Titan has acquired an additional 27 percent stake in omni-channel jewellery brand CaratLane for Rs 4,261 crore. Titan is buying shares owned by CaratLane founder and his family members "representing 27.18 percent", the company said in a statement.

With this deal, that is touted to be India's biggest in the D2C e-commerce space, Titan's stake in CaratLane increases from 71.09 percent to 98.28 percent. CNBC-TV18 has learnt that Titan will payout CaratLane employee ESOPs for the remaining 2 percent stake.

CaratLane had reported a turnover of Rs 2,177 crore in FY23 against Rs 1,267 crore in FY22. The firm has been profitable for the last three years and is expecting to close FY24 with a revenue of over Rs 3,000 crore.

Founded in 2008 by Mithun Sacheti and Srinivasa Gopalan, CaratLane started out as an online brand with an aim to make jewelry affordable for the average Indian woman. The company's primary customer is women aged 25-35 who spend an average of Rs 25,000 on an order.

Here are excerpts from an exclusive interview with Mithun Sacheti, Founder of CaratLane:

Question: Mithun, take us through the contours of the deal, it is touted to be the largest D2C deal in India. Titan was already the major shareholder, what led you to decide to exit the company or was it a planned milestone?

Answer: Yes, we had the option to exit, and we have exercised it. The business has an enterprise value of Rs 18,000 crore, with a valuation of Rs 17,000 crore, net of debt. I am completely exiting CaratLane with the sale of my 27 percent stake. The rest of the 2 percent owned by employees will get a payout right away, as that's the way the Tatas work. All 1500 employees have been working full-time with Titan.

Question: What kind of revenues is CaratLane currently clocking, are you profitable? You reported a reported turnover of Rs 2,177 crore in FY23 against Rs 1,267 crore in FY22. Give us a sense of the current numbers. You are an omnichannel brand, where is the growth coming from?

Answer: We did Rs 2,177 crore in revenues in FY23 with a Rs 160 crore in EBIT profit. We have been a profitable business for the last three years. For FY24, we expect to clock a topline of Rs 3000+ crore. In fact, in the last quarter ended, we earned over Rs 650 crore in revenue. Traditionally, Q3 is always our strongest quarter, as it is the festive season.

We currently have over 200 stores and are expanding rapidly. If you see Tanishq has 500 significantly larger format stores. So, I think the long way for us to go with this. I cannot share a revenue mix as we do not break our business by vertical, instead look at it at the pin code level. As an omni-channel brand, we do all our marketing online as we have always done, we don't sell in marketplaces, all our business is on the platform.

Question: Do share some insights on the company's biggest revenue churners, the top markets and how have you leveraged consumer insights to stay on top of the game?

Answer: The big metro cities Mumbai, Delhi, Bangalore, Chennai and Kolkata are the top revenue earners of the firm and contribute 60 percent of the revenue.

We are projecting to serve a million customers by the end FY24 with an average order size of Rs 25,000. In terms of who are client is, well they are young women in 25-35 age group.

If you look at the market and consumers - while most businesses have focused on delivering higher value, we have been obsessed with delivering everyday jewelry at the Rs 25,000 price point, irrespective of the price of gold. We've done value, engineering to deliver that because our customers have wanted it. And so, I think that's the biggest win for us. We delivered a 90 percent, plus diamond jewelry business, whereas India is mostly dominated by gold jewelry players. So, we are a destination for the daughter and others are destinations for the mother.

Question: Your technology capability is a highly valued asset for Titan, talk to us about how you have used technology to build and grow the business?

Answer: We think technology first and that's why we have built our business around technology. That ability to think how consumer interplays with our tech is the advantage that we brought to Titan. Also, many features like video calling sales as well as omni sales... all of these are positives, and we learned a lot about retailing from Titan and we complemented by adding all of this back into Titan. So yeah, I am hoping going forward Titan is able to build on our tech prowess to expand the brand.

Question: Where do you go from here? Is another startup/entrepreneurial venture in the works?

Answer: Will take some pause and then might think of launching a fund for privately held consumer companies. My biggest mentor was Rakesh Jhunjhunwala and I have learnt a lot from him. I am working on multiple ideas, but at the moment, nothing is concrete to share.

First Published: Aug 19, 2023 12:59 PM IST