TITAN INDUSTRIES LIMITED

Company Products Established Founder Distribution Production plants

Titan is the largest watch company in India and

the sixth largest in the world. Titan manufactures
over 7 million watches per annum and has a
customer base of over 65 million.

Background

Titan Industries was established in 1984 as a

joint venture between the Tata Group and Tamil
Nadu Industrial Development Corporation (TIDCO).
The company set up its corporate office in Bangalore
(Karnataka) and its watch manufacturing facility in
Hosur (Tamil Nadu). In two decades the company has
built an impressive watch business to become India’s
largest manufacturer and the world's sixth largest
manufacturer of watches. This has mainly been
achieved by developing a formidable distribution
network. The company has amongst the world's
largest retail chain of exclusive retail showrooms for
watches called ‘The World of Titan’ spread over 100
towns.

It also has multi-brand outlets named ‘Time

Zone’, service centers and dealer outlets. Globally
Titan has a presence in over thirty countries through
its marketing subsidiaries.
 Titan has also entered the jewellery business in
1995. Jewellery is sold in India through an exclusive
company controlled retail chain, comprising of owned
and franchised outlets. It is also exported to
Singapore and the Middle East.

The company has watch assembly plants at

Dehradun (Uttar Pradesh) and Baddi (Himachal
Pradesh) and a plant manufacturing electronic circuit
boards in Goa.

The majority stake in the company is held by the

promoters, with TIDCO having 28 per cent of the
shares and Tata Group companies owning 25 percent
of the shares. Public holding in the company is
around 28 per cent. The rest of the stake is held by
foreign institutions, non-resident Indians, mutual
funds and other institutions.
 Products & Brands
Company Products Established Founder Distribution Production plants
In watches, the company has two flagship
brands – Sonata and Titan. Sonata is positioned in
the low-end segment in the market with a price band
of Rs 250 to Rs 1250, thus addressing the
affordability issue of Indian consumers. The brand
Titan is positioned in the middle and upper segment
and has a range of sub-brands like Edge, Fastrack,
Nebula, Raga, Steel, Regalia, Bandhan and Flip. The
jewellery business selling under the brand name
‘Tanishq’ has a share of slightly over 50 per cent in
the total revenues of the company while watches
have about 45%.The balance is accounted for by the
new businesses viz. Precision Engineering,
Accessories & Licensed Products. In jewellery, gem
studded jewellery, which has higher margins as
compared to plain gold jewellery, has seen its share
rise steadily to 30 per cent.
 The company is involved in retailing of
accessories like sunglasses (brand Fastrack) and
manufacturing of precision engineering products,
mainly in automotive and aerospace. Watches under
the license of designer wear brand Tommy Hilfiger
have also been launched. In the international
markets Titan has also introduced a perfume under
the brand name Evolve.

Financial Analysis

Today, Titan has over 60 per cent of the

domestic market share in the organized watch
market. Its exclusive retail showroom chain – World
of Titan – is amongst the largest in its category. Titan
watches are sold through over 9,000 outlets in over
2,300 cities and internationally in over 30 countries
including the UK, Spain, Greece and countries in the
Middle East and Asia Pacific. It’s after sales service is
itself a benchmarked operation with a network of
over 616 service centers and has one of the world’s
fastest turnaround times. The company has a world-
class design centre both for watches and jewellery.

The return on capital employed has seen a

significant increase driven mainly by the
enhancement in operational efficiency, including a
reduction in capital employed in the jewellery
division, despite the rapid top line growth. Reducing
funds were employed in working capital of the
domestic business through new initiatives like supply
chain management to bring down inventories and
costs. The company’s continued efforts have resulted
in a significant reduction in the capital employed,
despite a considerable growth in the turnover. The
savings from these initiatives are beginning to kick in
and it is expected that operating margins will
continue to show a healthy growth.

Titan’s Contribution in Making ‘Made in

India’ Global
 Titan’s first foray into international markets was
through the export of watch movements in 1989.
This was a result of an arrangement with France
Ebauches from whom Titan had sourced its
movement technology to buy back a part of Titan’s
production of watch movements. This led the
company to get keen on selling the value-added
watch in the international markets instead of selling
the movements. The company first launched its
watch range in the Middle East in 1991.The Middle
East emerged as the best choice as it had a sizeable
non-resident Indian population that was familiar with
the brand. With the availability of Indian newspapers
and television channels, the spill over of domestic
advertising was another influential factor.

The first global footprint was placed in the

United Arab Emirates — the largest market in the
Middle East. This was followed by an entry into
Kuwait, Oman, Saudi Arabia, Egypt and a few key
markets in Africa. Despite competition from global
majors, Titan achieved sales of over 100,000
watches within a year of its launch. With the success
of the Middle East venture, the company was eager
to advance its geographic presence. The neighboring
countries of Sri Lanka, Bangladesh, Nepal and
Maldives were identified as ideal locations. The
company also moved into the Asia-Pacific markets of
Singapore, Vietnam, Malaysia, Thailand, Fiji and
Philippines.
After covering these markets, the company set its
sights on Europe. The company decided against the
soft option of driving its globalization through private
label exports. It launched its watches under its own
brand name in the UK market in 1993.The direct
sales route was employed in the UK and the
distributor-led route in other markets.

The Mecca of Swiss watches was a huge

challenge in every sense of the word. The company
hired leading European designers on a time sharing
contract to design a distinctive watch collection to
spearhead its entry in the world market. It also set
up a separate manufacturing facility with an annual
capacity of 200,000 watches per annum for
manufacturing its range of Euro watches.

