The history of Indian watchmaking over the last fifteen years is intimately related to the extraordinary growth of Titan. The company’s success is also closely associated with the very progressive manner in which India is opening to foreign imports. Tied historically to the regaining of India’s political sovereignty and to the Nehru family, the Tata group played a central role in the country’s independence and subsequent construction of a modern and democratic state. For Tata, as for the other large groups in the nation, the opening of the economy and Indian market was only thinkable if the group could react from a position of strength. To open its markets, India must clearly dispose of its own industrial resources, capable of competing on an equal footing with foreign companies. By reacting in this way, the Indian economy was thus able to avoid the damage suffered by many other countries.

Clash of the Titan
For many years, Xerxès Desai (the charismatic founder of Titan, then its CEO before recently retiring — now replaced by Bhaskar Bhat) opposed, and often vigorously, the efforts of François Habersaat, who was then the head of the FH. The ‘plenipotentiary ambassador’ of the Swiss watch industry, Habersaat fought to open India’s borders to Swiss watch brands, to lower import duties and taxes, and to liberalize the sector.
On the other hand, Xerxès Desai was building his own brand and taking it global with a fair amount of success (especially in the Middle East and other areas with large Indian communities). He also tried in vain to get Titan accepted into the inner sanctum of the Basel Fair. By starting his own Swiss Made brand, he had hopes of circumventing the rules preventing brands from protectionist countries from exhibiting at the prestigious Swiss show.
The clashes between Habersatt and Desai would eventually ease when Titan, having partially given up its dreams of conquering the European market to concentrate on consolidating its grip on the Indian market, began to consider that a gradual opening to outsiders was possible. Desai then began to use his influence with the Indian government, which had always taken Titan’s side, to open the nation to Swiss watches, as demanded by the Swiss Government. By accepting this request, India also satisfied international trade requirements.

The opportunity of quartz
Before Titan appeared on the scene, Indian watchmaking was dominated by another giant, HMT. The state-run HMT produced robust mechanical watches with an elementary classic design yet they were well made. They were also designed to last a lifetime. Resting on its comfortable monopoly, HMT missed the opportunities that the quartz revolution offered in a country such as India.
Titan did not miss them, however, and took advantage of HMT’s strategic error. Diving headlong in to fill the void, it nonetheless took Xerxès Desai ten years of struggle to finally get the equipment, technology and savoir-faire necessary to construct a large Indian watch industry. Thanks to an agreement with France Ebauches (the company has since disappeared), Titan acquired the necessary know-how and was able to train its people, resulting in the exceptional industrial base that now exists in Hosur.

Introduction of marketing
Titan would revolutionize the Indian watch market thanks to its formula that allied industrial power with modernity and combined consistent quality with a new form of marketing hitherto unheard of in India. Rapidly, an extensive distribution network covered the entire country and the Titan name would become a household word in India. In an article published in 1999 by the trade magazine Advertising & Marketing, Titan was Number One among the “Most admired durables companies” present in India, as well as Number One in the following categories: “Meet consumer needs”, “Different from competitors”, “Best new launches”, “Long-term stability”, “Market leaders”, “Value for money”, “Best Marketing”, “Best distribution network”, “In touch with markets”. It became the most recognizable brand name among all Indian consumers, and the most often cited spontaneously.
As Number One, Titan was finally ready to meet head-on the ferocious competition from the Swiss brands.
Where does Titan stand today as the most prestigious names begin spreading out everywhere in its home territoryı To answer this question and others, Europa Star asked Bhaskar Bhat, the current CEO of the Indian giant, to give his views on the future of Titan in a market that is now open - or nearly open.


INTERVIEW:
Bhaskar Bhat, Titan's CEO
Europa Star: India still has high taxes but it is now open to foreign watch brands. How does this affect Titan's overall performances in Indiaı

Bhaskar Bhat: Tax levels in India are not high but appropriate considering the distribution and retailing costs as well as the development needs of the country.

