Citizen History

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 Our beginnings go back to 1924, when Citizen's forerunner, the Shokosha Watch Research Watch Institute produced its first
pocket watch the "CITIZEN". The then Mayor of Tokyo, Mr Shimpei Goto, named the watch "CITIZEN" with the hope that the
watch, a luxury item of those times, would become widely available to ordinary citizens and be sold throughout the world.

Time and again Citizen has pioneered groundbreaking technologies and helped to make watches an indispensable part of modern life.
Introduced in 1956, Parashock was the first shock resistant watch made by a Japanese manufacturer. And three years later, Parawater
was hailed as the country's first water resistant watch.

One of the latest milestones is Eco-Drive system. Bringing new thinking to the art of watch making, this is a light powered solution
that eliminates the need to change batteries - a revolution that made it the first watch technology to receive the Japan Environment
Association's Eco Mark for environmentally friendly products.

And in 2003, Citizen continues to evolve and be ahead of its time with the launch of Stiletto. This is the World's thinnest light
powered watch - a watch so revolutionary it combines eco-drive technology with a refined, sleek and sophisticated case and bracelet
from 4.4mm thick.

Citizen is, however more diverse then simply watches. In fact watches only represent less than 40% of the company's business. Today
we are drawing on a heritage of proven quality and technologies as we develop the market for watches, clocks, jewellery, eyeglass
frames and health care products.

The Citizen Watch Company, Ltd. was established in 1930. Citizen Watches New Zealand (CWNZ) was established in 1975 with it's
head office in Auckland, New Zealand.

Citizen believes that delivering excellence is the key to building successful partnerships with retailers and consumers alike. Excellence
in product, marketing and service is paramount, and the resources required to achieve excellence are viewed as investments, not costs.

Citizen looks forward to the challenges that the future will no doubt bring. Our guarantee is a commitment to continually strive and
work towards an even more successful future for our retailers and consumers. Ready for further growth and progress, we are working
harder than ever to explore new directions and contribute to changing lifestyles.

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n 1924, the Shokosha Watch Research Institute produced its first "CITIZEN" and ever Mayor of Tokyo, named the watch "CITIZEN"
and ever after this was adopted as the name of the company. In 1999, Citizen has produced approximately 293 million units of
complete watch and movement. Since its' founding in 1930, the company has achieved many milestones such as:

 First pocket watch produced and named citizen by then Tokyo May Mr.Shimpel Go to.
 First Gentleman watches produced by citizen .
 Japan's first alarm watch produced by citizen .
 Japan's first water resistant watch .
 World' first thinnest wrist watch with date, only 4.48mm in thickness
 World's first analog solar powered watch.
 Citizen quartz 790 was first slimmest wristwatch below 1mm.
 Citizen quartz module 1500 was the smallest quartz analogue watch for women, the mechanism was only 9*7*2 .
 Citizen quartz Ana-Digi Temp was the first watch with a thermometer and waterproof to 100m.
 Promaster Aqualand was first diver watch with an electronic depth gauge.
 Voice Master VX-2, world first voice recognition watch.

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 Promaster Altichron was first Professional Mountain - climber's watch with integral altimeter.
 First multi-time-zone radio-controlled watch.
 Promaster Hyper Aqualand was the driver's watch with an interface.
 Launch of Eco-Drive, Eco-Drive alarm chrono was the world's first multifunction light-powered watch.
 Citizen Eco-Drive slim was the world's thinnest analog light-powered watch, only
6.05mm.

 Promaster Eco-Drive Aqualand was the first light-powered driver's watch.

 Eco-Drive Duo was the first hybrid watch in the Eco Drive series. Attaining power from both light and wrist movement.
 Thermo Eco-Drive introduced at Basel show. An entirely new concept of thermoelectricity generated by temperature
difference

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Company Idea
As the names "Citizen Watch" or "Citizen Group" state, citizen policy is to provide the best products and services to all "citizens"
in the world. The word "citizen" generally means "all national" in most countries, and every national surely desire better life and
better goods. The Citizen policy is to provide the highest quality products and services to each of them. Citizen hopes to make a
contribution to people's life in everywhere in the world by making products that is familiar and loved by citizens.

Citizen Keyword of 21st Century Micro HumanTech

Mirco
Citizen Technical Domain
The precision and miniaturization technology that Citizen has developed in a long time; we use these technologies as nuclei, and
always stick to the bases of production to make a contribution to the information revolution of 21st century in the field of precision
and miniaturization.
Human
Citizen Technological Philosophy
We provide products and develop technologies to communicate with people; the last consumer, and their healthy and hearty life, and
to enable our life live together with the earth. We return to our establish basics known as customer principles in which our hope is to
make a contribution to people's life in every where in the world by making products that is familiar and loved by citizens
Tech
Citizen Technological Method
The professionalism in production that supports the reliance of Citizen. We make a fusion for all technologies such as the precision
processing technology, the measurement technology, energy saving technology and the production technology with beautiful and
simple designs to create products that is reliable and fascinating. We have a strong belief that the technology fused with sense and
knowledge will make people happy.

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Code of conduct

1. Provide products and services which satisfy quality expectations and consider the safety and well being of our customers.

2. Perform fair, transparent, and open competition in business transactions, and maintain healthy relationships with our
suppliers and government regulatory authorities.

3. Publish corporate information positively and fairly under our own initiative, and manage relevant information
appropriately.

4. Value the global environment, and act according to the environmental policy.

5. Value symbiosis with the regional society as a good corporate citizen, and strive to make a social contribution.

6. Ensure a safe and good work environment, encourage the development of our employees’ abilities and energies while
respecting their character and individuality.

7. Respond to anti-social and corruptive behavior in a decisive manner.

8. Value and respect different culture and custom in foreign countries, and contribute to the development of the locale.

to observe this code of conduct, the company and employees will make ceaseless efforts. when any situation which contradicts this
code of conduct occurs, the company will undertake a problem solving and an own recurrence prevention, and does an appropriate
report to the society. moreover, the company will make strict disposal upon clarifying the authorities and responsibilities.

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Citizen watches

In 1924, we created one watch. We named the watch "CITIZEN" in hopes of launching into the world and being loved by citizens.
Later, "CITIZEN" became company name, and this is the origin of production. citizen concept has never been changed, and we'll
keep producing new values of watches fused with technology and beauty.

Challenge for Ultimate Technology

In 1980, Citizen developed the smallest module of that time in the world. In 2002, we developed an even smaller
movement. Now, various movements produced in Japan establish a global position as an industrial defact
standard. Beside this, Citizen continues to advance the products by challenging the ultimate technologies, and
some examples are; "Eco Drive" which allows the releases from battery changes, and "Wave Watch" with all
metallic case which was said to be very difficult to develop. Also, we're developing arm information device that
supports activities of the watch holders without reminding the power of technology.

Fusion Technology and Beauty

Just like clothes not only have functions to protect people's body or keep from cold but also give life to people,
watches don't only mean to let people know the time but also to show the value or individuality of the person
and adds decoration. Citizen brightens all scenes of people's life and adjusts to any values such as trends,
traditions, age, sex, time or places by fusing technology and
beauty.

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Human Ware
How to minimize the conflict between men and machine; this question is what we call "Human Ware". Metal
allergy is an example for this concept. Citizen was the first to sell watches made with titanium in the world,
and we prove that titanium did not cause metal allergy. We're also developing watches of universal designs.
The universal designed watch "MU" is for everyone for magnificence and high recognition

Clocks

Our various lineups give further choices to your lifestyles; happy and dreamy "mechanical clocks", "wave clocks"
that gives an accurate time and date at anywhere in Japan by receiving standard waves of electric time which the
error is 1 second in 100.000 years, highly fashioned license-brand clocks, and interior clocks for all arrangement.

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citizen watches technology

What is Duratect?

Scratch-Resistant because of its Hardness

Duratect is a revolutionary technology which involves a special treatment on existing
materials like stainless steel or titanium to harden the surface. Applying this technique on
stainless steel, we have achieved a hardness 3 to 4 times higher by penetrating carbon from the
surface in order to distort the crystal of the metal. The result is a scratch-resistant hardness for
daily use.

Shiny as Brand New

When you wear a watch over a long period of time, it sometimes becomes less shiny. It is
caused by slight scratches. Your watch may have slight scratches from daily use without hitting with something hard or dropping it.
By making it scratch-resistant, you can wear it while maintaining its polished look, thus your watch will appear good as brand new.

Various Designs

Duratect has a further advantage. It has an improved surface hardness while still keeping the characteristics of its original material.
Therefore, you can have the design using the characteristic of stainless steel or titanium finishing. The surface is "hard", but inside is
soft.

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What is Eco-Drive ?

The Eco-Drive watch runs solely on the power produced by light from any source. By utilizing the
mechanism of a solar panel and a charging device, light is converted into energy that ensures normal
performance even in deficient light conditions. Such advanced technology in using light, both
natural and artificial, to power a watch has brought to reality an ultimate vision that is Eco-Drive,
the Light Powered Watch.

The secret of Eco-Drive lies in its reserve battery. The device, which contains no such toxic
elements as mercury, acts as a reservoir to store the energy converted from light. When fully
charged, the watch can run on this energy from two to six months, depending on its model. The
Citizen Eco-Drive incorporates this hassle-free handling into an entire range of functions, from the
simplest in analogy movement to the most simplest in analog movement to the most sophisticated
chronograph and alarm system, and much more. All this, combined with the omission of battery
replacement, underscores Eco-Drive friendliness to ecology, as well as to its users.

If the Swiss are leaders in mechanical technology, Citizen is the innovator in quartz technology,
primarily with their Eco-Drive, which offers unstoppable power for some of the finest designs in
Japanese watch making. Citizen manufactures every part of their quartz watches, and their watch
empire manufactures one out of every four watches the world purchases every year. Not bad for a
company named with the hope that every citizen would someday benefit from and enjoy their own
luxury watch.

All Citizen watches carried by World Lux are powered by Eco-Drive. Citizen's Eco-Drive
technology harnesses power from any natural or artificial light source and converts it into energy
which is stored in the Eco-Drive energy cell. Your watch recharges continuously to run forever (for
a power reserve up to 5 years on most models), so you'll never need a replacement

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About citizen watches collection

Founded in 1924, Citizen Watch Co. was named by its founding father so it would be ?Close to the hearts of people everywhere.?
Citizen watches are recognized as a worldwide leader in the watch industry. Citizen has consistently drawn on its leadership in watch
technologies to create new possibilities in information and electric equipment, precision parts and industrial machinery. At the same
time, Citizen is moving beyond the conventional thinking of watch engineering in its pursuit to go ?Beyond Watch Technology.?

