A PROJECT REPORT ON FINANCIAL STUDY ON WRIST WATCHES

WITH REFERENCE TO TITAN WATCHES

A Project Submitted in partial fulfillment of the requirement for the award of the degree of MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY: AMIT KUMAR SINGH REG. NO. - CUJ/1/2012/MBA/45 SEMESTER- VII

CENTER FOR BUSINESS ADMINISTRATION CENTRAL UNIVERSITY OF JHARKHAND BRAMBE, RANCHI - 835205

ACKNOWLEDGEMENT

Firstly I would like to thanks (faculty of management) for giving me permission to do training.

I would like to acknowledge my sincere felt thank to Mr. Nishant Sharma ( Manager ) for allowing me to undergo job training .

I am highly obliged to Mr. Sunil (Accountant) for extending necessary help during the training.

I also thank to one & all members of Fogla Durables family for their affection & cooperation during my training period here.

DECLARATION CERTIFICATE

I, hereby declare that the project entitled FOGLA DURABLES PVT. LTD. submitted by me in partial fulfillment of degree in Integrated Business Administration, Central University of Jharkhand, is my own. This work has not been submitted to any other university nor has been published ever before.

I would like to declare that the information provided in the project report is authentic to best of my knowledge, as it has been obtained entirely by me and verified by the concerned authority.

DATE:

AMIT KUMAR SINGH REG. NO. - CUJ/1/2012/MBA/45 SEMESTER- VII

Place: Brambe, Ranchi Central University of Jharkhand

CONTENTS
S.NO. TOPICS PAGE NO.

1.

2. 3. 4.

Introduction of the Study a. Industry Profile b. Watch Industry c. Elements of Industry Structure d. Titan Industries Limited Product Profile Objectives of The Study Research Methodology

5-12

13-16 17 18

5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

The Tata Business Excellence Model(TBEM) Future strategy Company Profile Achievements Limitation of The Study Trading and Profit & loss Account Balance Sheet Profitability Ratios Granting of loan Conclusion Bibliography

19-22 23-25 26 27 27 28 29 30 31 32 33

INTRODUCTION
Industry Profile History
Time, the Fourth Dimension proudly influences all aspects of life. People are Constantly aware of the passing of time in their daily activities. Without the ability to synchronize comings and goings at school and work, complex societies would simply be unable to function. Until a few hundred years go there was no way to tell time more accurately than the nearest hour. The introduction of accurate timepieces played a major part in the development of modern civilization.

Watches and clocks are the most common devices for measuring time. The first portable timekeeper, the watch was developed shortly after 1500. With recent advances in automation and electronics, modern watches and clocks have become less expensive and more accurate.

Watches were developed rather than clocks. The first portable timekeeper or watch was produced during the Renaissance. Earlier there were mechanical watches. Although mechanical watches are still manufactured in large quantities, they are increasingly being supplanted by electronic and electrical time keeper. These newer devises are cheaper easier to manufacture, and considerably more accurate. Introduced in 1953, the funning fork watch was the first commercially successful electronic watch. Instead of a mechanical, it had a battery-driven funning fork.

THE WATCH INDUSTRY

The story of the watch in India goes back a long way to 1957. Pundit Jawaharlal Nehru, during his visit to Japan, received a watch as a gift inspiring him to bring watches closer home in his country. This dream became a reality in 1961 when the first watch factory was commissioned in India by Nehru in 1961. This was the watch division of HMT Ltd. Citizen, the popular Japanese manufacturer, evinced interest to train select Indian people at their watch manufacturing plant in Japan. The year 1962 saw the manufacture of the first component and then began the slow but steady growth of watch manufacture in the country. The first watch model manufactured by HMT was the Ajanta model, which exists even today, was gifted by Pundit Nehru to the senior most employee of the company. The next 10 years saw the Indian-made watches carve a niche for themselves in the market. 15000 to 20000 mechanical watches were made every month. Smuggling was on a rise during the 1970s and the 80s period. The counter this the watch manufacturing activities were beefed up. An assembly plant was set up and the concept of a mother plant with other units in various states was pioneered. The early 80s were a period of technological revolution with drastic changes in tastes and preferences. The integrated chip was invented in the US and digitals were in demand and LED watches flooded the market. Japanese companies took over the manufacturing of LCD for digital watches. Quartz technology had picked up and there was a shift in focus from mechanical to quartz watches. 1987 saw the establishment of Titan watches, which was formed by the Tatas and TIDCO (Tamil Nadu Industrial Development Corporation). The Tatas took two decisions - that they will manufacture only quartz (analog and digital) and not mechanicals, and they would set up a state of the art plant to manufacture watches in a wide variety of designs and prices.