After an extensive survey of the European

market, Titan found that with brands jostling for shelf
space, retailers needed good reasons to stock the
brand. The need of the hour was also to create
strong consumer demand. So the company
unleashed a massive advertising campaign to create
brand awareness. It also participated in the world
renowned Basle Fairs, an annual event in which the
world’s biggest watch and jewellery manufacturers
customarily participate in and unveiled its Euro
watch range at this fair. The company received a
huge amount of interest from major watch
distributors and companies.

Soon thereafter Titan inducted a French watch

industry veteran and the man credited with
establishing Seiko in Europe, Jacques Meyer, to the
board of its overseas subsidiary TIME. Meyer had a
host of distribution contacts throughout the continent
and Titan leveraged these to expand its presence in
twelve European markets. It also created a specific
campaign for each market. However, the
investments required for such a strategy were huge.
Also, in the time taken to launch, the initial designs
had to be augmented with a new collection. So the
company went back to the drawing board and
created a completely new collection for the European
market.

A few years into its European operations, the

company realized that its returns were not
concomitant with the investments made. The country
of origin is very important in the international watch
industry. The ‘Made in India’ tag was more of a
disadvantage for Titan. The cumulative losses of its
European operation touched GBP 9 million. This led
the company to shape a new business model for
Europe. The company’s presence was focused on
four key European markets, Spain, Portugal, Greece
and UK, in which it had a fairly large presence. All
sales and marketing efforts were only on these
markets. This move halved the advertising spend in
the European market. The company also decided to
shift its warehouse to lower cost locations to reduce
the overhead costs and rationalize its manpower
employed in managing European operations in its
subsidiary TIME.

To consolidate the operations in overseas

markets and provide a unified thrust across
countries, a new division, the International Business
Division was formed in the financial year 2004-05 for
watches, jewellery and other products of Titan. The
globalization efforts of the company rested with this
division with a sharp focus on country prioritization,
market positioning and identification of profitable
business opportunities across the globe. The same
year also marked the entry of Titan into a new
product category - perfumes, under the brand name
Evolve, launched initially in the Middle East region.
The International Business Division launched the
Titan brand in two new countries - Kazakhstan and
Yemen and its second brand Sonata in Kuwait. Today
Titan watches are sold internationally through a
network of approximately 2500 dealers across the
world with increasing presence in jewellery. Plans are
on to enter the markets of Pakistan and Indonesia,
for which market surveys have already been
conducted.
Factors Fuelling Titan’s Global Initiatives

The watch industry historically was a licensed

industry in India with the only major player having
the license to manufacture watches being HMT.
However, HMT was strong only in the mechanical
watches segment. It only made a handful of ordinary
looking quartz watches and neglected styling
altogether. In the late 1970s the Government of India
as a part of its efforts to step up watch production in
the country had granted TIDCO the license to
manufacture watches, the other recipients of the
license being small-scale units. TIDCO was seeking
an Indian partner to collaborate with and was aware
of the Tata Group’s intention to enter into watch
production. The Tata Group saw this as an
opportunity and formed a joint venture with TIDCO to
venture into watch production.

The company made aggressive efforts to ramp

up its position in the domestic market. Besides heavy
advertising and publicity to build up a brand name,
the company also concentrated on the design
element. At the time of Titan’s entry, the consumer
had a total of 400 models to choose from across
various brands and companies. Titan entered with
200 models of its own and rapidly expanded its
product range to over 850 models. Its product
development cell focused on encouraging consumers
to own multiple watches in order to expand the
market. Titan also revolutionized the retail market
with its innovations in enhancing the customer’s in-
shop experience through fashionable outlets.

Once the company established itself in the

domestic market, it leveraged its scale and
experience in brand building in the watch business to
make its presence felt in the global markets. It
consciously recognized that customer choices and
hence international designs for watches are different
in the European markets from those that are popular
in India. Accordingly it invested in building designing
capabilities for the international markets.

Future Plans

Titan’s future growth plans are comprised of

increasing market shares through geographical
diversification as well as improving sales through
change in product mix. Going forward the company
plans to enter five new global markets in a year. At
present Tanishq is exported only to a handful of
countries, namely the Middle East and Singapore.
The company plans to target both the NRIs and the
American consumers for its jewellery business and
hence is testing the market in the US for the same.

In the domestic market it has plans to expand its

portfolio of licensed brands & Accessories. Since the
manufacturing of these items would be entirely
outsourced, there would be no significant risk in this
venture, while it could boost profitability if
successful. In watches business, the company
intends to focus on rural and semi-urban markets to
tap first-time watch users.

Globalization at a Glance
• World's sixth largest watch company
• Watches exported to Europe, Middle East,
Africa, and Asia Pacific
• Launched its own brand in 30 countries
• Jewellery exported to the Middle East and
Singapore

Achievements

Titan Industries has been awarded the following:

• The President of India’s Award for employing the
disabled.
• Friends of BIL Award for employing the
handicapped.
• The Titan Design team received 7 accreditations
at the NID — Business World Awards, including
the 'Young Design Entrepreneur of the Year'.
• Titan and Tanishq were adjudged 'Most Admired
Brands' as well as 'Retailer of the Year' by
Images Fashion Forum.
• Titan retained it ranking as the 'No 1 Brand' in
the Brand Equity Survey, in the Consumer
Durables category.