Citizen watches have led the timepiece industry in innovation by playing a leading role in repeatedly developing pioneering
technologies such as Eco-Drive watches, which take their power from natural energy sources. Through the use of highly sensitive
photocells, even the weak light from candles can be converted into electrical energy to power the movement. Since excess energy is
automatically saved in storage cells, these watches can continue to keep time even after they have been in the dark for months! A
further advantage of the Eco-Drive models is that no battery change is necessary! This not only saves money but also helps protect the
environment

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About 300 engineers and scientists, as well as dozens of designers, work on the development not only of innovative technology, but on
a high-quality finish, superior materials, and an attractive design.

Citizen Watch Co. has, for the last 75 years, expanded its business throughout the world to become recognized as a global brand.
Currently, Citizen Watch Co. is the world’s largest watch maker and has retained this title since 1986!

If you are looking for the perfect gift for someone you care about, a Citizen watch will be sure to deliver perfect time -for a lifetime!
You will find Citizen watches that is right for you; with many styles and collections to choose from, ranging from dress watches, to
sport watches, and professional diver watches.

The timekeeping technology and advanced styling exclusive to Citizen watches can be found right here at MisterWatchOnline.com.
MisterWatchOnline.com offers Citizen watches, in their many forms, at extremely competitive prices. If you are looking for the latest
technology and style in a timepiece, look for a Citizen watch. If you are looking for low prices on Citizen watches, shop
MisterWatchOnline.com!

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Came in India

Citizen Watches shifts base to Bangalore — Creative duties move from RK Swamy to Hakuhodo Percept ( April '1,2003, HBL)

CITIZEN Watches India Ltd has relocated its corporate headquarters to Bangalore, which is the home turf of the domestic watch
majors such as Titan and HMT. Citizen entered India in 1997 and had its base in Chennai till January this year. Along with shifting its
corporate operations, Citizen has roped in a new advertising agency, Hakuhodo Percept Pvt Ltd, to handle its creative duties. The
account will shift from RK Swamy to the new firm on April 1. When contacted, Hakuhodo Percept confirmed the development. It is
learnt that Hakuhodo Percept will also be the Agency on Record for Citizen Watches in India.

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Hakuhodo, the second largest advertising firm in Japan and the eleventh biggest in the world, acquired a stake in Percept
Advertising almost a year back. Hakuhodo handles the advertising for Citizen in some parts of the global market. Citizen Watches
India Ltd is a joint venture between Citizen Watches of Japan, Citizen Trading Co, Tokyo, and the domestic partner, Doshi Time
Industries. Last year, the Japanese partners received the Foreign Investment Promotion Board's (FIPB) nod to hike their stake from
51 per cent to 75 per cent. It is not yet clear what triggered Citizen's move to shift base from Vadapalani in Chennai to Indiranagar
in Bangalore. The Senior Vice-President and spokesperson, Mr K. Chandy Jacob, could not be contacted. Incidentally, Citizen
opened its first exclusive shop, branded as First Citizen, in Bangalore and later took it to the other leading metros in the country.
Industry observers said Citizen has managed to turn around the domestic operations in the last two years after running into trouble
with failed strategies.

Citizen entered India with two price brackets of Rs 1,600 to Rs 2,500 and Rs 6,000 to Rs 20,000. The observers said Citizen had
misread the price-value perception of the Indian consumer, as they did not attach much value to the brand's products, which again
was rather limited in the initial years, at these price levels. In recent times, Citizen, besides rejigging the price points, has projected
Eco-Drive collection as its face in the Indian market. The Eco-Drive technology enables the watch to generate its own power -
using light energy from sources like a bulb, a candle or the sun. The focus on Eco-Drive has helped Citizen to breakthrough the
cluttered market on a high-end technology platform, the observers added.

Citizen also recast the marketing strategy in the Indian market and decided to restrict its promotional campaigns to the top 10 per
cent of the market comprising of the metro cities. The branded segment of the Indian watch market is estimated at roughly 12
million units annually and over 85 per cent of the sales happen in the below Rs 1,500 price bracket.

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Plans for citizen watches

Citizen plans more showrooms ( March '7,2003, HBL)

CITIZEN Watches (India) Ltd is planning to expand its retail presence by having 30 exclusive `First Citizen' showrooms across the
country. Inaugurating its sixth exclusive store in Mumbai, Mr H. Nakazaki, Managing Director, Citizen Watches (India) Ltd, said,
"Our First Citizens have been performing extremely well. We plan to take this format across the country and our target for 2005 is to
have 30 First Citizens."

The company is also hopeful of doubling its turnover in three years from Rs 20 crore to Rs 40 crore. Added Mr Chandy Jacob, Vice-
President, Citizen Watches India Ltd, "We have started making marginal profits this year and will be investing Rs 5 crore on our
advertising and retail initiatives." Citizen Watches (H.K) Ltd, is also planning to increase its stake to 90 per cent in its Indian
subsidiary by buying out its joint partner, Doshi & Co. The company intends becoming a 100 per cent subsidiary company of its
parent company in the future.

Category: Wrist Watches

At First Citizen, you'll find a complete range of Citizen watches, picked from the latest international collection, in a world class
ambience. A stunning collection of over 350 enchanting expressions of time to feast your eyes on, in an inviting setting that charms
you with its elegance.

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Citizen plans 30 exclusive outlets by '05 ( April '4,2003, HBL)

CITIZEN Watches India Ltd plans to have 30 exclusive `First Citizen' outlets by 2005 and hopes to almost double its turnover to Rs
40 crore by that year, it said today.

The company, which opened its seventh `First Citizen' store in Chennai today (the first for the city), expects the concept to change
customers' perception of its brands. Citizen Watches India's Senior Vice-President, K. Chandy Jacob, said the company hopes First
Citizen to drive sales in multi-branded outlets, which contribute the biggest portion of its turnover.

He said the company would focus on playing a differentiated market in the above-Rs 2,000 space, by bringing in more watches such
as Eco-Drive, which is not only claimed to run solely on light but is said to generate power from kinetic energy. Mr Jacob said selling
such products would justify the "added value" positioning of Citizen's brands.

Citizen has also confirmed a Business Line report that its creative account has shifted from RK Swamy to Hakuhodo Percept Pvt Ltd.
Mr K. Chandy Jacob, said Hakuhodo, "which would take charge with immediate effect", has been given the mandate to push Citizen's
growth through its Eco-Drive brand, which currently contributes almost 30 per cent of the company's turnover.

Mr Jacob also said the move to shift the company's headquarters from Chennai to Bangalore would give it more visibility among
dealers, as the city is considered to be a centre for the watch market.

The company has also announced that Citizen Watches Japan has increased the shareholding to 75.5 per cent in the Indian venture
from 51 per cent by purchasing 24.5 per cent from the Indian partner, Doshi Time Industries, consequent to the approval given by the
Foreign Investment Promotion Board.

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Adding value to Citizens’ watches

CORPORATE / After receiving knock-out punches in their initial days, Japanese watch-maker Citizen changed its business strategy
with focus on the upmarket segment instead of the mass market, writes P P THIMMAYA

THE clock was ticking and time was running out fast and one had a reputation to protect. The time came for some drastic action and
clear headed priorities to set the clock back in time... literally. Citizen Watches with that famous line “How the world tells Time” has
finally got its act together and knows where it has to go in the Indian market, given the fact of its troubled beginning.

Citizen Watches which started its Indian operations in 1998 began with lot of optimism and hope (they were already well known in the
country through HMT) that they would sweep into the Indian market, but they eventually found out that what they were offering had
no takers. Something had gone wrong. In a free-wheeling chat with Deccan Herald, Citizen Watches India Limited Senior Vice
President K Chandy Jacob spoke at length of the troubled beginning, the correction and confident steps into the future.

Citizen Watches India started with its head-office and an assembly unit in Chennai. It is a joint venture between Citizen Watches,
Japan and Doshi Time Industries with the former holding 75.5 per cent stake. As Jacob says “Citizen was a famous brand and India
was a vast watch market...we attacked the mass market with cheaper value watches with gold platings.”

The wrong move

But to their surprise, they found out that the consumers rejected their products and dealers were not happy with stocking their watches.
The Indian watch market is estimated to be around 24 to 25 million pieces annually but around 40-50 per cent of it constitutes the
unorganised market which includes the fakes, cheap imitations and smuggled watches. It was tough going for Citizen as their cheaper
watches could be easily procured at a much lower price in the grey market. And even the import barriers were lifted in 1998.

As Jacob says, “We started on the wrong foot as we realised that there were two types of market in the country — the mass market
and the added value segment.” The mass market were any how being served by the likes of Titan and others. There was utter
confusion as Citizen India was a well-known brand and company expected to make huge inroads into it going by the mere name of the
company. So in the year 2000, Citizen Watches took the conscious decision that they would not be present in the mass market and
look at only at the added value segment. The watches under this segment comes with a higher price and has more number of features.

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Changing the tracks

Jacob says, “Citizen is a class product... we are Japanese and one is buying technology.” And the motto of the company in India
became, “We will give you fabulous value for money... but not at a cheap price.” And once the decision was made, Citizen shifted its
bag and baggage from Chennai. This meant closing down its assembly unit in Chennai and moving its headquarters to Bangalore.

Jacob says if you are in the watch business, you have to be either in Bangalore and New Delhi. It made more sense to be in Bangalore
as it has got the presence of other two watch majors namely HMT and Titan. He says having an assembly unit in the country did not
make sense, if one is not serving the mass market. And Citizen could always source their watches for the Indian market from their
various locations worldwide. By sticking to its decision of concentrating on the added value segment, Citizen India has reaped rich
dividends. Today, Citizen Watches India has seen a change in its average value price of its watches with two to three years ago being
Rs 2,000 now it has moved to Rs 6,000. The watch company has its presence in the price range of Rs 2,000 to Rs 20,000.

Citizen Watches India has got a range of watches in the country — the Eco-Drive, Promaster, Chronograph, Quartz, Femme,
Independent, Mechanical and Anadigi. But the flagship product of the company is the Eco-Drive range of watches. The Eco-Drive
watch runs solely on the power produced by light from any source. By utilizing the mechanism of a solar panel and a charging device,
light is converted into energy that ensures normal performance even in deficient light conditions.

The secret of Eco-Drive lies in its reserve battery. The device, which contains no such toxic elements as mercury, acts as a reservoir to
store the energy converted from light. When fully charged, the watch can run on this energy from two to six months (depending on the
model) without further recharge.

Growing segment

Jacob says the added value segment is growing and has seen lots of other players in the watch industry are moving in to cater to this
segment. To substantiate this, he says that the Indian market is a “very interesting one” and it is like a “sharp pyramid”.
Citizen Watches India Managing Director Hideaki Nakazaki adds to this by saying that India is potential market but it would take time
say about five years to have a strong presence here.