Today the Indian market requirement for watches is well over 20 million watches per year. Majority of the demand is generated by the sub-Rs.1000 segment. Liberalization has brought with it a host of brands for the Indian market, viz. Piguet, Cartier, Christian Dior, Omega, Raymond Weil, Rolex and Tissot. Indian companies are now among the few set-ups in the world those are capable of manufacturing and integrating all parts of a watch. The industry growth rate is close to 8%. With the penetration level of 20 pieces per 1000, the Indian market presents an ocean of opportunity and potential for watchmakers. The new exim policy announced on 31st March 1999 removed all quantitative restrictions on the import of fully assembled watches - a
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full three years ahead of commitment made to the WTO. This will lead to significant upheavals in the watch industry and the trade. Most affected will be the watch makers with significant idle capacity, small or weak brands and host of component suppliers to them. Least affected will be the players whose sales exceed manufacturing capacity and who have both strong brands and strong distribution.

Elements of Industry Structure

Let us analyze the industry structure in the 1980s when Tatas decided to make a foray in the watch market. We use Michael Porters 5 forces model to carry out the industry analysis.

Industry Structure:
The industry consisted of the organized segment which was dominated by HMT, and the unorganized segment consisting of small time local players and the gray market. HMT, the timekeepers to the nation, manufactured only mechanical watches. The HMT watches fulfilled only the functional needs of a watch. Small time players lacked the nation wide reach that HMT had. They also did not have reliable support network. The gray market was flooded with quartz and digital watches from Japan. Though the gray market did not have the support network their sturdy performance and their looks made the Japanese watches very attractive purchases.

Buyers:
The penetration of watches within India was low, therefore there was a huge untapped market. The buyers wanted watches that offered more than just the functional benefit. There was also a latent demand for quartz analog and digitals watches that HMT was unable to fulfill as it manufactured only mechanical watches. The brisk sales of imported watches in the gray market hinted that there was a segment of people who were willing to pay a premium for watches with good design and performance.

Suppliers:
HMT had fully integrated operation for mechanical watches. There was no concept of having vendors in the watch industry. Since the suppliers role in this industry was very limited they did not have strong bargaining power.

Substitutes:
The quartz technology had become popular all over the world. Quartz watches from Japan had already beaten the Swiss in their own game in the sixties and the seventies. The Swiss had to embrace the new quartz technology and they had suffered because of their adherence to mechanical watches. HMT was making the same mistake in India. Since the imports were not freely permitted, there was no immediate possibility of some company entering into the watch market by assembling imported parts (assembly of completely knocked down kits).

New entrants:
The demand for watches in the gray market indicated that there was space in the market for a new entrant who would provide watches with good design and reliable performance. The new entrant could score over HMT with good design, over the gray market by providing dependable after sales service, and over the local players by establishing nationwide distribution network.

