The Tata group is planning to sell its entire 28.5 per cent stake in Timex Watches Ltd to the US-based promoter Timex Inc, according to top Tata group officials.
Negotiations are currently on between the Tatas and US-based Timex to determine the price at which the Tata's stake would be sold.
When contacted in New Delhi, V P Wadhwa, company secretary of Timex Watches Ltd said negotiations are on between the two promoters but nothing had been decided.
Wadhwa, however, refused to elaborate any further, stating merely that an announcement would be made when the deal has been concluded. Xerxes Desai, the managing director of Titan Industries could not reached for his comments as he was away in London.
Titan Industries _a joint venture between the Tata group and Tidco _ and Timex Inc USA formed Timex Watches Ltd in 1992 to focus on the lower end of the market. Both the promoters together have a holding of 58.43 per cent with the rest with the Indian public. The Tata holding is held by Titan Industries. The gameplan was that Titan would focus on the price range of Rs 1000 and above, while Timex would concentrate on watches below Rs 1,000.
However, with Titan diversifying into the lower end of watches with its Exacta and Spectra ranges, and Titan's reach not helping Timex to penetrate the rural sector, both parties decided in principle last December to separate amicably.
The company is planning to sell its large inventory of around 200,000 watches by opening retail outlets called "outposts at the outskirts of major cities in the country.
Timex watches has shown a marginal dip in volumes for the current year. In 1997-98, the company's sales volume was 1.7 million units as compared to 1.8 million units in 1996-97.
While its annual results for the year are yet to be announced, the Timex Watches has already shown better performance in the first half of 1997-98. Sales grew in the first half at 5 per cent over the previous corresponding period. Net profit for the half year was Rs 30 lakh against a loss Rs 3.96 crore in September 1996.
"With the parent now directly involved, it will benefit tremendously from the managerial and financial support, " says an analyst at a foreign brokerage house.
Titan's performance too has improved in the first half of the year with turnover rising 7.5 per cent to Rs 184.52 crore. Operating profit rising from Rs 43.15 crore to Rs 44.80 crore while net profit rose from Rs 6.43 crore to Rs 6.61 crore.