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The mass market occupies the largest space with lower priced models selling in this segment with middle range being the added value
segment. However, Jacob says the Indian market is becoming increasingly international with no difference between the domestic
market and what is available abroad. He says the rising incomes has witnessed a change in the pattern of buying watches as people are
willing to invest more in acquiring a watch which is priced much more expensive and has a host other features. Further, Indians
respect technology and Citizen is all about technology. Jacob says any further improvement in the economy will see the widening of
the market. “And the impact is going to be huge.”

Now, Citizen Watches India is looking only upwards that is to move up the value chain and sell higher priced watches. Jacob says “I
can only see the spectrum moving upwards. We are more interested in the money and not in the numbers.” “We cannot compete
against the mass players if we do not have a manufacturing base here and we cannot be present in the complete spectrum from low end
to the high-end products,” Jacob remarks.

Nakazaki says, “We are happy to sell watches here and sell high value watches as the economy improves even salary increases.”

Given its positioning in the country, Citizen India is looking at being present only in only in certain markets of the country especially
the metros and those cities which have around one million population.

Retail initiative

As part of its retail initiative, Citizen Watches India opened its first Citizen outlets which exclusively cater to their brands. There are
seven such stores across the country.Jacob says wherever they are present they would like to be present “very strongly” and this would
also means that they would looking into going to smaller towns. He says people interested in buying a higher priced watch are willing
to travel the distance to acquire them.

The opening up numerous malls in the country has provided them with extra outlet to position their watches. Jacob says such kind of
Citizen counters number more than 200 in the country. “We have had a reasonable success in distribution.” To supplement on this,
Jacob says, “There is no point in saying that we are a big brand and we are expanding our showrooms.”

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He says with the market is growing for the added value segment, Citizen Watches recorded a 35 per cent growth in value terms,
adding that talking about market share is irrelevant as the market they are targeting is very small and it only keeps growing.

The Indian watch industry has been plagued by the grey market and high incidence of taxes. The smuggled watches naturally eat into
the share of the established players while taxes add up to the costs of the watch. It almost goes up by 100 per cent.

Jacob says there is huge difference in costs between a smuggled watch and one which legally imported. “Grey market certainly affects
our brand.”

He says it makes much more sense for the government to lower the taxes on the watches which are imported as it will result in people
getting better quality watches at a much lower cost. “If the government were to rationalise they could double their revenues... they did
that to the cellphone industry.”

Jacob says given this scenario Citizen Watches would like to concentrate only in the higher end segment. “Officially we are present in
350 outlets but unofficially we are in 10,000 outlets!”

Emerging competition

Regarding the competition in the country with almost all the global watch majors being present in India, Jacob simply puts it as
“market is becoming extremely interesting and competition is necessary for the market to expand.”
As far as the future is concerned, Jacob says, “The current strategy will be our core strategy and the troubled days are over. We are
here for the long term and this is a good market. Last year we have seen some activity in our books and the brand is very strong.”

He says the Japanese parent of Citizen Watches India is also looking at India as a key market for growth. And this could be testified
by the fact that the company has applied to the Foreign Investment Promotion Board for increasing their stake to 95 per cent.

As Nakazaki sums it up that patience would be key factor in deciding on the success of the Citizen Watches India.

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Fight For Survival
STEP into the India headquarters of Citizen at Vadapalani, Chennai. You'll be
surprised. Citizen's offices (and the adjunct assembly facilities) lack the typical
MNC glitz, and doesn't present the picture of a $3.25-billion (Rs 15,250 crore)
global watch major operating in a Rs 1,000-crore-plus market. In fact, it gives you
the impression of a corporation that's ready to pack up and leave. It just may, even
though Noritsugu Iwata, the new managing director of Citizen India, angry that you
could even consider such a thing, dismisses any talk of the company calling it quits.
Along with the company's new marketing head K. Chandy Jacob, Iwata is trying to
rework Citizen's India strategy and put the company back on track after a disastrous
first two years of operations. The duo has just cleared a Rs 5-crore festive season ad
spend for Citizen's Eco-Drive range of watches, an amount that leader Titan may
spend on its Sonata label this year.

Don't envy Iwata and Jacob. They'll require more than advertising share of voice to fix Citizen and make up for lost ground. In early
1998, Citizen re-entered the market via a 51:49 joint venture with the Chennai-based watch distributors, Doshi Time Industries,
investing Rs 8 crore in an assembly line. (In the 1960s, Hindustan Machine Tools manufactured Citizen watches under a technology
collaboration agreement.) Dealers welcomed Citizen's return. For one, the brand enjoyed high levels of recall. Moreover, the trade also
thought that in Citizen it had found a strong number two player to Titan, which would give it better leverage when dealing with the
market leader.

That's when Citizen triggered a series of ill-advised moves. One was price. Blame it on the company's overconfidence. Citizen
launched its watches in two slots -- a medium-priced Rs 1,600-3,500 range and a premium Rs 6,000-20,000 range. Nothing was wrong
with the price per se, just that consumers saw no value in the product. Citizen had botched up the price-value equation. "When it
entered the Indian market, they assumed that it could sell watches at any price, just because it was Citizen," says a former Timex
official. Some Citizen officials confess that to be true. For example, the Eco-Drive range, available now at Rs 3,690 onwards, was
initially priced at over Rs 6,000. Then, Citizen's product range in India was much too limited, primarily because it had to make straps
locally as imports of fully-built watches were not allowed then. And even within the limited range, there was little differentiation with
most watches looking almost identical. Small wonder that the watches did not sell; and stocks kept piling up at the company's end.

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 By last September, Citizen was sitting on an inventory of about 80,000 watches (average monthly sales: less than 4,000 watches).
That's almost two years' inventory worth around Rs 8 crore at about Rs 1,000 per watch. This sent Citizen's working capital costs for a
complete toss. Frantic, Citizen announced drastic price cuts (over 50% in some cases), one in September 1999 and the other this May.
While that allowed Citizen to get rid of some of its stock, it reduced dealer margins for which it had to cough up about Rs 40 lakh to
compensate the trade. Worse still, the price cuts sent conflicting signals to customers about the equity of the label. Even company
officials admit that Citizen's India entry strategy was an unmitigated disaster. The company had frittered away all its existing brand
equity ("One of our biggest assets in India is the strong brand equity that Citizen enjoys," says Iwata) and was also making losses
(Citizen didn't share its financials with Business world). With its survival at stake, Citizen kicked off drastic changes. CEO Junichi
Tsuruta exited and Iwata took charge this July. Then JV partner, Doshi Time Industries, relinquished operational responsibilities and
Jacob, who had been roped in as senior vice-president in February, was given a free mandate on the marketing front.

Today, Iwata and Chandy will have to restore the confidence of the trade and consumers, ensuring that no time is lost in putting
together a workable strategy. (Remember that with imports of watches allowed, international labels like Espirit, Rado, etc, too, are
available here.) Moreover, Citizen still remains an insignificant player in the 20 million piece per annum Indian watch market (of this
roughly 50% belongs to the organised sector), which is dominated by Titan and HMT. For starters, Iwata and Chandy have tried to
create a USP for Citizen in India. And they have picked the Eco-Drive range to do just that. "We realised that Eco-Drive can be a
special product in a cluttered market," says Jacob.

Right now, Eco-Drive (a technology that enables the watch to generate its own power -- using light energy from sources like a bulb, a
candle, the sun, etc) is being projected as the face of the firm. Already, 10% of Citizen's current sales come from Eco-Drive, up from
negligible levels last year. The price strategy has worked. But more important, the focus on Eco-Drive also partially solved another of
Citizen's problems -- small product range. Even today, a medium-sized watch retailer stocks about 50 Citizen models, against the 750-
plus Titan models that he has on display.

At least, for the next few years, Citizen cannot hope to match Titan on the product range. But what it lacks in range, it can make up for
in the uniqueness of the Eco-Drive technology (you don't have to change battery cells). "Earlier, there was no direction in Citizen's
marketing. But that has changed now, with focused advertising on Eco-Drive," says P.V. Subramanian, CEO, P. Orr & Sons, a popular
watch retailing chain in Tamil Nadu.

22
 Focus is actually the key word on which Jacob has pegged Citizen's new marketing strategy. "Our plan now is to focus on key
markets, fewer dealers and also sharper advertising," he says. Citizen has decided to concentrate its efforts on the top 10% of the
market or watches that sell for about Rs 2,000 and upwards. Though, some of the existing inventory is being sold from Rs 1,200
onwards, the real thrust would be at the top-end market. As an extension of this ploy, Citizen has decided to focus on the key metro
markets. Most marketing and promotional exercises will now be restricted to cities like Mumbai, Delhi, Chennai, Bangalore and
Calcutta. Some efforts are beginning to pay off. For one, the average selling price of a Citizen watch has climbed from Rs 2,000 at the
time of launch to around Rs 2,700 now. Adds P. Orr & Sons' Subramanian: "Earlier, we were selling about 100 Citizen watches a
month across our six showrooms in Tamil Nadu. Now, we are selling about 200 every month." A big jump, but wait. A relatively
lesser known niche label like Espirit sells about 50 watches every month from the P. Orr & Sons' outlets, with hardly any advertising
support. Jacob for his part claims that Citizen will sell about 10,000 watches a month (October, November and December) during this
festive season

Some industry watchers claim that Citizen shouldn't yet take its survival for granted. "Citizen desperately needs a wider product range
and a complete revamp of its communication strategy," argues the ex-Timex official. Iwata admits that Citizen is yet to fully win back
the confidence of the trade. "There is no market in the world that is easy to enter. We will stay and fight," says Iwata. He points to
Citizen's perseverance in other international markets where it failed first but did well later, to support his bravado. In China, it took
Citizen 10 years to taste success, while in Mexico it took 25 years to establish itself. And in the US, which is today one of Citizen's
best international markets, it took 20 years of labour before the watch major was able to establish itself. So, compared to all this, what
is a mere two years in India, asks Iwata?

The one important reason why Citizen perhaps needs to gain dominance here is the shift happening in the global watch market. Last
year, the Japanese watch market (which still accounts for most of Citizen's sales) dropped 23%.

Besides, Japanese manufacturers faced a serious challenge from the Swiss who actually upped their share in the falling market. And,
with growth rates slowing down in mature markets, Citizen, which makes around 290 million watches annually, needs the emerging
markets like India and China to retain its dominance in the global markets.