TITAN INDUSTRIES LIMITED

The Origin
The industry structure prevalent in the 1980s provided a golden opportunity for the Tatas who were one of the most respected names in the Indian industry. They not only had the financial muscle to enter the watch business but also had the feel of India as a market. This led to the birth of Titan Industries Ltd. in 1984. From its inception, Titan decided that it would be the shaper of the watch industry and not an adapter. They created competitive advantage through differentiation. They first concentrated on technological leadership. The Tatas took 2 decisions they will manufacture only quartz (analog and digital) and not mechanicals, and they would set up state-of-the-art plant to manufacture watches in a wide variety of designs and prices. HMT and local players had always looked at the functional utility of the watch. Titan was first in India to introduce the style concept. They projected the watch as a fashion accessory. They clearly identified that their main competitor was not HMT, but the gray market. A firm differentiates itself from its competitors if it can be unique at something that is valuable to the buyer beyond simply offering low price. Differentiation allows a firm to command a premium price, to sell more of its products at the same price, or to gain equivalent benefits such as greater buyer loyalty. Differentiation leads to a superior performance if the price premium achieved exceeds any added costs of being unique. At Titan the products were developed in such a way so as to enhance quality and features to increase buyer value. This was the perfect example of differentiation through technological leadership and product technological change. In the initial years Titan chose to concentrate on the higher end of the market which was responsive to the style element of the watch. Also this segment of the market was relatively price inelastic. This was done so as to build the brand image of Titan as manufacturer of good quality stylish watches. Over the years the Titan brand and its signature tune Mozarts Fifth Symphony has become one of the most recognized in Indian consumer durable goods segment. 1990s was the liberalization of the Indian economy. There were two trends in the watch industry after liberalization, viz. the giant of the watch industry changed from HMT to Titan, and small manufacturers have gained strength in the market. Why did this happen? Mainly because times changed, but HMT did not. In fact when the other rivals were running a 100 meters, HMT was walking backwards. HMT lacked a clear market strategy or research. It failed to develop a good
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network of loyal and honest dealers. There was rampant corruption in marketing division. HMT also failed to provide a basic feature that any products must always satisfy: quality. In fact of all the watches that HMT sold in the market, 40% came back within 2 months for repairs. About 7% of the watches were rejected at the dealers level because of the manufacturing defects. Being a public sector undertaking, HMT had to dance to the tunes of the political bosses. It was overstaffed and grossly inefficient with 60% of the sales being expended as salaries. Last but not the least, though HMT had about 45% market share in the early 1990s, its share in the high margin high growth quartz segment was a mere 18%. This led to a sudden and drastic decrease in HMTs total market share in mid-90s. During this period, the unorganized sector also grew very fast almost 55% of the demand in the total market size of 20 million watches was being met by the unorganized sector. With the import duty reduced to 25% (earlier 50%) and with the import license for watch movement being easy to obtain, many smalltime players cropped up. These small players offered competition to Titan on the price front. Titan once again showed that it was a shaper and not adapter. Over the years Titan had built a formidable distribution and support network. Titans customer orientation was reflected through their advertising campaigns. Whereas HMT called themselves timekeepers of the nation, Titan told masses if you have the inclination, we have the time.

Typical sources of differentiation in the value chain

Earlier Titan created an advantage through its design and styling. Now it created an advantage through the last two elements of the value chain, i.e. Marketing and service. The Titan brand was well established. This was coupled with a chain of retail stores, which showcased the range of Titan watches and also provided with support and service. TIL and Timex Watches BV entered into a joint venture on November 6, 1990. Titan tied up with Timex to create a presence in the lower end segment of the watch market. Timex provided the know-how in the plastic watch manufacture and Titan provided is retail and distribution strength. Timex was positioned as a separate youthful brand. This served two purposes, Titan protected its image as the premium watch manufacturer and at the same time created a presence in the lower end of the market via the Timex venture. Also Titan had always strived to keep its costs in control. Right since its
11

inception Titan had implemented World Class Manufacturing which helped to keep costs under control. The major thrust areas under WCM were: Just in Time Manufacturing, Total productive Maintenance, Total Quality Control, Total Employee Involvement, and

Housekeeping. Though WCM meant lower costs, Titan always differentiated itself through other elements of the value chain viz. design, marketing and support. This meant more buyer value and at the same time more profitability for Titan due to cost controls.

THE PROGRESS CONTINUES...

