TITAN INDUSTRIES LIMITED
TO THE SHAREHOLDERS
Ladies and Gentlemen,
It gives me great pleasure to welcome you to the tenth annual general meeting
of Titan Industries Limited.
Shareholders will have read the annual report and the recommendation of a
dividend of 25% with some satisfaction. In a situation where all other major
players posted losses, your company has turned in an extremely satisfactory
performance with proflts rising by 75% to Rs 19 crores. These results are
expected to be improved upon in the current year with respect to both tumover
(which is expected to be of the order of the Rs 350 crores) and profits.
Since the Directors' Report deals with the events of the past year in a full
and complete manner, transparency being a key feature of our corporate
management style, I will not cover this ground once again in my speech.
Rather, what I propose to do today, is to talk to you about some of the
challenges which face your Company and the manner in which it is proposed to
respond to them.
To begin with, however, a few comments on the salient features of the current
business environment will not be out of place. With three years of the
structural adjustment programme behind us now, the Indian economy seems to be
at last getting poised for rapid growth. Production volumes are on the rise,
demand in general is firming up and the focus on productivity is getting
sharper. In these times of transition, it is essential for Companies to
nurture specific competencies with care and foresight. Let me try and relate
these general points to the speciflc situation of vour Company.
There are three main challenges which I shall be speaking about: the
challenges posed by the country's economic liberalization process: the
Company's scheduled entry into the European and North American markets; and
the need for all those associated with the Company in one way or the other to
work as a closely knit and disciplined force as it commences a new phase of
We have been told that, in another year or two, the present quantitative
restrictions on the import of consumer goods, including watches, will be
lifted. Import duties have already come down and are expected to come down
further. These developments will significantly alter the competitive
environment in which your Company funcffons. The Indian market will witness a
host of new products and new brands. The Indian consumer will have new and
However, your company does not view this scenario with trepidation. Instead
it looks forward to new and exciting times ahead. We believe that the entry
of foreign brands will, in fact, have the effect of expanding the market for
watches. Watch sales in India are still well below sales in comparable countries of the world, when expressed in terms of number of watches sold per
thousand of the population. So also with the total population of watches and
the number of people in India who possess watches. Thus, while we will
probably see Titan's market share decline, volumes and revenues should
continue to rise.
In order to make sure that the Company fares well in the new competitive
environment, your management is taking a number of steps including creating
new capacities or establishing new capabilities where we en,loy a cost
advantage, extending the product portfolio, increasing the price spread of
our product range, further improving product reliability, bringing down
production costs, consolidating the distribution system, strengthening the
retail chain, upgrading customer service, widening and deepening the brand's
equity, streamlining operations generally, increasing intemational networking
and entering a number of high synergy product categories including jewellery,
,jewellery watches and omamental table clocks. The company also proposes to
enter into a number of strategic alliances with certain leading intemational
brands, and is also looking at the prospects of a global strategic alliance
with its erstwhile technical collaborators, France Ebauches.
Your Company's entry into the world market is both an integral part of its
domestic defensive strategy and a part of a global offensive strategy. Your
Company's products have fared very satisfactorily in the four Middle Eastern
markets in which it has been present for the past several years: the UAE,
Oman, Bahrain and Qatar. This year, operations will be extended to the
important Saudi Arabian market, to Kuwait and to other West Asian markets, as
also a number of African countries, including, most importantly, South
Africa. An office will shortly be opened by Titan Intemational Marketing Ltd
(UK) in Dubai's Jebel Ali Free Trade Zone.
However, the crucially important market development activity is going to be
that of opening up Europe and the USA. Work is in full swing for the European
launch of watches and jewellery- scheduled for the first auarter of 1995.
International Marketing exhibited your Company's products and unveiled its
future plans at the European Watch, Clock and Jewellery Fair in Basle,
Swltzerland, in April. This Fair is the Mecca of the world's watch, clock
and ewellery industry and Titan International's plans and products evoked
very keen interest.
We are also fortunate to have as our partner in tlle European venture, Mr.
.Jacques Meyeri one of the most eminent personalities on the European watch,
clock and.jewellery scene. Mr. Meyer is now a senior vice president of your
company and a director on the board of Titan International. He also heads
Titan's Paris office which has a crucial role to play in product design and
development and in tapping the private label market, especially for
An extremely attractive range of Jewellery and a new range of very high
quality watches have been painstakingly created for the European market which
wlll make their debut in India towards the end of 1994. Arrangements are
currently being made for distribution in Western Europe and a pan-European
advertising agency headquartered in London is being appointed to handle
Titan's multimillion dollar advertising campaign. Titan wlll probably be the
flrst major Indian brand to be launched in Europe. Initial predictions point
to early success.
To flnance Titan's world wide launch, your company has applied to the
Government of India for permission to remit upto US $ 5,000,000 to its
Netherlands subsidiary, Titan International Holdings BV. We hope that this
permission will be accorded to us ven shortly.
