Titan to acquire majority stake in jewellery e-tailer CaratLane

07 May 2016


Titan Company Ltd, the Tata group retailer of jewellery, watches and eyewear, is acquiring a majority stake in Chennai-based online jeweller CaratLane, marking yet another entry by a brick-and-mortar retailer into e-tailing as India catches the e-commerce fever.

Titan on Friday announced plans to enter the online jewellery space acquiring a majority stake in online jewellery brand CaratLane for an undisclosed sum. The board of directors of Titan Company on Friday approved the acquisition subject to due diligence.

''Titan will acquire over 51 per cent stake in the company and post acquisition CaratLane will become a subsidiary of Titan Company,'' managing director Bhaskar Bhat told analysts on a conference call.

CaratLane had earlier raised $50 million from Tiger Global Management, one of the world's largest hedge funds, as per a Forbes India article that appeared in March 2015.

Titan Company did not disclose the value of the deal, nor the valuation of the target company, stating the valuation of the deal is ''currently under discussion and details will be shared on signing of definitive documents.''

The transaction is expected to be completed by the middle of June 2016, it added.

Co-founded by Mithun Sacheti in 2008, CaratLane has both an online and offline presence with a network of over 4,000 global vendors. It operates 13 retail stores across the country, while its online store reaches out to 150 cities.

On the other hand Titan's jewellery business, which includes the brands Tanishq, Gold Plus, Zoya, and Mia, is retailed from over 200 stores across the country. The Tanishq brand is also retailed online through the official company website.

''For Titan, the acquisition brings significant capabilities in the e-commerce space along with a brand, a customer segment and a business model that are very exciting,'' said Bhaskar Bhat, managing director, Titan Company Ltd.

This acquisition gives Titan control over a leading online jewellery brand, which caters to a different customer segment and has significant internal capabilities in design, manufacturing, and technology. Titan believes that the synergies with CaratLane is ''very high''.

Interestingly, Ratan Tata, chairman emeritus of Tata Sons, through his personal investment firm RNT Associates had in 2014 invested in Bengaluru-based Bluestone, a rival to CaratLane.

Titan, meanwhile, registered a 4.2 per cent decline in its net profit for the 2015-16 fiscal to Rs705.85 crore. Total income was down 5.2 per cent at Rs11,264.53 crore compared to the previous fiscal. Profit before tax declined by 17.5 per cent to Rs870.66 crore.

"The financial year as well as the last quarter of 2015-16 was an extremely challenging one for the company. The challenges faced were both on account of weak market conditions for all businesses and new regulatory restrictions for the jewellery business," a company statement read.

Titan's jewellery business accounts for 78 per cent of its FY16 revenue, the watch business 17 per cent, eyewear 3 per cent, and others 2 per cent. Income from the jewellery segment saw a decline of 7.6 per cent at Rs8717.40 crore over the previous year. The company attributed the decline to the "absence of revenues from the Golden Harvest scheme'' and disruptions caused by "industry wide strikes" in the last quarter of the just conclude financial year.

While its eyewear business registered a revenue growth of 11.8 per cent, the watch business clocked a growth of 1.7 per cent. The company declared an interim dividend of Rs 2.20 per share.

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