23
In the late 1970s, the Tatas had attempted to acquire the Bangalore-based watch company, egde & Golay. However, the venture
failed to take off. In 1981, the Tatas received an invitation from the Tamil Nadu Industrial Development Corporation TIDCO), to
team up for a joint venture. TIDCO had already commenced negotiations with the French watch movement manufacturing company,
France Ebauches, for accessing technology. The Tatas accepted the invitation.

Titan was set up in July 1984, under the leadership of Xerxes Desai, with its corporate office in Bangalore and a two million watch
manufacturing facility in Hosur (Tamil Nadu), approximately 30 km away from Bangalore.

India’s watch industry at the time enjoyed almost total protection from imports, thanks to a complete embargo on the import of
watches. But the rampant smuggling of completed watches and movements, particularly of products based on quartz technology, made
a mockery of this protection. However, Titan got some breathing space. It had no need to be concerned about competing directly
against such large international producers as Seiko, Timex, or Citizen.

The clear leader in the Indian watch industry, Titan had revolutionized the country’s watch market with its emphasis on style and
international quality. Most analysts agreed that Titan had created a strong brand identity for its watches both in India and some
selected overseas markets. Titan had also created a strong presence in the area of branded gold jewellery. These achievements had
made Titan one of India’s leading consumer marketing companies. As on Feb 18, 2004, Titan was present in 30 markets worldwide
and achieved a turnover of about Rs. 800 crore. Titan had suffered some serious setbacks in its efforts to globalise. Some markets like
Europe had consumed a lot of resources without the proportional returns. Titan realised it would have to use its resources effectively
as it competed with other global manufacturers based in countries like Switzerland and Japan. Meanwhile, competition in the Indian
market continued to intensify. Notwithstanding these challenges, Titan with its young top management team and the backing of the
Tatas, looked well placed to build on the success of the past.

24
About Titan Industries Ltd.
Titan Industries Limited, a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation (TIDCO)
commenced operations in 1987 under the name Titan Watches Limited. In 1994, Titan Industries diversified into Jewellery.

Today Titan is India's leading producer of watches, and is credited with changing the face of the Indian watch industry. It has a
domestic market share in excess of 50%. Titan Industries reported a turnover of Rs.958.52 crores for the year ended 2003-04. As a full
range producer-marketer, Titan offers the Indian and international customer a very large range of products to suit various
tastes and budgets. Its products are recognized for innovation in design, quality and reliability

Titan has rewritten the rules of watch making to emerge as the brand of choice for Indians of all ages and from every strata of society

The advertisements changed but the memorable melody that accompanied them remained the most popular aural mnemonic for Titan.
People remembered it fondly, associating it instantly with the watch brand that changed the face of the Indian timepiece market.
Watches in those days were staid objects, more utilitarian than attractive. Good design and innovative technology were hardly
priorities for manufacturers. Into this field stepped Titan Industries, a joint venture between the Tata Group and the Tamil Nadu
Industrial Development Corporation, ready to rewrite the rules of the business.

Established in 1987, Titan marked the Tata Group's entry into the precision engineering, time-keeping industry. That the foray has
been immensely successful is evident, considering that Titan is the clear leader in the organised sector, with a market share of over 50
per cent. The company has achieved this success in the middle and upper middle class segments through its flagship brand, and in the
mass market through its Sonata range. Today the company, one of the largest integrated watch and jewellery manufacturers in the
world and the world's sixth largest manufacturer of watches, has completely altered the way Indians view timepieces. State-of-the-art
technology, excellent design abilities and innovative retail practices have transformed Titan's watches into lifestyle and fashion
accessories. The company manufactures over 6.6 million watches every year and has a share of the Indian watch market that is more
than three times that of its nearest competitor.

The establishment of Titan gave Indian wrists an object of beauty to sport. It also helped smooth India's entry into an elite club of only
four countries in the world that have been able to manufacture all the components of an analogue timepiece.

25
The brand went on to justify its presence at the top and prove just why it is so comfortable there. Very early in the game, Titan set the
standard on every parameter of watch-making excellence. In terms of technology, the brand chose to work with quartz, a remarkable
differentiation in an Indian market where 95 per cent of watches sold were mechanical.

While the accuracy of the time displayed by Titan's watches is guaranteed, it is in the design and styling aspects that the brand's
superiority has come to the fore. No other watch brand in the country has the depth and skills of the award-winning design team at
Titan. The other big factor that makes Titan a winner is its tremendous range of offerings. The company had 350 different models at
the launch stage itself, whereas other watchmakers, taken together, could come up with just 200 models. Consumers could choose
from a range of watches, each different from the other in terms of looks, functions and price. The designers had designed the watches,
bearing in mind factors such as the buyer's age and taste, and the occasion for which the watch was to be worn.

The Titan watch collection now includes more than 1,600 designs, including the 3.5mm thick Edge, the slimmest watch in the world
and one of Titan's standout innovations. Titan also launched the Sonata sub-brand for budget-conscious buyers; Fastrack, a funky
collection for youngsters; Nebula, the gold and diamond-studded luxury watches; Steel, aimed at executives, and Raga, created for the
woman of today. The Titan brand also included decorative table clocks incorporating classic and contemporary designs.

The act of shopping itself assumed the nature of an experience with the World of Titan showrooms, 175 in number now, which
showcased Titan's concept of premium and sophisticated retailing. These showrooms, ranking among the world's largest network of
branded watch outlets, serve as a promotional tool for Titan. The large crowds that throng the showrooms are proof of the level of
customer satisfaction that Titan has achieved.Appreciation for its product and brand qualities also came through several Indian and
international awards. Titan was rated one of Asia's top 200 companies (and among India's top 10) from 1994 to 1998 by the Hong
Kong-based Far Eastern Economic Review. In 2001, Indian consumers nominated Titan the 'most admired brand in India' across all
product categories, in a first-of-its-kind survey conducted by The Economic Times. In 2003, Business World nominated Titan as
India's 'most respected consumer durables company'.

Titan has crossed domestic shores and is available in 30 countries. It has 2,500 dealers across the world, ranging from 10 in Brunei to 300 in Spain, one of the
four European countries where it has a sizeable presence, the others being Portugal, Greece and the UK. Titan is also the leading brand of choice throughout the
Middle East. Through the years, Titan has consistently pushed the envelope. Its focus on innovation, top-notch technology and customer
delight has helped it better itself and raise the bar for itself and its competitors. The relentless endeavour to innovate and to be worthy
of the trust that consumers have in its products is the hallmark of the pioneering Titan brand.

26
Watch and wait
Did you know that India is one of only four countries in the world with the capability of making all the components of watch analogue
movements? Did you know that watch, clock and timepiece manufacturers, and makers of ancillary products such as cases, dials,
bracelets and components have, over the last four decades, created an industrial base that employs an estimated 50,000 people and
supports nearly 2 lakh others? That is not counting over 10,000 horological watch and clock dealers across the country. Today the
overall investment in watch manufacturing plants, machinery and infrastructure in the country is estimated at over Rs 1,000 crore.

Watching the clock?

But the times they are a-changing and, with the impending WTO norms, a tad uncertain too. "Quantitative restriction on watch imports
has been withdrawn since April 2000. The basic customs duty applicable on imported watches has been lowered to the extent of 35
per cent, which depends upon maximum retail price [MRP]," says Bhaskar Bhat, the managing director of Titan, while explaining the
implications of the new WTO norms.

"This freeing of imports has caused foreign manufacturers to woo retailers and distributors with generous terms and consignment
sales. As the availability of brands and the number of goods that a distributor or retailer might wish to stock increases, pressures on the
deployment of available funds of a wider range of goods will also increase, causing a thinning of stock levels for individual brands,"
he says, adding that Titan is fully prepared to capitalise on the opportunities likely to emerge post-WTO.

Time’s up

"The entry of new players in the watch trade will fuel increased advertising and sales promotion, which, in turn, will increase visibility
and interest in the watch product category," says Mr Bhat. "This will benefit Titan. Currently, sales in India stand at an abysmal low of
25 watches per 1,000 people, compared with 250 watches per 1,000 people in a developed society. With more brands promoting the
category, demand will significantly increase." Until now investments in manufacturing or assembly facilities have had to precede the
introduction of new products. Obviously, things are set to change. "Liberalised imports will enable us to evaluate and exploit the
potential for new product offerings through the direct imports route. This will help us identify where the competitive advantage lies,
and, thus, also identify the most appropriate form of investment."

27
All-time low

Clearly, despite a dismal domestic environment where lower-priced, even spurious, products, have been flooding the burgeoning grey
market — more than half of the approximately 25 million watches sold in India are smuggled or made out of smuggled parts,
especially movements — things aren’t all downhill.

"The world demand for watches is around 600 million," says Mr Bhat. "Indian producers currently make about 12 million watches.
India can make watches of a quality comparable to that of the Swiss and the Japanese. Hence, overtures are likely to be made to Indian
manufacturers who can supply parts and components to foreign manufacturers. With India being granted
most-favoured-nation status and European and Japanese brands increasingly turning to various Asian
sources to contain production costs, a huge opportunity lies ahead for Titan."

Time for a change

The WTO norms are ushering in a new world. Lifting restrictions on the import of complete watches will
enable Indian manufacturers to globally source watches and, thereby, reduce lead times for the
introduction of new products. This should deal a severe blow to the grey market, which has been
flourishing in an atmosphere made conducive by governmental levies and the depredations of rampant smuggling and counterfeiting.

"Watches from Hong Kong and China already populate the low end of the watch market," explains Mr Bhat. "These watches have
entered India in a clandestine fashion, in much the same manner in which cheap quartz analogue clocks, which dominate the low end
of that market, entered through land routes."

Significantly lower effective costs of smuggled components means that this sector enjoys the advantage of zero taxes, no promotional
costs and lower input costs. Smuggled watches account for between 50 and 75 per cent of annual sales in the country.

Time after time

28
In contrast, legitimate manufacturers have borne historically high customs duties on the import of machinery to set up their plants.
Now they also have to deal with an excise duty of 16 per cent on watches whose MRP is higher than Rs 500. This has caused smaller
manufacturers to wind up their businesses.

Advice to the Indian government to have tighter controls along the grey market’s favoured entry points has not resulted in meaningful
action. To make matters worse, exim policy changes, which lifted all quantitative restrictions on the import of watches, were
introduced a full three years ahead of industry expectations. Naturally, the imports came in before manufacturers could implement
programmes to confront them, and much before the liberalisation timetable agreed with other trading countries and the WTO.

This happened even as the industry was seeking relief from high excise duties and sales taxes (both of which are in many multiples of
the taxes prevailing a decade ago). Domestic producers have been unable even to pass on excise increases to customers, and this has
adversely affected the health of the industry.

Watch out!

