It couldn’t be more typical than this for Monday-morning blahs. It’s 10 a.m. and traffic on the (now old) Airport Road in Bangalore is bumper-to-bumper. Looking at the time on your watch — Titan, of course — you wonder fiercel y whoever said traffic would be less now that Bangalore has got its spanking new airport on the city’s edge. After what seems like eternity one manages to rattle into Golden Enclave where watch-to-jewellery maker Titan Industries’ corporate office is located.
Away from the hurly-burly of the traffic, and ushered into Titan’s Design Studio you find Titan’s Business Head of Design, Revathi Kant, calmly exultant. And why wouldn’t she be? Two of Titan’s top designers, Neil Foley and Abhijit Bansod, have just bagged the Future Group-BusinessWorld-National Institute of Design award for best designs in the lifestyle category for their Titan Aviator and Heritage collections. And, Bansod has also been named designer of the year to boot as was Foley last year. A recognition of the avant garde design that Titan has been putting out in the market of late. Declares Kant, “It’s been a rediscovery of design at Titan; while design has always been Titan’s forte what we have done now is to bring design far more on to centrestage, more strategic and with a lot more of discipline and consistency.”
If in the early part of this decade, Titan, still recovering from a Rs 119-crore loss in its European business appeared to be dormant with hardly any cutting-edge design to show, in the past few years the company has put the zing back in, manifest in its artfully designed watch collections.
With a 20-member-strong team of designers, NID- and NIFT-trained, Titan’s core idea in watches is to create collections. Whether it’s the 10-watch Aviator series, created by Foley, which takes off, literally, on the World War II planes, or Bansod’s Heritage, inspired by the architectural splendour of India or the recent chunky Octane series which resembles the dashboard of a racing car, elaborate stories are woven around these collections into which customers buy. As Harish Bhat, Chief Operating Officer (Watches), says, “One of the key routes for watches to grow is really to get people interested in owning multiple watches. And if I have to do so, each of the watches has to look different and design has to do that. Buying a watch is no longer about a time-keeping device. Today, a watch is very much a lifestyle statement and you are buying a story more than the product itself. The story becomes more interesting if you are buying into the intellectual property behind the watch and there again the design element becomes the key.”
This trend of consumers’ buy-in into the story behind a brand, says Bhat, is not just in watches but across categories, whether they are apparel or other lifestyle products. With this insight gleaned, last year Titan launched 15 collections, with 10-12 cases in each, with a number of variations, and this year too could see around the same number, which, as Revathi Kant points out, could translate into 800 watches at least.
While Titan already straddles most segments of the Indian watch market — Sonata for the economy segment, Fastrack for youth (recording for the third year in succession an annual growth of over 50 per cent), the Titan brand for the mid-segment and the Swiss-made, Titan-branded Xylys at the top end, along with Nebula, Raga for women — like the tag line Be More in its recent ad campaign, Titan plans more offerings in the market. This year will see it revisit the market for kids’ watches, while it also plans an eco-friendly solar watch and at the top end, automatic winding watches, keeping with the trend the Swiss brand watches have established. And, right at the lowest end a recent launch has been that of Sonata Super Fibre – plastic watches to be sold in the price band of Rs 275 to Rs 550. Sourced from Hong Kong, China and Taiwan, these watches will take on cheap imports and spurious quality watches from China. The SF watches are a combination of analogue and digital watches and target the youth segment in the age group of 16-20 years. In trendy and sporty designs they would be available across 12,000 watch outlets and non-traditional chains. Titan expects to sell four lakh SF watches this year.
The Indian watch market is estimated at 42 million watches (60 per cent of this unorganized) in fiscal 2007-08 which registered in value terms a growth of 12 per cent. It is estimated that 55 global brands of watches are being marketed in the country. However, as Ajoy Chawla, Business Head (Titan & Retail), points out, in the bread-and-butter price segment of Rs 2,000 to Rs 10,000 it is Titan which dominates with a 74 per cent market share through its multiple brands. Driven by a strong brand-product and retail strategy, Titan, says Chawla, has been growing at 22 per cent, higher than the market growth of approximately 15 per cent. Its World of Titan outlets too are being scaled up from 245 to at least 300 by year end with larger flagship stores too planned to showcase the whole watches range.
Indeed Titan had its best ever year financially in 2007-08 where sales income stood at Rs 3,041 crore (Rs 2,136 crore in 2006-07) and profit after taxes (PAT) at Rs 158.29 crore (Rs 94.33 crore). In 2001-02 it had registered sales of Rs 725 crore and PAT of Rs 13.09 crore, pretty much at its nadir.
As a former senior executive of the company points out, in the early part of the decade, the losses in Europe prevented investments in the Titan watch brand, putting it in a somnolent mood. Added to it were the losses from the jewellery business (launched in 1996) which finally broke even only in 2004. Also, Titan was dependent on its own factory production. However, with trading allowed now, almost 25 per cent of its watches sold are sourced globally and all this has helped boost Titan’s financials. Also, fresh investments in the higher-margin watches business helped the brand bounce back. “Titan has been able to build an unassailable position with its retail distribution. However, an inability to grow the watch market could be a threat as the younger generation has to perceive watches as a fashion accessory where you are competing with a lot of other devices and brands,” he says. And, the other danger for Titan is consumers looking to make a fashion and lifestyle statement with a global brand.
Nikhil Vora, Managing Director, of IDFC-SSKI Securities, in a report published after the FY 2008 results, says he remains positive on the Titan business model of piggybacking on the lifestyle boom as well as its strong brand franchise. “However, our concern stems from the soaring gold prices and the volatility.” The lower-margin jewellery business growing ahead of the watches business and accounting for two-thirds of overall revenues is a matter of concern for the company, says Vora, as it would adversely impact the margin profile of the overall business as indeed the returns profile. However trite it may sound, in this case, time will tell.