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Timex in India

            
 
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Case Details:

Case Code : BSTR053
Case Length : 13 Pages
Period : 1990 - 2003
Organization : TATA Timex Corp
Pub Date : 2003
Teaching Note :Not Available
Countries : India
Industry : Watches

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"Imagine people walking into a Titan showroom, asking for Timex and being told that the brand was not being sold any longer. The 'Timex has wound up' factor was crippling. We had to rebuild the image from scratch."

- Pratap P, Marketing Manager, Timex Watches, in August 2000.

Introduction

In March 1998, Timex Corporation (Timex Corp.), the US-based watch manufacturer and Titan Industries Ltd. (Titan),1 leading Indian watch manufacturer, announced the break-up of their joint venture (JV), Timex Watches Ltd (Timex). Considering the fact that during the JV's six-year life span, Timex had built up sizeable brand equity in the Indian watch industry, the break-up attracted significant media attention.

However, the development did not come as a surprise to industry observers, as the JV had not been functioning smoothly since 1996. Analysts remarked that by breaking up with Titan, Timex stood to lose a lot. The partnership with Titan had provided Timex access to over 5,000 retail outlets, 2,500 showrooms, 220 direct dealers, 100 multi-brand outlets and 20 exclusive showrooms. It was felt that with the dissolution of the JV, Timex would not have a distribution network to market even 25% of its output. Since Timex operated primarily in the lower segment of the market (below Rs2 1,000), the absence of a strong distribution network would make it difficult for the company to compete with established players such as HMT and Titan and players in the unorganized sector in this segment.

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Analysts remarked that Timex would have to set up its independent distribution network in the country from scratch. Since this would in all probability take a considerable amount of time, Timex risked losing market share to competitors. Much to Timex's relief, as per the agreement between the two companies, it was allowed to continue using Titan's distribution and marketing network for the next two years.

Thus, Timex had this much time to set up its own independent network. In February 2000, the JV ended formally, when Timex Watches BV (Timex Watches, a Netherlands-based division of Timex Corporation) bought a combined 28.78% stake of Titan and other Tata group companies in Timex for Rs 336.8 million. Following this, Timex became a 58.46% subsidiary of Timex Corporation Timex was now completely on its own in the Indian watch industry. Though the company had reportedly built up an impressive distribution network by 2000, the past two years had been tough for the company. Not only did the company lose those customers who had been looking for Timex watches at Titan showrooms, the Timex brand equity too suffered a great deal. Given these circumstances, analysts felt that Timex would find it difficult to regain its earlier stature.

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1] Titan Watches Limited was promoted jointly by Questar Investments Limited (a Tata group company) and Tamil Nadu Industrial Development Corporation Limited (TIDCO). Refer Exhibit I for details.

2] In April 2003, Rs 48 equaled 1 US $.

 

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