The clock really is ticking for the Indian watch industry. As has been the experience in parts of the world where quantitative
restrictions were removed years ago, most brands are now likely to use the legitimacy of imports to shield a much higher level of
smuggling. There are also serious concerns about the likelihood of dumping and of remainders being disposed of in the Indian market
at deep discounts.

The legitimate presence of foreign brands could encourage grey-market players who have legitimate cover to explain the otherwise
embarrassing presence of imported goods. This market could become more active and the foreign brands that have been aiding and
abetting this market could now nurture the channels through which such goods have entered. This could affect bigger brands.

"The Swiss have not had great success nor have the Japanese, who are yet to get their act together with Citizen and Casio. Seiko had to
abort its entry," says Mr Bhat.

Things are so bad for the watch industry that Titan, HMT, Timex and Maxima are the only significant surviving Indian watch
manufacturers. Of these, Timex and the state-owned HMT have been making losses.

Future perfect

29
Titan, having hung on to its leading position in the market with aggressive marketing, is upbeat about the future. Mr Bhat expects
WTO to work in the company’s favour.

"The choices available to the customer will widen considerably," he says. "This will impact the strategies and policies of the business
community. The brands that have customer-focused marketing strategies will do well. Titan has chosen to place itself in the mid- and
upper-middle segments through brand Titan, and the growing mass market through Sonata. In both these segments the opened
economy will be used to our advantage."

The sales, marketing and services sections have already been restructured. "The object of this exercise is to
significantly improve our revenue streams, build two distinct brands (Titan and Sonata), utilise our manufacturing
facilities better, pursue new business opportunities by leveraging the power of our brands and our expertise in
micro-precision engineering, and exploit our strengths in marketing, retailing and customer service. A separate
supply chain and logistics function has been founded to leverage emerging opportunities in this field.

"We have been preparing for some time and have been measuring our performance very carefully in terms of
market share, which has, in fact, increased. Recently, the organisation has been restructured, focusing on our thrust
areas. Several cost-reduction initiatives are at an advanced stage. Titan’s extensive retail network is progressing with a planned
expansion in un-represented areas. This will make our strongholds an impregnable fortress."

Time travel?

This is already happening with ‘Time Zone’, Titan’s chain of multi-brand outlets. Currently with a presence in 89 cities, these outlets
could, in future, stock foreign watch brands, a move that is bound to increase traffic in these outlets, improve their profitability and, in
the process, increase Titan sales. The company is also looking at licensing and distribution arrangements.

Several new products are being introduced. Advertising and promotional plans have been realigned to enhance customer expectations.
Titan has tied up with suppliers in Hong Kong, China and South Korea for sourcing low-cost components.

No more Chinese torture

30
"We have already strengthened our lower-end Sonata brand, and aggressive marketing strategies have been adopted to counter cheap
Chinese products," says Mr Bhat. "From the customer’s point of view, we will fully exploit the potential of the power of one of India’s
most admired brands — Titan. The Chinese have no known strengths in brand building. As long as we offer an unbeatable value
proposition, our customers will remain loyal."

The company also intends to lobby the government to levy anti-dumping duties and strengthen the revenue intelligence machinery.
This should check smuggling and detect under-invoicing and bring some much- needed relief to the watch industry.

WTO or no WTO, Titan is set to maintain India’s position as one of the foremost watch-making countries in the world.

Titan re-defines innovation in the watch industry

Launches India’s first dual faced watch – FLIP

31
Reinforcing its technology leadership in the Horological industry, Titan Industries Limited today announced the launch of the latest
innovation to hit the Indian watch market. Titan’s latest offering, takes sophistication to a higher level with the introduction of ‘FLIP’,
India’s first dual face watch with dual functionality and styling. FLIP, once again underscores the excellent collaborative work
undertaken between Titan’s Design Studio, the Production Department and the R&D team.

Watches in the FLIP collection incorporate two watch movements embedded in a single case. The dual faced watch allows wearers to
switch between international time zones and alternative lifestyles – be it formal or casual, with the mere ‘flip’ of the dial. The FLIP
creates dramatic appearance changes ranging from a stark minimal style to a very sporty one. The collection explores innovative
constructions allowing for unique ‘flips’. FLIP represents a dramatic fusion of technological and structural innovation. The design
ethos derives links to the form and construction of modern day ‘bridges’. As part of this collection, Titan also announced the
availability of watches with the Automatic Generating System feature. This provides the customer with the added benefit of using the
watch without concerns of depletion of the power source. The collection also features a watch in the ultra-light material -Titanium,
creating a bold new-age expression of style and technology.

“FLIP once again reiterates Titan’s technology and R&D capabilities, making us one of the pioneering, global watch brands. With this
launch, we bring in a distinctive combination of style and dual functionality, which will definitely appeal to the evolving tastes and
preferences of our discerning global customer,” said Mr. Bijou Kurien, COO, Titan Watches. Priced between Rs. 5495 and Rs. 6500,
the unique collection, will be available in 2 cases and 6 variants. The price points of the collection are yet another significant
achievement for the product development team since it has been designed keeping in mind the evolving Indian customer. The AGS
watches are available in 2 cases and 5 variants priced between Rs 7995 and Rs 8500.

Celebrated actor Akshaye Khanna, who unveiled the collection expressed, “I think FLIP is the perfect accessory to complement my
ever-changing lifestyle; one watch that I could wear on a shoot, a formal evening or to a lounge bar. Its extremely stylish and
fashionable.” Award winning designer and lead designer of the collection, Michael Foley, stated, “The biggest challenge during
product development was in devising a series of innovative constructions and transforming each into unique and striking design
expressions. Special manufacturing techniques like MIM (Metal Injection Moulding) had to be used to keep the design features true to
the original concept.” The FLIP collection will be supported through a multi-media ad campaign across niche electronic media and
select print publications.
Titan machine stays ahead of its time

32
Remember when the only Indian wristwatch brand you could buy came in a clutch of clunky models, one more ordinary than the
other, when the craze for an ‘imported watch’ never seemed to wane? That was before the time of Titan, a
name which changed forever the way watches made in this country were seen by Indians and the world.

Launched in 1987, Titan is credited with transforming the face of India’s watch industry. By offering
consumers quality products that blended classy designs with superior technology, Titan became a byword
for success stories. Outstanding services, a wide variety of models, and effective marketing have helped
Titan consolidate its early gains, to the point where the company is a force to be reckoned with beyond
Indian shores. Understanding the Indian consumer's psyche has been vital to Titan reaching its current
position of strength. The company today has a model for every price segment and every market, urban and
rural, regional and international. Within the Titan mother brand are Nebula, which comes draped in 18-
carat gold; the exclusive Insignia; PSI, for those turned on by technology; and Raga, which has been
designed exclusively for women.

Titan’s focus has always been on India. Research reveals some interesting facts and figures about this heterogeneous market.

• The Indian market is estimated at 25 million watches a year, with 50 per cent being sold by the organised sector.
• Titan is the runaway market leader, with domestic sales of 6 million watches a year.
• There are 190 million watch-owning Indians; between them they own about 210 million watches.
• Urban India accounts for 120 million of these watches and 90 million are on rural wrists.
• More men than women own watches in India, and more working women than housewives own watches.

It is the rural segment within this diverse market that Titan is now looking to tap. "The key to success," says Bijou Kurien, vice-
president (sales and marketing), "is getting into the rural market on a larger scale." The company’s Sonata range is targeted at rural
customers, and is part of a strategy where the alignment of price and reliability are crucial. The range costs between Rs 495 and Rs
1,200, has showrooms exclusively for it, and is sold mainly in small-town India. Fast Track is a different kettle of fish. This range is
broadly aimed at young Indians looking for watches that are fashionable and stylish. Then there’s Dash, a range that Titan launched
for children. Introduced in early 2000, Dash is priced low, but it hasn’t sold too well. The company plans to change that with enhanced
advertising and a different marketing strategy.

33
Titan’s retail operations are a mix of company-owned and franchisee outlets, with the idea being to ensure a dominant presence in all
market areas through different kinds of stores, and to assure the availability of every Titan product. Says Mr Kurien: "We have
concentrated on customer perspective, and we have engineered the entire chain to suit different customers." Manoj Chakravarti,
general manager (retailing), has more to say on the customer theme. "Earlier there was no attempt in the retailing sector to entice
customers to buy a watch," he says. "We have tried to bring the brand to the customer in an appropriate setting." The company does
this through its ‘World of Titan’ showrooms. The franchisee is a critical cog in Titan’s retail matrix. The company organises various
programmes for franchisees, their managers and customer relationship officers. These include training workshops and seminars on
market trends, visual merchandising, store operations and maintenance, and customer service initiatives.

According to Ajay Chawla, senior manager (retailing and supply chain), the real challenge in retailing is managing the franchisee
network through processes and systems that ensure a superior brand experience for every customer. "Franchisee relationship
management is important because of increasing competition, not only from the watch business but also from other businesses in the
retail industry," he says. "The market is opening up and the franchisee is, after all, looking for what is most profitable."Besides the
franchisees and its own showrooms, Titan sells its products through other outlets as well. Among them are the Time Zone stores,
which stock all the leading brands, and the Value Mart outlets, which operate in Bangalore and Chennai and sell surplus-to-export
watches at a discount.

For its many customers Titan has Tata Signet, a 1,36,000-member club that looks to build relationships through rewards, regular
discounts and special offers. Customers can also count on a service-centre network that’s 550-strong and spread over 30-odd cities and
towns across the country. The service centres have been deliberately kept apart from Titan’s showrooms. "The business is different
and the customer is in two different moods at the two places," says Mr Kurien Titan’s blueprint for the future includes making watches
for international heavyweights such as YSL, Christian Dior and Gucci. Mr Kurien believes there is huge potential at the designer end
of the market. The marketing investment is lower because "the brand is doing the marketing for you". Also on the anvil are speciality
stores for niche customers, and an expansion into product categories like sunglasses and leather goods.

However, it is staying ahead of the competition that is the overall priority. Says Mr Chakravarti: "We have to ensure that Titan has the
best wristwatch store in any given city or town." You don’t really have to watch this space for confirmation on that count.

Strategy, not a straitjacket

34
The future is becoming increasingly difficult to predict. Change is the name of the game. The economic environment is changing
constantly. Markets are getting segmented on the basis of customer preferences. Technological advancements are providing for faster
turnaround times. Companies need to become more flexible and willing to cater to the needs of their customers. Does this mean that
companies must take a fresh look at strategies?

Every organisation needs a clearly articulated strategy. An organisation works towards achieving clear objectives. A strategy demands
good planning, based on rigorous thinking and tough self-assessment. Organisations need to focus on long-term planning in which
they define their overarching goals, direction and strategy. They need to identify the end results and work towards accomplishing
them.

