ACT 5001 FINACIAL ACCOUNTING

TITAN COMPANY LIMITED

Submitted By
Group AD-2
Asish Paul 22F510
Prashant Nigadi 22F534
Rutu Barve 22F541
Smit Patel 22F550
Udita Saraogi 22F557
 CONTENTS

1) Introduction
2) Company Background
3) Company Management
4) Shareholders
5) Auditors
6) Non- Current Assets
7) Revenue & Income
8) Inventories
9) Long term Borrowings
10) Other
11) CSR
12) Ratio Analysis
13) References

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 INTRODUCTION

Titan Company Limited is an Indian products company that mainly manufactures fashion accessories
such as jewellery, watches and eyewear. Part of the Tata Group and started as a joint venture with
the Tamil Nadu Industrial Development Corporation (TIDCO), the company has its corporate
headquarters in Electronic City, Bangalore, and registered office in Hosur, Tamil Nadu.

Titan company commenced operations in 1984 under the name Titan Watches Limited. In 1994,
Titan diversified into jewellery with Tanishq and subsequently into eyewear with Titan Eyeplus. In
2005, it launched its youth fashion accessories brand Fastrack. The company is the largest branded
jewellery maker in India, with more than 80% of its total revenues coming from the jewellery
segment. As of 2022, Titan has a 6% market share in India's jewellery market. As of 2019, it is also
the fifth-largest watch manufacturer in the world. It is most trusted Indian Brand.

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 COMPANY BACKGROUND

Segments Brands Market shares Competitors

Zoya Malabal Gold & Diamonds
Tanisq Kalyan Jewellers
Jewellery 6%
Mia PC Jewellers
Caratlane Bhima Jewellers
Favre-Leuba
Xylys Casio
Nebula Fossil
Watches Titan 60% Tommy Hilfiger
Fastrack Diesel
Zoop Timex
Sonata
Titan Eye+ Lenskart
EyeCare Glares 5% Specsmakers
Fastrack Himalaya Optical
Fragrance & Skinn UCB
9%
Fashion Accessories Fastrack Davidoff
Indian Dress Wear Taneria   BIBA

Geographies: Titan Industries established in1984, has there production plant in India and distributes
there products in Indian, Middle East, Africa, Asia-Pacific and Europe

New Developments

 Titan is planning to take its jewellery brand Tanishq to the US and other West Asian markets
as part of its long-term strategy to tap into the demand from large Indian diaspora and Non-
Indian Resident (NRIs) communities.
 Tanishq opened its first international store in November 2020 in Dubai and currently has
four stores at international locations. The company is planning to open 20-30 stores in the
next 2-3 years in North America and West Asia which would enable it to serve the vast
diaspora of people of Indian origin residing in these international locations
 On the domestic retail front, the company is expecting a strong festive season and is
planning to adopt a combination of product innovations, new launches and marketing
investments besides promotional offers to capture the expected demand.

For Titan, their Jewellery division generates the most revenue(Rs. 23,268 Crores), and the most
profits (Rs. 3050 Crore)  followed by the watches division.

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 COMPANY MANAGEMENT
Board Size & Composition –Is the board diverse enough with reference to Gender, Age,
Educational Background, Experience, independence etc. ?
Mr. Mr. S Krishnan - Chairman
Mr. N N Tata- Vice Chairman
Mr. Bhaskar Bhat- Ex MD
Mr. C K Venkataraman- Managing Director
Ms. Jayashree Muralidharan- Director
Mr. Ashwani Puri- Independent Director
Mr. B. Santhanam- Independent Director
Mr. Pradyumna Vyas- Independent Director
Dr. Mohanasankar Sivaprakasam- Independent Director
Ms. Sindhu Gangadharan- Independent Director
Mr. Sandeep Singhal- Independent Director
The Board is diverse enough with reference to gender as it includes 2 female directors out of the
total size of 11 members. All the members are well educated including people who have studied
from IIT’s, IIM’s and worked in corporates, Indian Government as IAS/IPS officers and Associate
Professors. All the members are interdependent as we can understand from the expertise of their
functionalities like Sales, Advertising and Marketing, trading and distribution, Valuations and
decision analysis.

Has the company expanded board size? 

Dr. Mohansankar and Mr. Venkataraman were appointed as the additional directors in 2019 at the
same time Mr. T K Balaji, the Independent director retired on 31 st July 2019

Compensation to directors – as % of revenues & increase over last year. 

The compensation to directors as a ratio of revenues and the % change over the last year

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How many Board meetings were held during the year?  
During the year 2021-2022, In total six board meetings were held

Do these directors also hold directorships in other companies?  

Yes, a few of directors hold Directorship in other companies too

Does the entity comply with regulations wrt Independent Directors & Women Directors? 
Yes, the entity complies with regulations wrt Independent Directors and Women Directors according
to the company act 2014

What portion of current earnings is distributed as dividends?  

