|Bhaskar Bhat, Managing Director, Titan Industries|
For starters, Titans future vision will begin right from the moment the Tata work-level program is rolled out across the company. Eventually, the answer to Titans prayer for an extended marketplace might just lie in a de-risking strategy which will segment its business and manufacturing capabilities into core product-related and non-product related OEM business (which has already commenced in a small way in the precision instruments/ parts supply arena). Interestingly, Titan has also made it to the select list of suppliers from the Asian region for a global automobile maker and expects to see a Titan made customised dashboard clock ticking on the cars for the global market.
Work Level Program
Titan is all set to implement a Work Level program, which simply put aims at tackling one of the biggest challenges for the Tata Group: of assigning grades for management and staff across the gigantic group which makes people comparable across the entire chain. Besides, this program specifically for Titan is being targeted as a move towards a progressive appraisal system, a new beginning of sorts, in a post-VRS scenario. We are all still trying to clearly understand how to go about implementing this program. The main task ahead is one of slotting various jobs based on the role and responsibility and profiling the jobs across all the departments. Then comes comparing the job to the work level it fits into, Mr Bhat said.
Interestingly, this program will see a standardisation of work and responsibility levels in the organisation and eventually move the entire organisation to a more competency-linked and performance-linked structure (which is already happening in some pockets within the company). Drawing from this, Titan has specifically identified five key objectives to be gained from the completion of the Work Level Program rollout. They include improving speed within the organisation, facilitating mobility of talent within the group, enable faster career growth for employees, faster decision making and quicker deployment of the Work Level program at the management levels.
Value Or Volumes
Titan will now have two key brands in the market: Sonata which will cater to the lower end, lower prices volume market, while the Titan brand will extend to the value segment complemented by design-led products, higher price points and spread across different categories. While a significant part of Titans watch revenues of approximately Rs 350 crore comes from the volume segment, the value range accounts for roughly Rs 150 crore. Going forward, Titan will keep focused on the volume segment simply for want of huge volumes and also have a significant thrust on the value segment. But will Titan eventually want to play at the top end of the chain and get in luxury watches, or does it prefer to let that category rest for the moment
The value category has immense scope for growth, improvement and product mix, but the question is about how expensive or how much of a luxury item do we want to make a watch. Even in the value segment, Titans philosophy is to play on better design and features and a value price point rather than making it a big price item, Mr Bhat says. For example, the companys latest-Titan Edge-positioned as the worlds thinnest watch by the company comes to the consumer at Rs 5000.
While Titans product range goes from the trendy Fastrack range to the top end designer jewellery watches withNebula (occupying the top price band of the entire range), Titan has stayed away from entering the super premium categorya segment dominated now even in India by the likes of Omega, Tag, Rado etc. In most segments however, Titan has been able to retain its position in the Indian market despite a number of Swiss and foreign players clamouring for a piece of the pie.
Technically, we can make an entry into the super premium segment. Titan has the capabilities to be in that space as well, but the super premium category is another ball game altogether. This segment is not about building a watch but about the creation of a global brand much like Omega which necessarily comes with buying a product of that category. While Titan does have the kind of brand recall and visibility and name, a super premium watch is more often bought for the brand value it has in that segment and is one that has been built over years and decades. The resources required to undertake such an initiative are not available with Titan. And with our philosophy of offering value for money products across all categories, we dont see ourselves targeting this niche at the moment, Mr Bhat adds.
We were operational in 11 countries in Europe and now we will be in five countries mainly Spain, Portugal, Greece, UK and Austria. Some of the places we pulled out of were Scandinavia, France and Holland, Mr Bhat said.
According to the company, the watch industry in India was currently in a demand-led market, having moved out of a supply led scenario. While volu- mes will go up, the costs per unit will continue to drop. We expect the volume market for the company to grow by five per cent while the value segment might see about 10 per cent growth on the revenue side which is still good given the market conditions, Mr Bhat adds.
The real bottlenecks, however, continues to be the large grey market especially in the lower end volume segment. The low end of the watch market is infested with grey market players and as a result the organised sector players have not grown as a percentage of the total, Mr Bhat says. While this is also slowing down the market, the drain of significant revenues through the back door is a cause for worry. It is estimated that of the 25 million total watches market in India, roughly 11 million is made in India while a whopping 15 million come in from the grey market where sales taxes and excise duties are not paid for.
Almost Rs 150 crore every year goes out through the back door. Titan last year payed Rs 138 crore towards sales taxes and excise duties which is almost what the country loses every year to fly by night players, he says.
Moving towards a strategy that would incorporate non-watch related manufacturing activity as in the current retail context, looks well set to be part of the companys long term vision. While the companys executives are quick to add that the non-product related manufacturing activity is still too small to be a de-risking game, the success factor over the years may end up making it that way.
For example, the OEM line of business began in a small way a few years ago when the company took the decision to also use its expertise and manufacturing infrastructure to get into precision products manufacturing for other large industries. Though this has remained a small Rs 1 crore activity for the company, Titan has made in roads into a number of industries including the big ticket ones like the automobile sector and aerospace. Currently, Titan supplies pointers to the automobile industry and mechanical devices, sub assemblies to the aerospace industry.
Interestingly, the next move for this business will be its all new dashboard clock initial order it bagged for a global automobile major. For this, Titan literally had to make the leap to pass the tough test of getting into the select list of OEM suppliers to the automobile major, and it did. In fact, Titan is the first supplier selected from India and may well turn out to be the key one from Asia.
Following the selection, Titan will now have to go through the process of the final agreement and formalisation procedures to bag the contract which is likely to see the company supply between 200,000 to 250,000 custom made dashboard clocks per annum to cater to the auto majors global car market.
Without disclosing the name or size of the deal with the global automaker, Mr Bhat says this win has prompted other other global manufacturers to touch base with Titan to see how they could leverage the latters manufacturing expertise mainly from the instrumentation perspective.
The automobile major, a key player in the US and Europe market, selected suppliers on an Asia-basis and Titan competed with players on that level and not on an India basis, he added. While the company has most of the equipment required to service these orders in its existing manufacturing units, some equipment may be additionally required to complement existing infrastructure and capabilities. Clearly, then for Titan, these are new and exciting times.