Organisations are often reluctant to plan because they see the plan as a straitjacket, destroying their flexibility. They fear that a plan
will not let them respond to new opportunities and changing circumstances. Where they err is in viewing a plan as a taskmaster rather
than as a tool. A plan only sets standards against which to measure your decisions and performance.

Abandoning strategy leads to confusion within an organisation. Strategising is an important process in the functioning of an
organisation. Once a direction has been set, it is easier to manage an organisation. Whether the strategy is long term or not depends on
the company and the industry. In some industries the pace of change is faster than it is in others.

About four years ago, the Indian market was opened to foreign competition. Titan realised then that the Indian watch market would
undergo tremendous change as it was moving from a reasonably uncompetitive era to an intensely competitive one. It was important
to keep one’s options open and to keep the strategy flexible.

Strategic flexibility

35
Keeping your options open means building flexibility in the strategy. For instance, in 1998-99, Titan announced its intention to
become a significant global player, to address the multiple segments emerging in the Indian market through multiple brands and sub-
brands, and to offer terrific value for money through differentiated design, retailing and brand image.

When the company said that it chose to become flexible, it meant that it would not make any investments
of an irreversible nature. It refrained from making significant investments in watch manufacturing because
it was aware that, as the market opened up, there would be an opportunity for outsourcing.

The company addressed multiple segments through brands such as Sonata, Fastrack, Raga, etc. It realised
that as the market became competitive, multiple brands would be the best way to address the needs of the
market and deal with the competition. Besides, the market was getting segmented. When you have multiple
brands and are flexible, you are less vulnerable. In expanding its market base and choosing to be flexible,
the company showed its keenness to serve the consumer segment better.

At one time we expected Swatch to be a major competitor, particularly in the youth segment. We invested
in a brand called Fastrack. We knew that we could not dominate that market because of Swatch’s deep
pockets and its global image. But we still wanted to take advantage of our strengths, in terms of distribution assets, retail strengths and
our leadership position. We couldn’t have used Titan as a brand. In the worst-case scenario, if we were forced to give up this segment,
we would still lose only one sub-brand. This solution was driven by our understanding of the consumer.

Strategic processes

36
Companies must have robust processes to develop strategies, irrespective of the personality of the CEO. These processes must
override an individual’s view of what the strategy should be. Everyone in the organisation must have a common understanding of the
future. It is also necessary to revisit strategy frequently, to see if certain assumptions, held to be true when the strategy was crafted,
still apply. ‘The World of Titan’, our exclusive showrooms for watches, are our assets. As retail formats change, the role of
showrooms may also change.

Our European operations made a loss of £9 million. Our ambitions far exceeded our ability to execute. We faced a problem with
reference to costs of entry. We did not have enough money to invest. We paid dearly for our mistake in underestimating costs. Our
strategy was right, but the implementation was not. Strategy is about one’s ability to withstand. The ‘Made in India’ label also proved
to be a big barrier.

Initiatives need to be prioritised. We will take some next year, others can take longer. However, we must start today.

Increasingly, strategy consultants are advising companies to become more pragmatic. Pragmatism has also set in perhaps because of
the downturn. For example, in Titan our debt equity is 2.7:1. This hinders us from tapping all opportunities because the interest burden
is high and our ability to borrow is low. The company faces financial risk. So our current initiatives are those that do not need too
much capital.

The company strategy therefore needs:

• To be developed with the participation of a large number of people in the organisation.

• To be clearly articulated and communicated.
• To be revisited often.
• To have a very strong implementation focus.
• To be pragmatic.

Titan Supply-side success

37
The unseen star of Titan's achievements in securing and retaining customer trust is its supply-chain methodology

Whatever be your station in life, at Titan you can expect to be treated like a celebrity. Lavishing that kind of attention on its customers
is one reason why the brand stands head and shoulders above the competition in the market for watches. The precision and sharpness
that enables such unwavering customer focus are products of Titan's standout supply-chain systems.

Your favourite Titan design comes at the right time and the right place through a complex supply chain. The rapidity with which the
company rolls out new products — it currently has some 2,000 variants in the market — keeps the clock at Titan ticking at all times.
Says Bijou Kurien, chief operating officer (watches): "Customers are demanding, and time and money are tight. While supply-chain
management was earlier seen as production and stock planning, it is today about the optimal utilisation of capacity."

Two years ago, Titan had about Rs 180 crore stuck between its finished goods, raw material and working capital, and the company
turned its inventory twice a year. Titan has since then put its assets on the treadmill to sweat them slim. Last year, while it cut the flab
down to Rs 110 crore, it also increased its inventory turns to four. Coming soon is a new inventory plan of six times in a year at a mere
Rs 80 crore.

A decade back Titan would predict market requirements for each month of the year a good six months before the year began.
Gradually, by breaking down its array of products into discrete buckets, Titan reduced its response time significantly. The cycle of
forecasting sales, creating a production plan, mobilising components and assembling them into watches was pared down to four
months. But with the market getting competitive, Titan was faced with the danger of a style's star appeal getting crusty even quicker.
So now this watch wizard can bring you a watch in one or two months and, in case of urgent requirements, even in 15 days.

This makeover has not been merely skin-deep. To ensure a better shot in fewer takes, the company has scoured each link of its long
and many-stringed supply chain and hammered it into maximum efficiency mode. Here is a glimpse of Titan's architectonics.

Link 1: Reorganising the structure

38
About two years ago, Titan's management stepped back and looked at the big picture. The company supply chain then consisted of
two discrete departments: manufacturing, and sales and marketing. The idea for one supply chain banner became self-evident
following the implementation of an enterprise resource planning solution in 1999.

"Information suddenly became transparent and we were able to 'see' the stocks across the entire system at a single glance, in terms of
quantum as well as the financial investment, and for both finished goods and raw materials," says Mr Kurien. That led to activities
under the heads of sales forecasting and production planning becoming one continuous whole.

Then the company sorted out its watch categories and made distinct processes for each. This happened when the management noticed
that the time required to make Sonata products, which catered more to semi-urban and rural markets, was less than that needed for
other watches under the overall Titan brand. The batch sizes for Sonata were also larger. The company realised that the components
for these could be outsourced from vendors, while the Titan watches could be taken care of in-house. A third category emerged from
the styles for which international vendors supplied components; the time required for these was the highest. At the end of this
brainstorming, Titan created three different segments according to the lead-time required from the start to the end: Sonata watches that
needed 30 days, Titan watches that needed 60 days and Titan watches that needed 90 days. Having set its house in order, it was time
now for Titan to woo customers with what their hearts desired.

Link 2: Forecasting demand

Securing the future of a Titan product is a scientific and rigorous exercise. To accurately predict which watch the market needs and in
what quantity, Titan uses a time-tested method. First, it studies the historic sales of different styles. The primary information comes
from an account of its own sales. Retail or secondary information is gathered from showrooms and distributors. The company also
keeps in mind elements such as marketing schemes and advertisement campaigns to foresee demand. Seasonality is factored in
because sales shoot up during festivals like Diwali, Onam and Pongal.

Considering that there are about 1,300 variants in the domestic market and 700 internationally, there is a lot of estimating to do.
Instead of forecasting for all its varieties, Titan focuses on about 400 variants that contribute to 75 per cent of the company's overall
sales.

To hit on the optimal mix of products, the company has also come up with an iterative demand-planning method. It is currently setting
up an 'advanced planning and optimising' (APO) tool. This monster of an engine takes into account the historic sales pattern for three

39
years and applies a forecasting model to that data and develops a heuristic. The forecast thrown up by this formula is then vetted by
the sales and marketing group, which may want to modify it based on specific sales or market inputs they have received. Once the cast
and the screenplay are ready, production begins.

Link 3: Utilising manufacturing capacity

Mapping the demand projection of all the styles to the available production capacity can make science fiction seem as simple as
running around trees.

The forecasts may add up to a requirement of say 800,000 watches in a month. But the production capacity may be pegged at 650,000
or 700,000. "We have to prioritise the watches we want to make," says Mr Kurien. Titan cannot simply be partial to styles that make
larger contributions to the sales; it may end up under-utilising some of its manufacturing capacities while others get overused.

When the new APO tool is put in place by April 2005, the demand for each watch variant will be matched with the capacity within
each of the company's manufacturing shops, as well as those of its vendors. In case the two do not fit advantageously, the forecast will
get modified till a concrete production plan emerges.

As some of the components are bought from vendors, the company will maintain what it calls its 'supplier network planning' (SNP).
Through a portal for its vendors, orders can be placed keeping lead-times in mind. Vendors will upload information daily on this
portal, helping the company keep track of the production in real time. "It will give us a good feel of whether the vendor will meet our
production plan," says Mr Kurien.

It is through this complex web of considerations that the number of watches is reached, while ensuring that resources are used
effectively.

Link 4: Sales and after

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Titan reaches the nooks and crannies of its market through 170 exclusive 'World of Titan' showrooms and 8,000-odd dealers. The
availability of spares and accessories is critical to ensure that every watch sold can be quickly and reliably repaired so that Titan's
customers remain loyal and satisfied.

Titan has a network of spares distributors across the country, and stays connected using a web application. In fact, they are able to
place approximate orders before the production begins, thus helping Titan produce closer to market requirements. If there is excess
inventory after all the orders are met, it gets released into this system for all prospective buyers. As the consignments are dispatched,
the company's logistics service provider ensures that distributors can track their consignment online without manual intervention.

The journey of your favourite Titan watch, thus, passes along a long and intricate string, for which precision and finesse at each stage
is vital.

But the best never rest. "The watch industry has created issues for itself because of the way it has developed historically," explains Mr
Kurien. "We cannot take comfort from the success of our current supply chain; we have to keep looking for better benchmarks in other
consumer industries." The company has stepped up pressure by comparing itself to retail chains and apparel. These have dynamics
similar to those of watches but have achieved lower lead times.

Titan has upped the ante for itself and will keep fine-tuning its supply chain even further. It is this thoroughness that ma

Living in interesting times

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Way back in 1991, a small neon sign opposite Place de la Concorde, the big square near the busy Champs Elysees, in Paris heralded
Titan’s debut into the world business of keeping time.

The company is now present in 30 markets worldwide. It has approximately 2,500 dealers in the world — ranging from 10 in a small
market like Brunei to 300 outlets in a large one like Spain. Titan Industries achieved a turnover of Rs 800 crore last fiscal. This year, it
has set a target of Rs 1,000 crore and aims to make it to Rs 1,500 crore in three years. It is expecting a 20 per cent growth in top line
this fiscal.

Turn back the clock

Titan had been itching to go global way back in the early ’90s, soon after tasting success in the Indian market.

