Timex stake in the company would go up to 62.66 per cent after the acquisition and a preferential allotment of equity shares.

The board of directors of TWL, which met here on Monday, announced that the company has also decided to make a preferential allotment of equity shares to Timex totalling Rs 10.91 crore. Following this, Timex's holding in the local company will increase to 27.884 million shares. Timex currently controls 11.887 million shares in TWL.

An extraordinary general meeting of TWL shareholders will be convened on March 1, 2000, to consider the preferential allotment.

Titan Industries owns five million shares in Timex, its investment affiliate, Samrat, owns another 4.75 million shares. Titan and Samrat together will get about Rs 28.7 crore for their Timex stake. The balance is held by some other Tata group companies. The Tata companies together hold 11.51 million shares in the Delhi-based watch company. Titan and Timex which announced the severance of their association in December 1997, arrived at an understanding about the price at which the stake will change hands only recently, after lengthy negotiations. It has been further decided that the directors nominated by Titan on the board of the company will resign and Timex will have the right to the right to nominate a majority of directors.

Commenting on Timex taking a majority interest in the company, TWL managing director Richard J Masilamani said: "We look forward to receiving additional support from Timex organisation." He added TWL would now leverage the manufacturing, marketing and distribution expertise of the US-based company to the fullest.

Masilamani further stated that the injection of capital, consequent to the preferential allotment, will allow TWL to reduce its reliance on external borrowings, reduce its interest expense, and lower its debt/equity ratio. During 1998-99, the company's income came down to Rs 68.25 crore compared with Rs 74.07 crore during 1997-98, while losses before taxes rose to Rs 17.5 crore during 1998-99, as against Rs 1.55 crore during 1997-98.

The company said during 1998-99 a total of 14.09 lakh watches were manufactured and 16.06 lakh watches were sold. Because of stringent production and inventory control, the inventory of finished watches declined by 40 per cent. Because of these efforts in cost reduction, the company was able to save around Rs 1 crore.