Titans business model resembles the one created by the Swiss watchmaker, SMH. Its essence is the product pyramid: a portfolio of products spanning 3 distinct price-bands that can be defined, in general, as Popular, Mid, and Premium. At the bottom, the emphasis is on volumes-not margins. At the top, the emphasis is on profits and image-not volumes. Obviously, profits are concentrated at the top of the pyramid, but the base acts as both an entry-barrier and a caretaker of the companys fixed costs. This pyramid guides the present strategy of TIL. TIL was first focused only on the premium segment of the watch market. As per the above-mentioned strategy TIL is moving into the mass market for watches. To broaden the mass base, TIL is creating new segments and increasingly focusing on segments individually. In the past few years TIL has launched at a number of initiatives focused on specific segments.

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PRODUCT PROFILE
In the last few years Titan has begun to face a competition from HMT and other players in terms of launch of newer elegant models. Titan, who pioneered the concept of repositioning watches as up market lifestyle articles, now faces stiff competition from domestic as well as foreign watchmakers. It has moved from strength to strength and has zeroed on using focus as a source of competitive advantage. Increasing focus necessitates paying minute attention to the market requirements. Titan has segmented the watch market and clearly identified clearly the needs of each group. The strategy that Titan has adopted in recent years is that of focus. It has segmented the market into different need groups and tailored its strategy to the exclusion of others. By optimizing its strategy for the target segments, it seeks to achieve a competitive advantage in its target segments. Market segmentation is concerned with identifying differences in the buyer behavior, allowing a firm to match its capabilities with distinctive products and related marketing programs. Market segmentation tends to focus on the marketing activities in the value chain in which Titan commands a very formidable position. This also allows Titan to find out how it should serve each segment.

Titan has tried to achieve a balance of cost focus and differentiation focus. By this we mean that in the lower end (Popular segment) of the market, it seeks to achieve a cost advantage by exploiting the differences in cost behavior. In the mid-and higher-end (Mid and Premium segment) of the market, it seeks differentiation by providing better designs. To achieve this Titan has segmented the market and launched a brand or a sub brand to meet the needs of each segment. Thus it aims to be a market leader in each niche it aims to serve. The various brands of Titan and the price range in which they fall are tabulated which follows: No. of Models (Rs) Insignia Gents Insignia Ladies PSI2000 Gents PSI2000 Ladies Regalia Gents Regalia Ladies Royale Gents Royale Ladies Brand Price Range 3750 to 7750 1600 to 7500 1780 to 7500 800 to 4350 1820 to 7790 1725 to 7770 960 to 2810 1120 to 2830
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Classique Gents Classique Ladies Spectra Gents Spectra Ladies Exacta Gents Exacta Ladies FasTrack Gents FasTrack Ladies Technology Raga Ladies Nebula Gents Nebula Ladies Bandhan Sonata Gents Sonata Ladies Sonata Pair Dash Boys Dash Girls

850 to 2450 565 to 2930 1140 to 1830 650 to 1410 600 to 1170 595 to 800 550 to 1430 850 to 1050 2350 to 8170 1420 to 4000 8950 to13500 5950 to 6950 1675 to 8085 295 to 1195 350 to 1100 1495 to 2000 295 to 395 250 to 350

Titan has developed a range of brands that encompass the entire spectrum of the watch market. Each of the brands is targeted to satisfy the needs of a particular segment of the market. Some of the major brands and the brand strategies are given below: Sonata Mr. Xerxes Desai, CEO, realized 3 years ago that the size of the market Titan had chosen to play in (3 million units per annum), its relatively slow pace of growth (10 percent per annum), and the customers resistance at those higher price-points in the watch market would choke off Titans future. That is when he decided to chase volumes rather than margins. The launch of the Sonata range can be attributed to Desais desire to stick to the pyramid. The subbrand Sonata was spun off as a separate division, and today Sonata is Indias second largest selling brand, after Titan. FasTrack FasTrack was an attempt to target the urban youth segment with an appropriate line of products. After the initial success of the metal collection, FasTrack offers a variety of fashionable trendy watches at affordable prices. The FasTrack range has grown by almost 100 per cent in volume terms and is easily the largest youth brand in the country. Titan has now made a foray into the digital watch market with FasTrack Digital. The decision to enter this segment was inspired by the resurgence of digital watches internationally and the need to revitalize a
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dormant segment of the Indian watch market. It also extends the width of Titans offer to the fashion conscious youth of India. Breaking away from the traditional, functional platform, Titan has positioned the FasTrack Digital collection on a fashion platform. Dash! The childrens watch brand, Dash! launched by Titan a year and a half back, has garnered volumes of 2.5 lakh units since then. The company has said that the brand is well on its way to achieving the one million target in three years. Dash!, targeted at the age group of 6 and 14 years, is priced in the range of Rs 250 and Rs 395. Dash! competes with Gimmis from Times in this category. the company says that Dash! has done exceptionally well since its launch, growing in volumes every month, both in like-to-like stores as well as a consequence of the extension of distribution from the 8-city launch to full national distribution.