At the time, it had even toyed with the idea of turning into a contract manufacturer for a global watch brand. This would mean
minimum investment, cost and manufacturing efficiencies, and substantial profits. Besides, it would be totally risk-free. Yet, the idea
died a quiet death. "We strongly felt there was no glory in being a contract manufacturer. You constantly get driven down in terms of
price," explains Bijou Kurien, chief operating officer, Watches, Titan Industries.

This meant that to take Titan to the world, the company would have to take the arduous route of brand building and large investments.
"Building your brand abroad and creating value provides the highest return on investment in the long run," Mr Kurien adds.

The next step involved deciding the ideal global launch pad. The Middle East emerged as the best choice as it had a sizeable non-
resident Indian (NRI) population that was familiar with the brand. With the availability of Indian newspapers and television channels,
the spill over of domestic advertising was another influential factor. The first global footprint was placed in the United Arab Emirates
— the largest market in the Middle East.

The Middle East was a no-entry barrier market in 1991. Every good brand fought fiercely for shelf space there. The experience gave
Titan a taste of international competition and an insight into international product design and consumer demand. The company was
able to observe the marketing and branding strategies of its rivals.

This knowledge was invaluable. "We knew that the entry barriers in India would also be dismantled eventually. Then all these global
brands would want a slice of the large lucrative Indian market. They were likely to duplicate the same marketing strategies here. It

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helped us prepare for the competition that we could face back home," says Bhaskar Bhat, managing director, Titan Industries.
Subsequently, the company also replicated the gains abroad in its domestic markets.

After UAE, Kuwait, Oman, Saudi Arabia, Egypt and a few key markets in Africa followed. With the success of the Middle East
venture, the company was eager to advance its geographic presence. The neighbouring countries of Sri Lanka, Bangladesh, Nepal and
Maldives seemed ideal. The company also moved into the Asia-Pacific markets of Singapore, Vietnam, Malaysia, Thailand, Fiji and
Australia, which were large economies with India-like market structures. Currently, the company has also extended its presence to the
Philippines and Indonesia.

In the nick of time

After covering these markets, the company set its sights on Europe. "If we could crack this market, it would have been an achievement
that would have given us the satisfaction that we are as good as the rest of the world," says Mr Kurien.

The Mecca of Swiss watches was a huge challenge in every sense of the word. The country of origin is very important in the
international watch industry. And the ‘Made in India’ tag was more of a disadvantage for Titan.

In those days, there were also several restrictions on obtaining foreign exchange. So the company had to craft a complicated export
strategy of three marketing associates based in London, Dubai and Singapore, and two investment companies to maintain continuity of
investments.

In Europe, the direct sales route was employed in the UK and the distributor-led route in other markets. With brands jostling for shelf
space, retailers needed good reasons to stock the brand. The need of the hour was also to create strong consumer demand. So the
company unleashed a massive advertising campaign to create brand awareness. Titan, then present in 12 European markets, had to
create a specific campaign for each market. The action achieved the desired effect. But the investments were huge and the returns
meagre. Also, in the time taken to launch, the initial designs created had to be augmented with a new collection. So the company went
back to the drawing boards and created a completely new collection for the European market. The efforts were arduous and time
consuming.

After a few years, the company discovered that the returns failed to meet the expectations. The cumulative losses of its European
operation touched £ 9 million. "It was an expensive learning experience for us. In hindsight, we underestimated the investments

43
required for the European market and overestimated the returns we could achieve," reflects Mr Kurien. Echoing the sentiment, Mr
Bhat says, "We did not have the financial wherewithal to continually invest in the market. But, at the same time, I would say it was an
investment worth making."

The learnings helped shape a new business model for Europe. The company’s presence was shrunk to four key European markets,
Spain, Portugal, Greece and UK, in which ithad a fairly large presence. All sales and marketing efforts were focused only on these
markets. This also halved the advertising spend. The company also decided to shift its warehouse to lower cost locations to reduce the
overhead costs.

Manpower employed in managing European operations — Titan International Marketing — has also been rationalised. It has also
started monetising some of its European investments. This whole exercise will be completed in the coming two years. The company is
hoping for cash break-even by next year. Meanwhile, its operations in other key markets in the Middle East and Africa and the Asia
Pacific regions continue as per plan. Titan has notched many successes in various markets in these areas.

"Almost 95 per cent of our international investments amounting to Rs 150 crore are in Europe. Comparatively, our exposure in Middle
East and the Asia Pacific region is minimal and both these markets continue to be extremely profitable. They are now self-sufficient in
terms of their financial capability," says Mr Bhat.

Hence, while Titan plans to enter Japan, Taiwan and Korea in the Far East, and Brazil, Argentina and Chile in Latin America, the US
will not be considered because it would require large investments. China is another market being watched with great interest.

The company aims to make it to 50 countries in the next three years, from 30 at present.

Watching the future

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To gear up to meet the challenges of covering all that ground, Titan has taken many initiatives. "We have repositioned our brand in the
European market and we are doing the same in the domestic market as well. We want to be positioned in between the fashion brands
and the functional ones. The quality will be world-class but the prices will be affordable," says Mr Kurien.

According to the company, Titan watches combine the qualities of conventional watch brands like Seiko, Citizen, Rado, Tissot or
Omega with the style quotient of brands like Calvin Klein, Esprit, Christian Dior or Guess at reasonable prices.

In the initial phase of globalisation, Titan was positioned in the premium segment. But the going on this route was tough. Now, it is
targeting the younger consumer between 25 and 35 years of age, who is seeking distinctive fashion designs at affordable prices and for
whom the country of origin is not a major deterrent. The European and Far East markets have these characteristics.

As far as the range of product designs go, they are by and large based on the preferences of local consumers as they vary from market
to market. For instance, the Europeans like their watches to have large dials, which are white, silver or champagne-coloured.

They like their watches to have a white metal look. They prefer them to be made of steel with a hint of gold. On the other hand,
Indians like darker dials, leather straps or even a complete gold look. Hence, Titan has to create a sense of distinctiveness in the
product lines.

"In Europe, we have 400 designs which are exclusive to that market. In the Middle East, we have 400 designs with a 50 per cent
overlap with the Indian market. In India, we have 1,000 designs, of which only 10 per cent are sold in the international markets," says
Mr Bhat.

Titan’s jewellery arm Tanishq also owes about 7 per cent of its turnover to exports. However, so far it has been exporting non-branded
products. But it is expected to follow Titan’s footsteps in marketing the brand abroad. It has already successfully experimented in the
Middle East market on a small scale. Now plans to enlarge this exposure are on the anvil.

Titan to enter new overseas market; aims 20% topline rise

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. Titan Industries said Oct 18,2004 it would enter new countries to enlarge its export basket and aimed 20 per cent growth in sales
turnover in 2004 over Rs 960 crore last year, "We will enter new overseas markets like Latin America, Eastern Europe and the Far
East and we plan 20 per cent rise in our topline," Titan Industries Managing Director Bhaskar Bhat told.

The company will also spend Rs 15-20 crore to strengthen its distribution network by increasing the number of retail stores to 205
from 168 outlets now. The Rs 15-20 crore investment included Rs 3.5 crore for setting up a greenfield project in Himachal Pradesh.
Out of Rs 960 crore topline during 2003-04, the watch business contributed Rs 540 crore while the rest came from the Tata group
company's jewelley business.

At present, Titan has manufacturing units in Hosur (Karnataka), Ooty (Tamil Nadu) and Dehradun (Uttaranchal). The Himachal
Pradesh unit, which became operational recently, has manufacturing capacity of two million watches In the Rs 1,800 crore domestic
watch market, Titan's sales grew by 18 per cent while the industry logged a 6-7 per cent rise. Out of the Rs 1,800 crore Indian watch
market, Rs 1,200 crore is organised.

The Indian watch market grew at 6-7 per cent during 2003-04 after witnessing slumping sales during the year ago period. Bhat said
the sluggish growth was due to decline in the sales of HMT and stagnating sales of Timex, the nearest rival of Titan. Last year, Titan
had grabbed 18 per cent of the value of the watch market. Titan sells watches under two brand names 'Titan' and 'Sonata'.

The 'Titan' brand which had been priced at Rs 1,000 and above catered to the upper segment while 'Sonata', priced below Rs 1,000,
was grabing marketshare and expanding the market itself, he said. Titan has recently forayed into accessories like sunglasses under
'Fast Track' brand while it has signed an agreement with Tomy Hilfiger to sell the latter's watches at Titan stores.

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‘World of Titan’ showrooms range from 500-1500 sq ft in area. For today’s sophisticated, well-travelled Indian customer, watches are
moving towards an impulse buy, quite unlike a few years ago. The new look stores have seen a 10 to 50% increase in sales, after the
makeover.

To meet the challenges of an increasingly mature retail environment, Titan has created for itself a new retail identity through the
transformation of its stores’ look and feel. Here’s a walkthrough

The new retail identity was launched at Titan’s ‘World of Titan’ showroom at Colaba, Mumbai, which provided an ideal setting for
the launch, juxtaposing the heritage of Titan and of the building in which the ‘World of Titan’ is located, against the new retail world.

47
“Watch buying today has gone beyond a considered purchase decision to an impulse purchase. While launching watches for today’s
evolving consumer, we have recognised the need for a more fashionable and contemporary retail experience,” says Bijou Kurien, Vice
President – Sales and Marketing, Titan Industries. “But the exercise was not about designing a store. It was about focussing on a
brand and creating a platform to communicate its identity.”

The objective of the new retail identity is not just to attract the impulse buyer, but to also introduce an element of interactivity in the
retail outlet while projecting and reinforcing the identities of the Titan sub-brands. Incorporating all the elements of the new retail
identity, the Colaba showroom has been designed by Kiran Kapadia of Kapadia and Associates, Mumbai, with Bo Steiber of
Singapore as the lighting consultant. There is in place a roll out plan to implement Titan’s new retail identity across key showrooms in
other cities.

According to Kiran Kapadia, “It was a challenge to design the showroom at Colaba. In today’s cluttered retail environment, not only
did we have to create a store that would stand out, but also one that would showcase the values of the Titan brand. Titan has a strong
equity in the Indian market and the showroom had to reinforce it. At the same time, we had to give each sub-brand its space and
identity.

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Titan launches Edge, the slimmest watch in the universe
May 21, 2002

Bangalore: Heralding a historic achievement in the annals of the international watch industry, Titan Industries Limited May 21,2002
announced the launch of the Titan Edge, the slimmest commercially available watch in the universe. Produced indigenously after four
years of intensive research and development, the Titan Edge has a total slimness of just 3.5 mm and a wafer thin movement of 1.15
mm. The Titan Edge is a true technological marvel given the intricacies involved in producing a watch as slim, and is a result of close
collaboration between Titan’s Design Studio, the Production Department and the R&D team.

