Navigating Challenging Times

A simple guidebook from Titan’s experience

Bhaskar BhatTitan Industries Limited

30th May, 2009

The worst of times….

• For the first time after the great depression of 1930s, global growth is likely to turn negative this year.

• Consumers in many countries have lost significant wealth – housing, stock markets. Consumers also perceive a more uncertain future. This impacts their confidence to spend.

• Banks are risk-averse and unwilling to lend freely. This impacts liquidity.

The best of times…

• Yet these challenging times hold many opportunities…

• To woo and retain our customers…

• To make ourselves leaner…

• To engage our people far more deeply…

CCCPStamp collectors will know these

four alphabets, featured on all postage stamps of U.S.S.R.

ManagingTurbulentTimes

Consumers-reevaluate their

needs

Cash-conserve

Costs-ruthlessly prune

People-engage positively

C

C

C

P

Consumers• Consumers will seek value

– offer value in interesting ways– eg. a meal to take home each time you eat with us – During these periods, consumers seek more information to make choices. Provide more information.– But if you are thinking of value engineering your product, remember Nestle and Kit-Kat

• Consumers will seek to feel good & celebrate– the “lipstick” effect – make your product a partner in celebration– eg. a Titan for every happy moment in 2009 !

Consumers

• Consumers will seek to escape difficult times– “leave it all behind” even for a day or two– affordable escapes will be irresistible– movies, holidays, spas, bars, restaurants– Perception v/s reality

• Consumers will seek brands they can trust– lower capability to spend will imply far more selective

choice of brands– we must make our brands “trustworthy”

Consumers

• Some consumer groups continue to have strong capability to spend– urban and rural super-rich– kids, youth and women– pharmaceutical, telecom, insurance, PSUs,

banking sectors– countries such as Saudi Arabia, Russia,

Canada, Brazil– Sharp choice of consumer segments more

important this year

Cities

• Consumers across India are not equally affected– Pursue smaller towns– Invest in Rural India– Analyse geographies carefully

Changing Face of Communication

• Point-of-Sale communication – Increase in BTL activities

• Tactical flexibility will be exercised • Communication focus moving towards rational

benefits than pure image– Airtel DTH & Aircel

Cash

• Singh was King last year. Cash is King this year

• Conserve cash in every way. Liquidity is the key

• Prioritise cash generation over sales volumes or profit margins alone– Even if this means packaging excess inventory and

offering it at very good value

Cash is King

• Reduce cash guzzlers everywhere – inventories– idle assets– irrelevant innovation– non-value adding cash outflows

• Secure lines of credit when they’re available– don’t wait until they are required

Costs

• A natural opportunity to prune costs– launch a systematic war on waste– 20% always a feasible target

• Our teams know where waste languishes– give them the opportunity– eg. “My Titan” program, Jan to March 09

• Make cost-saving fashionable– We like engaging in fashionable and positive activities– How will you make costs a fashionable, cutting-edge

subject ?

The My Titan Program

Jan-Mar, 2009

People

• Our people need to feel reassured– uncertainty has no place– need to see the business strong & capable– need to feel valued in these challenging times

Titan

People

• Our people have to think positive and stay focused on business goals– wide ownership of business plans and targets– challenge of coming up with refreshing new

ideas– focus on the right actions, rather than results-

driven anxiety– celebration of every success, however small or

insignificant

Face Of Titan & Tanishq Superstars

People

• We have to engage the minds and hearts of our people– engagement enhances emotional commitment,

particularly in challenging times– communicate, communicate, communicate…

spend all the time and energy necessary – hand over ownership of critical initiatives to our

people at large, not to management alone

Some can dos…

• Increase quality and frequency of communication with key stakeholders

• Raise the level of top management ownership of problems

• Be transparent• Empower • Be agile• Spread ownership of critical issues to be

resolved

Don’t…

• Stop investing

• Go back on promises and commitments

• Create a sense of gloom and despondency

• Cut back on Community Initiatives

• Trivialise

Results

• YOY topline growth 26.5%

• Bottom line growth 30%

• Employee and ad. spend up 20%

• Capital employed has remained at same level

H1 v/s H2

Item H1 H2 Total

Income 1924 1924 3848

Employee cost 108 126 234

Ad.spend 95 86 181

Outlets 79 56 135

New brands 1 1 2

ManagingTurbulentTimes

Consumers-reevaluate their

needs

Cash-conserve

Costs-ruthlessly prune

People-engage positively

C

C

C

P

Wishing you a safe voyage !