BEYOND WATCHES:
Titan decided that it did not want to remain only in watch segment. It wanted to extend the brand umbrellas to the hitherto untapped market segments, viz. branded jewelry, jewelry, watches, and clocks. This led to the following initiatives. Tanishq Tanishq was stared as a premium watch and jewelry brand. But it failed to be profitable for a long time. It is now being repositioned as a pure jewelry brand. Tanishq is a four-year-old brand, available through around 25 exclusive boutiques in India. Starting our with contemporary designs, Tanishq now has a very comprehensive, traditional 22-carat jewelry line that compares well with any traditional Indian jeweler. Tanishq is reaching out to the mass market by shedding its premium high-end image to become the largest jeweler in the country by 2001. In a bid to extend its reach, Tanishq has introduced a large variety of styles, price points and applications. Its jewelry ranges from Rs 800 upward. It has also, for the first time, ties up with Countrywide Finance for providing preapproved credit line are selective outlets. Plans are now on to increase the number of outlets to around 50 by the end of the year. Titan plans to spin off Tanishq as a separate entity, as the jewelry business does get well with the proposed mass-market orientation of the company. Now the high priced watches will be marketed under sub-brand Nebula. Tanishq will remain in the premium readymade jewelry segment. Synchrony - Titans strategy is focused on segmenting the Rs. 500-Rs. 2,000 clock and time-piece market, based on price, lifestyle and customer by introducing exclusive collection in each category. Titan feels that well crafted timepieces would be in demand in corporate and as gift items. With Sychrony, the focus would be on style and
15

design attributes rather than the functional aspects of a clock. In addition to this, Titan has created a 115-strong network of watch-stores named Time Zone, with the aim of capturing value at the retailing end of the value chain. Thus, these stores sell not only Titan brand, but also HMT, Benetex, Dsigner, Raymond Weil, Citizen, Timex, Casio and Espirit brands.Titan also recognized the e-commerce revolution that is taking place. It has started selling its watches through its website www.titanworld.com. Its entire product range catalog with model numbers, photographs and price is available on the Internet. The watches are home delivered and payment can be made by cheque. The delivery is made on realization of the cheque. Credit cards are accepted but presently the credit card information transfer is not secured. Titan is working to enable a secured transaction processing and this will be enabled shortly.

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Objectives of the study

To prepare the trading, profit and loss account of the business to ascertain the gross profit and net profit for the period. To prepare the Balance sheet of the business to ascertain the financial position.

To assess the profitability on the basis of profitability ratios. To suggest whether bank manager should grant further loan.

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RESEARCH METHODOLOGY
Research Methodology
Research methodology is the backbone of the project work. It means the way one researcher selects his sample and sample size, methods of data collection, various tools used for studying problem with certain objectives and objectives in view.

Research Design
The study is descriptive in nature. The collected data was latter analyzed and interpreted. Based on the findings some recommendations have been made.
.

Nature
This project work purely relies on secondary data to study the objectives.
The secondary data were collected from:

company brochures Internet Company website.