"The Titan Edge is a significant achievement and matter of pride not just for Titan but for every Indian as it reiterates our
technological strengths and expertise as a nation," said Bijou Kurien, Chief Operating Officer, Watches Division, Titan Industries
Limited. "With its combination of rare precision and elegant styling, the Titan Edge will leave an indelible mark in history," he added.

The challenges that faced the Titan design and production team in manufacturing a watch as slim as Titan Edge were tremendous
given that most watches average between 6mm and 10mm in thickness. It was in the 1980s that watch manufacturers around the world
began experimenting with slim watches and the first slim watches by international players created much excitement in the watch
industry. However, the watches could not sustain the momentum created by them owing to their poor water resistance and reliability.
Titan’s experiments with slim watches began with the design and manufacture of slim movements in the mid 1990s, culminating now
in the Titan Edge, a watch so slim there is no other like it commercially available.

"In making Titan Edge commercially available, we have dared to do what no other watch manufacturer has been able to do
worldwide," said B. G. Dwarkanath, Vice President, Horology, Titan Industries who spearheaded the team that designed the ultra slim
movement. "The challenge lay in crafting a movement that defied traditional manufacturing processes and techniques while retaining
the Titan hallmark of quality and reliability."

The Titan Edge is a fully jewelled quartz analog movement with water resistance of upto 30 metres, a feature unheard of in slim
watches. Some of the unique features of the Titan Edge include a state-of-the-art silicon chip that conserves power and doubles the life
of the battery, a specially designed step motor and an amazing tolerance of ± 3 microns in some movements (against usual tolerances
of ± 20 microns) which demonstrates the extreme and exacting precision of the watch.

49
The movement of the Titan Edge has been tested and certified by M/s Chronofiable SA, Switzerland, a world renowned independent
horological testing agency in Switzerland. The Titan Edge has also received a national award for excellence in the area of R&D in
electronics by the department of scientific and industrial research, government of India.

"Even in terms of design, the issues we faced were in designing the functional parts of the watch to fit into the slimness of the
movement," said Michael Foley, Head – Design Studio, Titan Industries. "From the wedge profile of the case to the finely etched
ceramic dials, the uniquely crafted skeletal hands, the elongated markings and the specially designed fine leather strap and buckle, the
Titan Edge speaks of elegance and sophistication with a defined slimness."

The Titan Edge currently comprises of 13 variants – eight in stainless steel and five in the plated version. Priced between Rs 4,495 and
Rs. 4995, the Titan Edge comes with a two- year comprehensive guarantee and will be available at all World of Titan showrooms and
premier outlets in the major metros.

The Titan Edge will be promoted by a television campaign and supported by striking red and black visual merchandise which will be
displayed at select stores.

The launch of the Titan Edge follows on the heels of other recent successful launches by Titan in the last couple of years. Prominent
among these were the Titan Steel, the Fastrack women’s range and Dash! watches for children.

Titan Industries Limited, a joint venture between the Tamil Nadu Industrial Development Corporation (TIDCO) and Tatas,
commenced operations in 1986 under the name Titan Watches Limited. Titan has now become India's leading producer of watches
with a domestic market share in excess of 50 per cent. In its 15 years of manufacturing, Titan has produced over 45 million watches
and is the sixth largest "manufacturer brand" in the world.

Titan is one of the largest integrated watch and jewellery manufacturers in the world and manufactures over 6.6 million watches and
1,50,000 pieces of jewellery annually. The company reported a turnover of Rs. 709 crore in 2000-01. Headquartered in Bangalore,
India, Titan has offices in London, Dubai and Singapore. Titan's products are available in 32 countries across the world.

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Fight for survival

Almost a decade after driving the State-owned watch maker, HMT, into the hinterland of the domestic market, Titan Industries,
producers of the eponymous brand of watches, has remained alert to the threat from foreign labels following the removal of
quantitative restrictions on the import of watches.

Has it held its own? Perhaps, as it controls over 50 per cent of the organised watch sector in the country. Even last year, the company
braved difficult conditions and posted impressive double-digit growth. The sales grew from 5.90 million to 6.68 million units, a nearly
15 per cent jump, resulting in a larger value share of the watch market that declined in terms of volume.

But the devil is in the details. The income from the watch division crawled from Rs 468.22 crore to Rs 487.48 crore last year, creeping
up four per cent, against the 10 per cent jump in the companys overall topline. In context, Titans fear about the expanding ambit of
global watch brands appears real. International labels such as Esprit, Swatch and Citizen, hitherto restricted to the premium end, have
entered the mid-priced segment, bracketed between Rs 1,200 and Rs 3,500, as they find it a tempting plank to garner volumes in the
local market. Titans market share in this segment, estimated in the region of three to four million units annually, is a whopping 75 per
cent. It is our bread and butter. Almost 65 per cent of the Titan brands value and nearly one-third of our entire watch business is
locked in this segment, says Bijou Kurien, Vice-President (Marketing), Titan Industries Ltd. The trouble is heightened as its old ally,
Timex, is making a spirited comeback, hitting hard at the mid-priced market.

The Indian watch market is estimated at 25 million units annually with 12 million falling in the organised sector, valued at
approximately Rs 1,000 crore. At present, Titan looks well-fortified, accounting for 60 per cent of the organised sales. HMT is its
closest competitor in numbers, selling around two million watches. But Timexs CEO, Kapil Kapoor, claims his brand has increased its
stake from 18 to 22 per cent in the last four months. Titan remains unperturbed. Says Kurien: Maintaining or growing market share
wont be a problem. The challenge lies in keeping our value share in the organised sector, which is approximately 60 per cent.

Till now, Titans average purchase value has had a comfortable lead over rival brands such as Timex and HMT. The average value of a
Titan watch sold is Rs 1,100, while that of Timex and HMT is Rs 700 and Rs 550 respectively, says Kurien. Interestingly, Timex
claims that its average purchase value has climbed steadily to Rs 1,050 from Rs 650 two years ago. There will be some upward
movement in the case of Timex mainly because of its shift in focus to the segment priced above Rs 1,000, adds Kurien.

51
Until last year, Timex in India was seen largely as a player in the mass market, where watches are priced below Rs 1,000, and
addressed to budget conscious buyers. The brand recently revamped its portfolio, aiming for a major push in the price bracket of Rs
1,000 to Rs 5,000. Two years ago, about 90 per cent of Timexs sales in India came from the mass market. Now, we sell 62 per cent of
our volumes below Rs 1,000, 35 per cent between Rs 1,000 to Rs 3,500 and three per cent above Rs 3,500. We expect volumes in the
Rs 1,000 to Rs 3,500 bracket to be the mainstay of our business in the years ahead, says Kapoor.

Titan's problems, analysts say, is partly due to its sway over the mid-priced segment for too long. Rivals now accuse Titan of keeping
the segment underdeveloped on account of its sheer dominance. As against an approximate 75 per cent market share in the mid-
segment, Titans market share in the mass market, through its Sonata brand, is only between 18 to 20 per cent. Its grip over the
premium end is weaker at about 10 per cent. The mid-segment sales, estimated at Rs 400 crore, accounts for 40 per cent of the
organised sector sales of Rs 1,000 crore annually. The premium end is valued at Rs 150 crore leaving the rest with the mass market.
There is no authentic data on the value of the unorganised sector, which is pegged between 16 and18 million units in numerical terms.
The value attached to this sector varies from Rs 300 to 500 crore.

The obvious significance of the mid-priced segment and Titans vulnerable hold on it is not lost on international brands. The price
bracket of Rs 1,500 to Rs 3,500 is exciting in volume terms. This segment itself has been underdeveloped due to lack of choice to the
customer and due to the relative monopoly of Titan in a closed market, says K. Chandy Jacob, Vice-President (Marketing), Citizen
Watches India Ltd. Since 1999, when the Government allowed full imports, the variety and range available in this segment has
increased dramatically. With more brands and more choice, the segment itself is growing. So to some extent while we are eating into
Titans share, the segment itself has great scope for expansion, adds Jacob.

Our main fight is against brands such as Timex, Citizen, Esprit, and Swatch. Tissots lowest range begins at Rs 3,700,says Kurien.
While Timex is reinventing itself in the segment priced above Rs 1,000, others have their base range starting at Rs 2,000. Among
these brands, only Timex and Citizen have a sizeable retail presence in the country. Citizen is officially present in 300 outlets. It is
present in Delhi, Mumbai, West Maharashtra, West Bengal and the southern States. The brand recently set up an exclusive shop in
Bangalore and is poised to open more in the coming year. Timex claims to be present in 5,000 odd retail points, which include 27
exclusive showrooms. The brand is poised for an aggressive expansion by foraying into non-traditional outlets and expects to add
another 300 retail points through this route before the current year ends.

Titan is geared up to face the challenges, says Kurien. The company had anticipated the unfolding scenario and made early moves in
differentiating the market through a second brand, Sonata, and segmented Titan brands equity in the mid-priced segment according to

52
customer categories. This shielded the brand from a single point attack, Kurien adds. The Titan brand umbrella includes sub-brands
such as Fastrack, Dash and Nebula and ranges such as Titan Steel, Raga, Regalia and Classique. Fastrack is targeted at the youth in the
age group of 15 to 25 years, while Dash caters to the childrens market. The recently launched Titan Steel is aimed at the trendy urban
youth in the 25 to 35 years age bracket. Titans Raga range boasts of silver watches targeted at working women. Most of these
differentiated offerings fall at different price levels within the mid-segment. Nebula, being pure gold watches, is priced above Rs
6,000.

Titan is also evaluating the potential to launch a brand priced at Rs 10,000 and above, which offers the ``consumers a set of values
distinct from Titan and competitive in that space, says Kurien, adding, We know that we cant fight global brands in image and stature.
So we are focused on fashion and style with international quality. Titan is also offering technological innovations on premium analog
watches, he adds.

The company hopes to build on its understanding of the local watch market and is now poised to provide a specialised shopping
experience based on customer segments. For instance, Titan is likely to open outlets specifically for youth and women. This is still in
the experimental stage and could take definite shape next year. Besides, Titan is in the midst of cementing its relationship with
customers through focused initiatives on the service front. It has started company-owned customer care centres apart from authorised
franchisee service points across the country.

Titan expects to keep global brands at bay by building on its already established strengths and a better understanding of the domestic
watch market. The multinationals, however, are hoping to tap consumers search for more options and lead an attack on Titans position
as the overwhelming leader in the organised sector.

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 Bibliography
This Project is referred from following out sources

Theoretical Aspects:-

Web site:-

 www.google.com
 www.yahoo.com
 www.titan.com
 www.citizen .com

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