Titan Strengthens Jewelry Presence with ₹4,600 Crore Acquisition of CaratLane Stake
Titan Bolsters Jewelry Dominance with ₹4,600 Crore Acquisition of CaratLane Stake :
In a significant development, Titan Co., a subsidiary of the Tata Group, has acquired a substantial 27.18% equity stake in its subsidiary, CaratLane Trading Pvt Ltd, for an impressive ₹4,621 crore. This strategic move aims to fortify Titan’s position in the jewelry market and fuel its growth trajectory.
Tata Group-owned Titan Co. executed a share purchase agreement to secure the entirety of the 91,90,327 equity shares held by Mithun Sacheti, CEO of CaratLane Trading Pvt Ltd, and his family members. As a result of this acquisition, Titan’s shareholding in CaratLane will soar from 71.09% to a commanding 98.28% on a fully diluted basis.
The acquisition comes as part of Titan’s strategic efforts to solidify its foothold in the jewelry industry. This bold move aligns with Titan’s vision for expansion and diversification within its jewelry division. The division, which includes iconic brands such as Tanishq, CaratLane, Zoya, and Mia by Tanishq, posted an impressive revenue of ₹31,897 crore in FY 2023, contributing significantly to the company’s overall turnover.
CaratLane Trading Pvt Ltd, an unlisted entity, showcased its prowess in the jewelry sector by recording a substantial turnover of ₹2,177 crore in FY23. Beyond sales, CaratLane is actively involved in jewelry manufacturing and distribution.
The acquisition is anticipated to be completed by October 31, 2023, subject to regulatory approvals from the Competition Commission of India (CCI). Titan has outlined its financing strategy, involving a blend of cash reserves, internal accruals, and debt, to facilitate the acquisition.
CaratLane, founded in September 2007, also has a subsidiary presence in the United States. Regulatory filings indicate that Titan’s acquisition of the remaining 27.18% stake in CaratLane values the online jewelry retailer at an impressive ₹17,000 crore.
This acquisition carries echoes of significant e-commerce exits, such as Walmart’s acquisition of 77% of Flipkart in 2018. CaratLane’s founder, Mithun Sancheti, and his family’s decision to sell their stake in the online retailer underscores the transformative potential of such strategic moves.
At present, Titan holds a 71.09% equity share capital in CaratLane, on a fully diluted basis. The proposed acquisition is poised to elevate Titan’s stake to a formidable 98.28%, underscoring the brand’s commitment to leading the jewelry market.
Completion of the transaction hinges on customary regulatory approvals and closing conditions. Titan’s strategic financing plan, combined with its well-established market presence, positions the company for a successful transition.
CaratLane’s performance in FY22-23 saw a turnover of ₹2,177 crore, demonstrating its robust presence in the jewelry sector. The transaction values CaratLane at 7.8 times its FY23 sales, indicating a noteworthy premium compared to the market valuation of Titan itself, which stands at 7.07 times its FY23 sales.
Founded as a pure online brand in 2008, CaratLane experienced rapid growth under the stewardship of Titan, which initially invested in the brand in 2016. Collaborating with Tanishq, the brand achieved impressive growth, with sales increasing at a Compound Annual Growth Rate (CAGR) of 74% over the last three fiscal years, despite challenges posed by the Covid-19 pandemic.
Titan’s Managing Director, CK Venkataraman, expressed his belief in India’s consumer story and the potential of CaratLane’s growth journey. Mithun Sancheti, Founder and Managing Director of CaratLane, expressed pride in the collective achievements of the past 15 years, expressing confidence in the brand’s future under Titan’s stewardship.
As Titan embraces this transformational acquisition, CaratLane’s journey takes a significant leap forward, buoyed by the support of Titan, the Tata Group, and its enthusiastic customer base.
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