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THE TATA BUSINESS EXCELLECE MODEL (TBEM):

Titan Industries has signed up to implement the compliance plan laid out by the TBEM. Beginning July 2000, it will be evaluated on 7 parameters that constitute the TBEM: leadership, strategic planning, customer and market focus, information and analysis, process management, human resources focus and business results. The goal is to reach a score of 600 in next five years. Titan currently stands second in the Tata group, with a score of 450, after Tata Steel. The objectives of TBEM are: To provide a framework for the group to become competitive. To work as a competition to ensure participation. To acquire competitiveness using quality as the route. To monitor the progress through ratings. To become a transformational tool for every company.

The TBEM has no prescriptions, and its extensively adaptable. The choices of tools and the method of deployment lie entirely with the company. It also shies away from making any suggestions about how the organization should be structured and whether they should have quality-planning department or not, and any suggestions about starting points, systems, tools, and techniques. The TBEM drives excellence across functions in the following manner:

The Leadership criterion checks haw senior leaders create leadership system based on Group values. With the able leader in form of Mr. Xerses Dessi at the helm of affairs, Titan has become a dynamic, vibrant and pro-active organization. The Customer and Market Focus checks how the company determines customer groups, key customer needs, and complaint-management issues. Titan has always been a customer centric organization and always has focused on satisfying the customer demands. The Strategic Planning criterion examines how the company develops strategic objectives, action plans, and resource-allocation. Since its inception, Titan has been the shaper of the watch industry. It has identified the future trends well in advance and taken appropriate steps in the right direction to emerge as the leader in the industry. The information and Analysis criteria check whether the organization has key metrics in place to measure and analyze performance. Being market- driven, Titan has its information systems in place and has
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its hand on the pulse of the watch market. The Human Resources Focus checks the appraisal system, the work environment, and the training and development of the employees. Process management examines the product design, production and delivery process, and supply chain management. Titan has pioneered the style concept in the watch industry and is the undoubted leader in design. Also WVM ensures high quality of products at all times. The Business Results criterion measures the organizations performance in areas like customer satisfaction and product- and service- performance. Implementation of the TBEM will ensure that processes and practices are customer-centric, company pursues agility, uniform performance are employed, knowledge and best practices are shared, and a unified management strategy for the Tata Group is employed.

THE TATA BUSINESS EXCELLENCE MODEL (TBEM)

The Future

Titan has followed a strategy of serving the entire watch market by targeting a separate brand or brands at each market segment. To serve these brands better, Titan is creating a business structure that would provide the necessary focus at these segments. With this in mind, Titan has reorganized the organization as followsCompanys operations have been reorganized into business units (BUs) with chief operating officers (COOs) appointed at the helm of these BUs. BU concept represents a more efficient way of managing, COOs running the Bus will be responsible for the entire value chain starting from design to strategy to sales and marketing. Such a BU stricture will allow Titan to be more flexible in its market operations and approach. It will also cultivate a healthy competition under the parent Titan brand umbrella, without causing any BU to eat into the market share of any other BU as they are catering to needs of different market segments.

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RESTRUCTING CLOCK BUSINESSES:

Titan has evolved a whole new strategy for its low-end clock business by going in for virtual manufacturing. Titan has stopped making clocks at its own facility and is now sourcing them from vendors, local and international. Titans inputs come in the form of design, styling, marketing and quality control. Titan plans to focus on the segment of the clock market where it enjoys a competitive advantage and where it can leverage its three core competencies, viz. design, brand name and market reach. The company plans to focus on beautifully crafted clocks. Under the Kaal banner it has recently introduced clocks that symbolize the fusion of time with Indian craftsmanship. Titan plans to use the investment made in the clock manufacturing to make plastic watches and its new offerings.

BRANDED JEWELRY BUSINESS:

