the time of publishing this report.
Titan’s market cap has zoomed to over Rs 1 lakh crore
In over three decades of its existence, Titan has managed to grow at a fast clip. The company’s revenues were at Rs 20,000 crore in 2019-20 with a net profit of over Rs 1,500 crore.
Titan’s market capitalisation currently is over Rs 1 lakh crore, up nearly five times from the levels seen in 2011. To put the rise in perspective, the benchmark Sensex just over doubled during this period.
From an initial investment of less than Rs 10 crore, the value of the investments for the two promoters has multiplied many times. At current market price, Tamil Nadu government’s stake is valued at more than Rs 30,000 crore, while Tata’s stake is valued at over Rs 27,000 crore.
These numbers also probably explain why the state government has not pared its stake in the JV, unlike some of its other investments.
“There were more such ventures entered into by the state government in the 1980s. But over a period of time, the government has divested its stakes in these firms, unlike Titan,” the former chairman said.
One example of the Tamil Nadu government paring its stake in a JV is Southern Petrochemical Industries Corporation where it brought down its double digit stake to less than 5 per cent.
Unique positioning could see Titan grow at a faster pace
The fifth largest watchmaker in the world has potential to grow further given its unique positioning as an aspirational brand and ability to capitalise on some unorganised sectors, according to analysts.
“Titan has a big opportunity to gain market share from regional unorganised retailers facing pressure, liquidity constraints, funding issues and limited ability to sell online,” said Deven Choksey, managing director of K.R. Choksey Investment Managers Pvt. Ltd.
“Titan has positioned itself as an aspirational brand for both men and women. Their balanced business model should help in steady growth in business,” he said, pointing out that the company has made a mark in the personal accessory space.
The Tanishq brand launched in 1996 managed to carve a space for itself among a population that still favoured the local jeweller. The promise of quality coupled with a mix of contemporary and traditional designs has given Tanishq a strong foothold in the market. Some of the other brands under the jewellery vertical include Zoya, Mia and Carat Lane.
Ajay Bodke, CEO & chief portfolio manager (portfolio management services) at Prabhudas Lilladher Pvt. Ltd said Titan is in a unique position in the consumer discretionary spending space.
“It is uniquely placed to grab a lion’s share of the business. 25-30 years back, every family had their own family jeweller. Then the Tatas entered the market armed with Karatmeters and promise of gold purity. The Tata brand also inspired trust among consumers,” he said, adding that Tanishq managed to appeal to the sensibilities of the younger generation with its contemporary designs.
Choksey pointed out that under Xerxes Desai, the company pioneered the concept to lease gold rather than buy it, a practice that helped it keep the risks of holding inventory off its books.
He pointed out that the jewellery business accounts for 80 per cent of expected total revenues of the firm.
Brokerages like Emkay Global and Motilal Oswal have maintained their ‘Buy’ on the Titan stock despite its products catering to mainly the discretionary spending category — a segment that has seen a sharp slump in demand in Covid times.