The Watch Industry

The total demand for watches in India is estimated to be about 25 million pieces every year (NCAER study) out of which the organized sector supplies around 11 million . The demand potential for watches in India is quite high. Approximately 25 watches per 1,000 persons are sold in India annually as against 63 watches and 725 watches per 1,000 persons (international average 157 watches) sold in china and the US respectively.

The business dynamics in the Watch industry has changed completely after the government has allowed their import of fully assembled watches into India (Exim policy 2000). Now the three major Indian players – Titan , Timex, and HMT (other players include Indo French Time Industries, Bifora, Amar watches, Sakura Seimitsu, Indo Swiss Time Industries, Sikkim, Time Corporations, Bentex) have to compete with a member of international giants. From a humble beginning in the 1950s when the only choice was an HMT (and unreliable stuff from your friendly neighborhood smuggler) the scene has changed today to one where the market is flooded with models from both India and abroad, all vying forth customer’ attention. Thanks to this kind of cut throat competitive scenario, the wrist watch has become a fashion accessory a reflection of one’s status and personality.

The market:

The industry is growing at a comfortable pace and a large part of the sales (over 80 percent) is accounted for quartz and analog watches. Mechanical or hand wound watches, which are increasingly out of favor in urban areas still cater to 15% of the overall market, Digital watches (which display the time in numbers instead of the traditional hands of the analog watches) make up the rest of the demand.

Within the industry most of the players have positioned their products along three price segments. At the lower end, in the Rs 100-300 price range, Chinese watches have flooded the market. Titan has positioned itself firmly in the below Rs 1000 segment. In the mid range Rs 1000-5000 Japanese brands such as Citizen and the lower end Swiss brands such as Swatch, Esprit, and others have a presence . In the premium segment above Rs 10,000 price bracket top notch brands such a s Omega, Longines, C Klein, and Rado are slowly establishing their presence. The mid price segment is witnessing lot of action these days, as most players have recognized the importance of serving the aspiration levels of the growing number of urban and semi-urban middle class families in India, both Titan and Timex are focusing attention on this segment and coming out with lot of models targeting the young executives, students and techno savvy consumers.

The players:

HMT: One of early entrants into the watch industry (Hindustan Machine Tools) HMT watches started its operations in Bangalore in 1961, specializing in men’s hand wound watches . Today, HMT is one of the few companies in the world with the ability to produce both mechanical and quartz watches (four units with an installed capacity of 7 million watches per annum). Being a public sector unit, HMT has not been able to improve bad image . Unable to run the race along with private sectors players , HMT has only accumulated losses (HMT watches and HMT Chinar watches accumulated losses of Rs 400 crore) and is now an attractive disinvestment candidate. Unable to pay even salaries to its staff ( 3200 workers) it has sold its property for Rs 1.20 crore recently (annual turnover Rs 139 crore in 2001-02).

Titan: The biggest player today is Titan, which has a market share of more than 50 per cent. The Rs 786 crore Tata Group company commenced operations in 1986 as a joint venture between the group and the Tamil Nadu Industrial Development Corporation (Tidco)

Source: Strategic Management