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Sowmya Sundar

The watch industry is witnessing hectic action in the mid-price segment. Titan Industries, the leading watch manufacturer has a presence across segments through its brands Titan and Sonata. Business Line caught up with Mr Bijou Kurien, Vice-President (watch division), Titan Industries, to discuss the company's performance and his plans for the division.

Excerpts from the interview.

How did sales fare in the mid-price segment?

Titan is available in two price bands — above and below Rs 2,000. In the first category, sales grew at an average of 20 per cent. This includes brands such as Edge, Regalia, Raga ladies and Royale ladies. The other brands in the below Rs 2,000 range were almost stagnant.

We were affected because of the lock out and the pace slowed down in the last quarter. We usually sell about two million watches in the January-March quarter — our peak selling quarter. Our plants at Dehradun and Ooty continued to work well beyond their assembly capacity but the Hosur plant was affected reversing the turnover trend.

Was the effect of the lock out felt through all the categories or only on some brands?

Between the two brands, Titan and Sonata, Titan was affected more as many of the components is made in-house. Most of the parts are outsourced for Sonata. Therefore, the effect of the lock out was minimal for that brand. Within Titan, if you look at the less than Rs 2,000 and greater than Rs 2,000 price bracket, most of the market action happened in the greater than Rs 2,000 price bracket. The higher end watches had built up a pretty huge growth rate even before the lock out. This category grew at 33-35 per cent in first nine months.

But due to non-availability in the last quarter, the average declined to 20 per cent. In the less than Rs 2,000 price bracket, the growth was 10-12 per cent till December. That trend was reversed in the last quarter. The average growth that we had built up in the first nine months dropped in the last quarter.

How did your new collection, Edge, perform in its first year of launch? How much does it contribute to the topline at present?

Edge had consistently done well in its first year. It built up a certain amount of consumer demand and we kept selling 2,000-3,000 watches a month continuously. The sales peaked in October during the festival season, dropped a bit and then continued. We would have reached 50,000 watches for the year if it had not been for the lock out in February-March.

That affected our production. We ended the year at around 42,000 watches. That is only our domestic sales. We also had good success in the international market. The only thing that limited the sales in the international markets is the availability. Overseas, primarily in Europe, Dubai, middle east, Singapore, Malaysia and Thailand, sales was close to 20,000 watches. We confined it to four or five key markets that we are present in.

In the domestic market, we actually aimed at urban markets, but the surprise was that it also started selling in small cities like Mangalore, Madurai and Salem. So we are now planning to take it into gold. We are planning to launch a Nebula collection around the Edge concept in addition to steel and gold plated versions.

Today in terms of value, Edge will be about 8 per cent of Titan's sales. It will continue to come in more shapes and ranges. A ladies collection Nebula gold ultra slim movement for women will be released by September. We will sell it through both company-owned showrooms and some key multi-brand outlets.

What other new products are you planning to launch next year?

After the success of the Edge concept, we are planning to launch a new Edge Series for women. Fast Track did extremely well last year.

We are also planning to expand the Fast Track collection. We had introduced several new watches with cables and bracelets for both gents and ladies, and all have done well. We will continue the effort this year too. We are also planning to introduce new Nebula cases and a range of Classique watches. These watches would be more expensive than the current ones and will Rs 2,000-Rs 3,000.

Most of our Classiques are now in the less than Rs 2,000 range.

Again a new collection in steel in the range of Rs 2,300 and Rs 4,500 is also in the pipeline. The current steel collection is largely up to Rs 2200-Rs 2300. These are new products that would be launched under the Titan brand name.

Since the new collections are more expensive, will it improve realisations?

Our average realisations for Titan and Sonata improved last year. In the case of Titan it improved approximately by about 5.5 per cent.

In the case of Sonata, realisations were higher by around 3.5-4 per cent. All the new launches will be in the higher price band and we will make more money on the new collection.

What are your plans?

We are planning to separate Sonata and Titan into two divisions. The strategies and objectives are different for the two brands. We had created a focus at the front end. Now we will be creating two business units geared towards these two brands.

We are planning to increase our ad-spend roughly by about 50 per cent totally. We are also contemplating some reorganisation to achieve better focus.

We are also giving a facelift to our stores. Last year we had completed 26 stores. This year we will be completing another 36 stores. While the facelift is there for the exclusive world of Titan stores, we are also improving the quality of our presence in some of the key multi-brand outlets. We would be investing Rs 4.5-Rs 5 crore in 2003-04.

Investments in IT would be around 5 crore to improve supply chain, information capture and our alignment to market demands. Between IT and retailing, investments will be to the tune of Rs 10 crore. The advertising spend will be huge and will be amortised over five years.

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