The revenue from operations for year 2019-20 was INR 27,210 crore and the profit after tax is INR
2,180. The dividend given for the same year was INR 666 crore which makes 30%

SHAREHOLDERS
Period Authorised Issued Paid up
Instrument Capital (Rs. Capital (Rs. Face Capital (Rs.
From To Shares
Cr) Cr) Value Cr)
Equity
2021 2022 120 89 890000000 1 89
share
Equity
2020 2021 120 88.8 887800000 1 99.9
share

Issued Share Capital : No of shares & par value.

Issued Share- 890000000

Par Value- Rs.1

Has the company issued any shares during the year? How & to whom were they issued?

Yes, the company issued 22,00,000/- shares to the public.

Has the company bought back any shares?

No

What is the shareholding pattern? Has it changed as compared to the immediate previous year?

Holder's Name % Share % Share Holding

Holding (2022) (2020)
Promotors & 52.9% 52.9%
Promotor Group
Public 47.1% 47.1%

Have the directors pledged their shareholding as security? How much and Why?

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No

The shares are listed on which exchanges?

BSE and NSE

What is the highest & lowest price at which the shares traded during the financial year?

Highest- Rs. 2,768

Lowest- Rs. 1,825

What is Book Value of the shares? How does book value compare with the par value & the current
market price?

Book Value: 104.5

Par Value: Rs. 1

Current Market Price: Rs. 2,579

Book value is 104.5 times the par value and Current Market value is 24,68 times the book value

Do you observe any relation between the Sensex/Nifty & the company’s stock prices?

Titan is part of both Nifty and Sensex. The movement of both is affected by Titan shares and Vice
versa.

When was the AGM held? What was the agenda for the meeting?

The 38th Annual General Meeting was held on 26 th July 2022 at 10.30 A.M. through Video
Conference/Other Audio Visual Means

Agenda:

1) To receive, consider and adopt the Audited Standalone Financial Statements for the financial
year ended 31st March 2022 together with the Reports of the Board of Directors and
Auditors thereon
2) To receive, consider and adopt the Audited Consolidated Financial Statements for the
financial year ended 31st March 2022 together with the Report of the Auditors thereon
3) To declare dividend on equity shares for the financial year ended 31 st March 2022
4) To appoint a Director in place of Mr. Novel Naval Tata, who retires by rotation and being
eligible, offers himself for re-appointment
5) To re-appoint BSR& Co. LLP, Chartered Accountants as statuary auditors.

What portion of current earnings is distributed as dividends?

The revenue from operations for year 2019-20 was INR 27,10 Crore and the profit after tac is INR
2,180. The dividend given for the same year was INR666 crore which makes 30%

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 AUDITORS
Who are the auditors? Have they changed from the last year – why/why not? 
TITAN Company is audited by BSR and Co. LLP, Firm registration No.: 101248W/W-100022, and it is
audited in accordance with the Standards of Auditing (SAs) specified under the section 143(10)

Are there any negative comments/qualifications in the audit report? Does the audit report contain
any recommendation to present/potential investors? 
No, there are no negative comments or recommendations for the present/potential investors in the
Audit report by BSR and Co. LLP for TITAN

What is the total compensation to the auditors? Did the auditors provide any non-audit services
also?  
Annual remuneration of 2.75 crores for the year was given to the BSR and Co. LLP for Auditing

NON- CURRENT ASSETS

What is the total investment in non-current assets as % of total assets?  
The Investment in non-current assets is 18% of the total assets

What is the depreciation as % of total revenues? 

Depreciation is about 1.27% of the total revenues

What the return on total assets, return on fixed assets? 

Return on total assets is 11.77 and the return on fixed assets is 7.87

What is composition of tangible & intangible assets? 

Tangible Assets: INR 20,091
Intangible Assets: INR 46 crores

Has the firm made additional investments in non-current assets? How does this compare with
current revenues, profits, operating cash flows? 
The firm has made an additional investment of INR 442 crore in non-current assets. The current
revenues is INR 27,210 crore i.e the investments are 1.6% of the revenues and the investments are
20% of the total profits

Has it scrapped or sold any assets – what was the profit/loss in that case? 
Yes, they have sold assets worth INR 3,571 crore, loss on sale of PPE is INR 3 crore net, but there is a
gain of investments which is INR 86 crores

What is the policy for depreciation? Is it the same for all categories of assets? 

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Land and buildings held for use in production or supply of goods or services are stated at cost less
accumulated depreciation and accumulated impairment losses

How much revenue is generated per rupee of investment in fixed assets? 

Per rupee investment in fixed assets generates revenue of INR 7.24

What % of last year’s revenues, profits, operating cash flows is invested in additional fixed assets? 
The firm has made an additional investment of INR 442 crore in non-current assets. The current
revenues is INR 27,210 crore i.e the investments are 1.6% of the revenues and the investments are
20% of the total profits.

