Timex Group India Ltd has announced a 303 per cent rise in net profit and 27 per cent growth in net sales in 2010-11 over last year. This was attributed to the launch of four new brands in eight months and an aggressive marketing strategy to double turnover by 2013. V D Wadhwa, managing director, and Kapil Kapoor, COO, share highlights of the performance and plans with Priyanka Singh. Edited excerpts:
What were the key drivers for your phenomenal growth?
Kapoor: There was a significant management change last year, which catalysed the whole team and approach. Second, we launched four new brands — Marc Ecko, Tarun Tahiliani, Versace and Helix — in the past eight months, which have a potential of Rs 100 crore each. We focused heavily on the retail aspect and increased the number of exclusive stores to 81. We focused heavily on television as a key medium to connect with consumers and ran a ‘Conversation starters’ campaign from December to February. The retail expansion and revamping of the product portfolio has helped us in re-positioning and growing of overall margins.
What are your plans for the next year?
Wadhwa: We will be increasing the number of exclusive Timex factory stores from 81 to 120 by March 2012. Today, we have presence across 4,000 outlets. We want to add 600 new points of sales across all departmental and multi-brand retail stores by next year. This year, we would focus heavily on retail expansion and developing the brands that we launched last fiscal. We have invested close to Rs 2.5 crore to expand our manufacturing unit’s capacity at Baddi (Himachal). We expect 25 per cent growth to make a turnover of Rs 225 crore in 2011-12. This year, we also aim to invest about 15 per cent of our top line budget into marketing initiatives.
Though you started operations much earlier in India, you are still facing stiff competition from other international players in the category. What efforts have you made to reposition your brand and business model?
Timex is commonly known as a sports category watch? Do you also plan to enter the traditional wedding watches category in India?
Wadhwa: The wedding season is a peak one for all watch companies in India. The months of April-May and November-December contribute about 50 per cent of the total annual revenue. We have a ‘Tarun Tahiliani’ brand which offers high-end wedding watches. We are not looking at the low-end wedding segment, as this is not the category we want to associate ourselves with.
Also, we see that the seasonality curve is getting flattened in India. Retailers have developed new seasons for watches like Valentine’s Day, Friendship Day, Rakshabandhan, Mother’s Day, etc. These are new markets apart from the wedding season, which need to be tapped. We want to be seen as a sports and fashion watch brand and not stick to a season.
How many brands are there in your portfolio and what is the price range of new launches?
Kapoor: We have 10 brands spread across various segments, from mid-premium to luxury. In Helix, which is our youth fashion brand, our price range is Rs 1,500-3,500. In Tarun Tahiliani, high-end wedding and casual designs start from Rs 11,000 to Rs 25,000. Our Versace and Marc Ecko brands offer fashion luxury watches within a range of Rs 45,000 to Rs 10 lakh. About 96 per cent of our revenue still comes from the Timex brand.
What have been the challenges so far to grow your brand in India? Do you see any kind of threat from your competitors?
Kapoor: A watch has evolved from being a time-keeping unit to a fashion accessory. These days, people own multiple watches and wear these depending on the occasion. So as new competitors come in, they benefit others, as they contribute in growing the category. We see a huge market still to be explored in India, as the watch penetration is still only 30 per cent. More than competition, our worry is managing the high rentals of our stores. In India, the cost of retailing is significantly high as compared to other countries.