ES: Has Titan the intention to leave the ‘luxury’ and ‘haut de gamme’ sector of the market to top international luxury 'Swiss Made' brands, or will it compete in this fieldı

BB: Titan has not been significantly affected by the tax rates and we continue to work with the Government towards rationalizing the rates. The luxury sector in India is growing quite rapidly but it still only caters to a very small segment. Titan is carefully watching the development and will make the right move at the appropriate time

ES: The ‘mid-priced range' is the core of Titan’s business. Does the arrival of strong competition, from the Swatch Group's brands such as Tissot, Swatch etc. force you to make new plans, adapt, or launch new productsı

BB: The Titan brand dominates the mid-range segment and over the past 12 months it has grown in this segment. Brands like Tissot and Swatch have created a certain awareness but have not made any significant inroads. Titan’s philosophy is more customer-centric than competition driven. By constantly monitoring consumer trends, we are able to adapt our entire marketing mix to its needs. Moreover, Titan is not operating only in the watch market we are also very competitive in personal accessories and even gifts.

ES: In the ‘bas de gamme’ sector, how do you react to the massive importation from China and others Asian watch producers and what is Titan’s position regarding the enormous importance of India's grey market (70%)ı

BB: Initially, the low end of the market was catered to by mechanical watches and then later by grey market operators making quartz watches. This phenomenon started in the early 90s and Titan has been constantly responding to this, initially with its association with Timex and more recently with the launch of its Sonata brand. We believe that this segment will continue to grow but consumers will increasingly demand quality, reliability, after sales service and good retail ambience. In short, consumers will move from unbranded to branded players. Our brand Sonata therefore has the advantage in this segment of being the first.

ES: Has the arrival of Swiss and international brands changed in any way the appreciation and the image of Titan amongst Indian consumers - especially compared to large marketing campaigns by global fashion playersı And why hasn’t Titan developed strong distribution ties with the new brands arriving in Indiaı What are your prospects in the near future (two to three years) for Titan shares and position in Indian marketı

BB: The opening of the Indian market and the arrival of premium Swiss brands has certainly led to Indian consumers being exposed to global brands, styles and various price levels. To the Indian consumers, the high price of Swiss watches has helped them to realize the value of Indian brands, particularly of Titan, which offers equivalent quality, but at lower prices and with better distribution and service. Therefore, in many ways the influx of foreign brands has been advantageous to Titan. We do see the market growing both in the low end (Rs.1000 = US$ 22) as well as in the mid-range (Rs.1000-1500) through product and marketing innovations, two areas in which Titan has a comparative edge. The present size of the Indian market is Rs.1500 Crores (US$ 330 million) of which Titan has more than a third share. Over the next 3 years this could be expected to grow by 30% and the Titan share to grow to about 40%. Titan has not found the need to develop distribution ties with new brands primarily because we believe in our brands as assets and therefore in generating value out of our own brands.

ES: On an international level, Titan had a few problems developing in Europe. Do you intend to re-launch Titan's presence in the key European marketsı

BB: As regards the International market, we are continuously evaluating opportunities everywhere, including European markets. We made our choice based upon the level of investment required and the returns. At present we find the return to be better in the Middle East and Far East, consequently, we are concentrating our efforts there.

ES: Titan and the Tata Group, have always been strongly involved in the modernization of India and socially and environmentally concerned by its future. Does globalization change this attitude and what are your present commitmentsı

BB: Titan and the Tata Group continue to pursue the goal of creating wealth and our responsibility as a corporate citizen is growing daily. Initiatives taken by the Chairman of the Group, Mr. Ratan Tata, during the past years in entering the telecom sector, producing an indigenous car and becoming the lowest cost steel producer in the world, stands testimony to this.

ES: Does the new situation compel you to reevaluate your product lines, your manufacturing processes and your quality standardsı

BB: The Indian market provides ample opportunities for growth for a watch and jewellery company like Titan, which has several strong brands. Further, our customer-centric approach has helped us continuously evolve our business processes to suit current needs. For example, today we are more outward looking even in manufacturing and sourcing compared to 15 years ago when we were forced to produce everything in-house. I believe our company is uniformly positioned in terms of product, quality and expertise to make a significant impact in the global arena.


TO BE CONTINUED...
In the forthcoming days, the rest of this lenghty survey will be added to our europastar website.

India, From a watch market to a brand market

 Indian conception of time

India, Analysis: Overall Indian Watch Market

 A 7% growth in 2003

 The Infrastructure challenge

India, Profile: Titan, the inevitable giant - Interview: Bhaskar Bhat, Titan's CEO India,

India, Distribution: India's evolving work of distribution

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