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 Other Information :

What kind of investments has the company made?

(i) Investment in subsidiary companies

Subsidiaries Amount (in Cr)

Titan Engineering & Automation ltd Rs 235
Caratlane Titan Rs 505
TCL NA Rs 1
Titan Commodity trading Rs 2
Total subsidiary investments (A) Rs 743

(ii) Investment in associate companies

Associate company Amount (in Cr)

Green Infra Wind Power Rs 745
Total Associate Investment (B) Rs 745

(iii) Property, Plant & Equipment

Components Amount (in Cr)

Land & buildings – 27 Cr Rs 27
Plant, Machinery & Equipment – 36 Rs 36
Cr
Computer & Servers – 17 Cr Rs 17
Furniture & Fixtures – 35 Cr Rs 35
Office Equipment & Vehicles – 30 Cr Rs 30
Total PPE investments © Rs 145

Total Investments ( A + B + C ) = Rs 1633 Cr

What kind of contingent liabilities does the firm have?

Contingent liabilities not provided for - 403 Cr comprises of the following:

a) Goods and Service Tax - 1 Cr (relating to mismatch in statutory returns)
b) Sales tax - 56 Cr (relating to the applicability of rate of tax, computation of tax liability, submission
of certain statutory forms)

c) Customs duty - 5 Cr (relating to denial of benefit of exemptions)

d) Excise duty - 134 Cr (relating to denial of exemption by amending the earlier notification,
computation of the assessable value, denial of input credit on service tax and excise duty on
Jewellery)

e) Income tax - 199 Cr (relating to disallowance of deductions claimed)

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f) Others - 9 Cr (relating to miscellaneous claims)

What is the effective tax rate?

A company’s effective tax rate is one ratio that investors use as a profitability indicator for a
company. The enacted income tax rate in the year was 25.17% which amounts to 738 Crores but
after adding (i) expenses that are not deductible in determining taxable profit & others worth 20
Crores and deducting (ii) Effect of rebate worth 6 Crores the total effective tax paid by the company
became 752 Crores thus Titan for the financial year 2021-22 recorded an effective tax rate of
25.64%.

What are the major reasons for the current profits increasing/decreasing as compared to the
previous year?

Considering that the second wave of the pandemic's humanitarian impact on customers was severe
and extensive, the programme of customer engagement that had generated sales the previous year
was also abandoned.

In the second quarter, the Company saw a significant rebound in demand following the second wave
throughout its consumer businesses, with sales in the majority of the Divisions quickly rising above
or very nearly pre-pandemic levels.

The Company finished the year on a satisfactory note despite the last quarter of the year getting
disrupted twice, with overall store operation days exceeding 90% for the quarter.

CSR:

Is the entity required to comply with guidelines for CSR spending?

Yes, the company is required to comply with CSR spending as it has profit of 2180 crores. According
to rules, any company with annual profit of more than 5 crore or net worth of 500 crore or annual
turnover more than 1000 crore must spend 2% of their average profits of three years.

How much was allocated for CSR & what was actual spending?

The amount allocated for CSR was 35 crores which was 3 crores less than the amount required to
spend last year. The company spent all its CSR amount and there was no shortfall in the amount of
CSR spending.

What are the focus areas of CSR spending?

Titan had mainly focused on 4 activities of CSR spending as mentioned in Schedule VII of Companies
Act, 2013. They are:

i) Eradicating hunger, poverty, and malnutrition, promoting healthcare including

preventive health care and sanitation.
ii) Promoting education, including special education and employment enhancing vocational
skills.

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 iii) Ensuring environmental sustainability, ecological balance, protection of flora and fauna,
animal welfare etc.
iv) Protection of national heritage, art, and culture.

What is ESG? What are the focus areas of ESG?

ESG is the abbreviated form of Environmental Social and Governance which is a stakeholder centric
approach to doing business. Titan has a mission to ‘Go Green’. To ensure that the company is
investing in energy saving initiatives to reduce carbon emission. Some of the initiatives are sourcing
energy requirement by windmills and solar PV cells, water conversation with rainwater harvesting
and replacement of AHUs with new energy efficient AHUs.

The company has increased its intake in the retail and sales. The company has given options that
provide flexibility to paternal and maternal leaves that include support till the child is over one year,
also unpaid leave extensions, half-time pay-out options. Also cab support for pregnant women.

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 REFERENCES
1) https://www.titancompany.in/investors/investor-relations/annual-reports
2) https://www.titancompany.in/investors/investor-relations/stock-information
3) https://www.titancompany.in/investors/investor-relations/quarterly-results
4) https://economictimes.indiatimes.com/titan-company-ltd/stocks/companyid-12903.cms
5) https://www.titancompany.in/sites/default/files/Shareholding%20Pattern%20Q4%202020
6) https://www.smart-investing.in/balance-sheet.php?Company=TITAN+COMPANY+LTD

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