While your Company plans its overseas expansion, it is alsu seeking to act in
concert with the Government of India to ensure that its domestic base is not
eroded through the machinations of smugglers, blackmarketeers and other anti-
national and anti-social elements. We believe that anywhere between ten and
twenty million watches or watch movements are smuggled into the country each
year. A study recently prepared for the Swiss Embassy in New Delhi puts the
flgure at twenty million. This is twice the amount that is domestically and
legitimately produced. Poor customs controls and a frequent lack of sense of
purpose in the various regulatory authorities contribute to the vast
magnitude of smuggled watches in India. Such smuggling not only leads to a
huge loss of Govemment revenue but also hits at the roots of economic
efflciency. Your Company is in the process of making certain suggestions to
the Government of India for dealing with the menace of smuggling and it is to
be hoped that these suggestions will be seriously received and faithfully
implemented. Indeed, in our experience of regulatory agencies so far, we flnd
that an enormous amount of ffme and energy is spent in straining at law-
abiding gnats while'swallowing herds of lawless camels. It is imperative that
the crack-down on watch smuggling precedes the lifting of import controls on
watches since legitimacy is often used as a front for a large scale illegal
operation backing it.
Counterfeiting of brands and "country-of-origin" claims are also areas of
concern. It is imperative that these two evlls are dealt wlth on a war
footlng and that the country effectively administers a set of rules governing
"country-of-origin" claims on the product and in advertising. The world is
witnessing an internationalization of the manufacturing process such that
countn, of origin claims are often misleading and used more as a label than
to inform the consumer. For instance,,there are Swiss watch brands where the
ownership is Hongkong Chinese, the movement is Japanese, the case and
bracelet is Chinese and the dial is Taiwanese. Similarly, many Japanese
watches are, in fact, assembled outside of Japan, with many of the parts made
in countries of East and South-East Asia. It is absolutely essential,
therefore, that for a watch to be permitted to carry a country-of-origin
label, some clear criteria should be strictly enforced. For example, the
movement and the watch must both be assembled in that country and at least
50% of value addition should have taken place in that country. If these
conditions are not satisfled, the brand in question must be debarred from
carrying country-of-origin markings or making country claims in its
advertising in the interests of a level commercial playing fleld.
As we organize ourselves to combat external threats, we need to be more
vigilant than ever before to the threats from within. Of paramount importance
is discipline and commitment to agreed corporate goals on the part of
individuals and organizations associated with us. We saw some lack of that in
the month of June when, for the flrst time, we wltnessed industrial action at
Hosur. We dealt with it fairly and firmly and I believe that it is now widely
recognised among the workforce that the industrial action to which they
resorted was unwise and potentially damaging. We have ayoung, talented and
spirited workforce at Hosur and at Dehradun and, indeed, all over the country, whose welfare and well- being is close to our hearts as already
demonstrated in everything that we have done to date - from recruitment, to
training, to remunerating and to taking care of the many needs of each
individual at the workplace or outside it. We expect this workforce to show
its appreciation of our continuing concern for their personal good by
dedicating and committing themselves unstintingly and single-mindedly to the
corporate objective of making Titan one of the
world's most outstanding producers and
marketers of watches and jewellery, and of
ensuring that Titan is a widely known and highly respected name not only in
India but worldwide as well.
I trust that such cooperation will always be forthcoming and enable us to
achieve the seemingly impossible, and that such cooperation will be
forthcoming not only from all those who work in the company but also from all
those with whom the Company deals in the course of business - those from whom
we buy, those to whom we sell, the flnancial community, the press,
govemmental agencies - each and every person and organization that has some
stake in the Company today.
I am sure that all shareholders will join me and the other Directors of your
Company in congratulating the management and the employees for the
magniflcent achievements of the year and wishing them well in charting new
courses for this now famous organization.
I would also like to take this opportunity to record the excellent support
received from the Government of India, the Government of Tamilnadu ana its
various agencies, flnancial institutions, banks and numerous business
associates in India and abroad, and we are indeed grateful to all of them.
Before I conclude, I would like to say a few words about that truly great man
Mr JRD Tata . Perhaps not all shareholders are aware that Mr Tata had taken a
very keen interest in the creation of Titan Industries, thenTitanWatches, and
that, though he had handed over the reins of power to Ratan Tata for most of
the period that your Company has been in existence, he continued to take keen
interest in its activities, providing insight, guidance and very strong
support. His departure from the scene is a loss to the country and the world,
and is a loss most keenly felt by Titan Industries. The most fltting tribute
that we as a Company can pay to him is to dedicate ourselves totally to the
values and goals which he so cherished and practised and propogated in his
lifetime. Let us so dedicate ourselves now and in doing so remember what he
once said of Titan: "Titan Watches is not only in the Tata tradition, it is
in the forefront of that tradition: in the beauty and elegance of its plants,
in the spirit of its people, in the perfection and quality of its products.
I am very proud of it and grateful for its contribution to the Tata Story."
Ladies and Gentlemen, it is for us to make sure that those words of Mr JRD
Tata are forever true.
A L Mudaliar
Hosur, 26 July 1994