The turnaround began around the time Ravi Kant, the CEO of the watches and wearables business who will retire this month, took over in 2016. “When I came back, the watch business was big but in some serious trouble,” Kant says. Kant, who has spent close to 33 years with the company, was prior to this heading the eyewear business.
Watches volumes were declining and revenue increases came primarily from price increases. Loyal customers chose to gift belts, perfumes and wallets, instead of watches. Between fiscal 2012 and 2015, revenue on a standalone basis grew to Rs 1,921 crore from Rs 1,529 crore, a CAGR (compound annual growth rate) of 7.9%, while profit dipped to Rs 206 crore from Rs 216 crore. Since Kant took over, while revenue growth has remained about the same, volumes picked up, and profit zoomed to Rs 316 crore in fiscal 2019, from just Rs 168 crore, a CAGR of 23%. EBITDA (earnings before interest tax depreciation amortization) has gone up to 13% from 8% in the same period.
Smartwatches and wearables were key to this. The smartwatch Juxt was launched in early 2016 following a partnership with Hewlett-Packard, and the Juxt Pro series was launched in partnership with Intel. It also introduced smartwatches called Reflex under the Fastrack brand.
Today, it’s present across price points, starting from basic bands or activity trackers priced at Rs 700, to pure-play smart watches, the forte of Apple and Samsung. There’s also the hybrid – analog watches with digital features. These have an analog face, but the screen darkens to show you a variety of alerts. The smartwatches can monitor the distance covered by foot every day, estimate the heart beat, and get alerts for, say, the incoming messages on your phone.
Kant says the low-priced bands are popular even in smaller towns, where people are as aspirational as in bigger cities, and where the desire to remain connected is just as pervasive Titan, the world’s fifth largest watchmaker, manufactured 18 million watches last fiscal, of which about 700,000 were smart wearable devices. The company had a market share of 14.5% in 2019 in the wrist band category, the second highest after Xiaomi (49%), according to consultancy firm IDC.
“Titan phased out its older models and launched Fastrack’s Reflex 2.0 in the 2018Q3. It helped the brand to get a healthy 70% sequential growth in its overall shipments in the overall wearable segment,” IDC said.
While the overall smartwatch contribution to the topline still remains small, the company says entry into the segment has helped it remain relevant. “Consumers did not want just one more device on the wrist but a good watch which is different,” says Kant.
“Considering Titan has a 65% market share in the watch industry, growth as a category is limited,” says Abneesh Roy, executive VP of research at Edelweiss Securities. “But it has done a good job in making its presence in the wearables category through the launch of fitness bands which competes with the Chinese firms, though it was late to enter.”
Manoj Menon, head of research and consumer analyst at ICICI Securities, says he’s not surprised that Titan was late into smartwatches, considering it is a core manufacturer. But he says that “at a time when many considered watch as a sunset industry, Titan has been able to premiumise its offerings.”
The premiumisation happened across its offerings, with a focus on design in brands such as Raga, Fastrack and Titan. “We have been launching new collections and also tying up with designers to further push the brands,” Kant says.
The current big initiative is to integrate its smartwatch technology platform. Towards this, the company recently acquired Hyderabad-based wearables startup Hug Innovations. The plan is to create a development centre in Hyderabad where Titan will build its technology expertise and consumer platform. “For different watches we previously used separate platforms – with HP, with Intel. Now, with Hug, everything, the hardware and software can be managed in-house to better integrate consumers,” says Kant. It opens up the possibilities of offering numerous new services.
Source Name – Economic Times – Retail