Changing with the times

After Timex, US decided to gain the majority control over its Indian arm, Timex Watches Ltd, the company is going through the pangs of tr...

After Timex, US decided to gain the majority control over its Indian arm, Timex Watches Ltd, the company is going through the pangs of transition from a sole manufacturing concern to marketing, distribution and servicing. These functions have been taken over from Titan with effect from April 1, 1998.

In India, Timex has a 30 per cent stake in Timex Watches, while Titan Inds and the Tata group together have an equal 30 per cent stake. Under the new arrangement, Titan and Tatas will sell their entire holding in Timex to its American parent. However, the whole process of separation is gradual and it will not affect its operations in the country.

With Timex8217;s American parent deciding to part ways with Titan Inds, according to the market players, the company is now expected to provide brand building support earlier its Indian operation was not covered by this, integrate the Noida manufacturing facility into Timex8217;s global manufacturing plan, integrate India into Timex8217;s global sales plan, integrate Indiawith its product development plan and cut prices on its products.

They also expect Timex to launch global brands in the Indian market and the parent to bring in a variety of strengths in the Indian venture. Banking on such a rosy future, it seems the worse is over for the company and the potential in the stock looks enormous. Since July-end the stock has remained range-bound at Rs 10-20 on BSE. Currently, the stock is trading at Rs 15 on the bourse.

Timex Inds have been the second largest participant in the organised quartz watch sector, next only to Titan Inds. Here, besides the competition from the two established players in the segment, Titan and HMT, the other threat to it comes from the steady encroachment of its territory by the unorganised segment and a perceptible fall in demand.

During the three years of economic slowdown, the premium and the medium range segments have shown a declining trend in demand. Realising that the demand growth for watches in India has been largely confined to the lowerprice range of Rs 300 to Rs 500 during these years which is also expected to remain so for some more time, the company has been aggressive in the segment and has been introducing new models in the price range. However, the latest move by Titan to introduce the Sonata8217; brand of watches in the segment comes in as a direct threat to the move by Timex.

Also, the company is now in the process of expanding its distribution set-up over the next couple of years. It has plans to set up exclusive outlets across the country of which some will be company-owned and the others franchisee agreement. Although the dividend from such reorganisation will expand Timex8217;s bottomline over the long run, in the interim it can witness some volume growth. Timex has also chalked out plans to reduce inventory and not keep excess stocks with the dealers which are then offloaded at a discount at the end of the year. This should also enable it reduce its interest costs to that extent. During the year to March 1998, the company8217;s interestoutgo almost doubled to Rs 8.57 crore against the previous fiscal8217;s Rs 4.41 crore.

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During the third quarter ended December 1998, Timex had incurred a net loss of Rs 1.9 crore from a total sales of Rs 20.1 crore. Given the nature of the Indian watch market, where the second half of the year always shows better sales figure than the first, the company is expected to report a better performance during the fourth quarter.