Titan plans to spin off Tanishq as a separate entity, as the branded jewelry business does not gel well with the proposed mass-market outlook of the company. Also, Tanishq will remain only in the branded jewelry business; the high-end watches will be sold under the Nebula brand name. Titan has realized that there is a huge untapped market for branded jewelry in India. The basic premise for branded jewelry is assurance of quality, fashionable design and impeccable aftersales service. In addition to this, changing lifestyles demand lighter, trendier kind of jewelry. With the thrust of Tanishqs marketing strategy being on countering competition from the traditional jewelers, it plans to push the brand on the trust/quality platform. The advertisement pitch is also on similar lines. Tanishq is rationalizing its prices to increase its customer base and become the larger jeweler in the country by 2001. There is a common feeling that Tanishq products are not very accessible and affordable to common buyers. As an initial step, the company has decided to train its boutique staff on how to woo and handle customers by making the brand more accessible, affordable and attractive. To expand Tanishqs geographical reach, Titan would open 30 more outlets across the country during the next calendar taking the total to 60. The company has already signed 17 franchise agreements and another eight are under negotiation. Titan would also introduce caret meters in 12 more outlets- taking it to around 30 to help customers buy and sell right quality gold. The company recently launched awareness and
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customer interaction program with a view to collate their feedback on tastes, styles and patterns. The exercise was expected to assist the brand locate and design newer varieties of jewelry. Titan plans to invest over Rs.1 Crore to network all Tanishq outlets both franchise network and own shops - to facilitate greater interaction within the brand. The networking exercise would be kicked off by mid-2000. Tanishq plans to double its turnover in 1999-2000 to Rs.150 crore by selling over 3 lakh pieces of jewelry and is looking at Rs.200 crore during 2000-2001. It is looking at a quantitative return pattern without charging an undue premium on its products. The company plans to leverage on the retailing and distribution clout to emerge as a premium retailer of imported, high end fashion products and accessories in the personal wear segment. Titan is looking for goods essentially bought for their brand value - crystals, leather belts, pens, sunglasses, jeans etc. These will be sold through its Tanishq boutiques. Titans agreement with Lee Cooper is a case in point. The size of jewelry market in India is about Rs.40,000 crore. At present the share of Tanishq is less than 0.5 per cent. The potential for growth is therefore immense. If Tanishq grows at a healthy pace it can corner a high proportions of this market.

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FUTURE STRATEGY:
It is prudent for Titan to follow a two pronged strategy in the future one strategy for the domestic markets and a different strategy for the overseas markets.

Domestic strategy:
Titan has established leadership in India by catering to every market segment. They pursue a strategy of cost focus and differentiation focus in the country. Continuing this strategy will enable them to further consolidate their position in the domestic markets.

Overseas strategy:
Titan now plans to enter the European market. It will start off by offering ultra-thin movements market under the brand name Le Papilon with the all important made in Switzerland label. Titan is going to offer the ultra slim movements, which are as thin as any Swiss movements, but a price which is a fraction of what the Swiss charge. Le Papillon will retail for Swiss Francs 33, whereas the cometing Swiss movements cost Swiss Francs 150. Titans Le Papillon movements will qualify for the made-in-Switzerland label as components, which constitute 50 per cent of the cost of the movement, will be of Swiss origin. Titan will make the electronic circuitry parts like step motor, quartz crystal, chip and battery will be sources from Switzerland while the plate, the moving parts, at its Hosur plant. Titan also plans to provide a stiff competition to the Swiss companies by introducing their range of watches in Europe. Titans marketing strategy will be to offer watches that match the Swiss watches in looks and quality, but which come at a much lower price. Thus, Titan will be adopting the strategy of being the cost leader in the overseas markets.

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THE ROAD AHEAD...............

The removal of Quantitative Restrictions has seen a flood of international players getting into the Indian market. With low levels of watch penetration and the large size of the Indian population, India is a market that no one can ignore. The future Time Keepers to the Nation will not only be Indian but also French, Swiss and Japanese. This puts forth a new and a formidable challenge in front of the Indian watch manufactures and especially Titan, which is the dominant player in the Indian market. As we have seen earlier, till date Titan has always been the proactive Shaper and not the reactive Adaptor. Titan has the experience of playing against public sector giants like HMT, but fighting against nibble footed International players with deep pockets, and the latest technology is going to be a different ball game. It will be difficult to preempt the moves of such competent opponents, so Titan for the first time will be in a reactive mode than a proactive mode. Titan also has to contend with the basic Indian paradigm - foreign goods are always superior. Titans successes in the markets like Dubai has given a hint that Titan does have the capacity to compete internationally, but, whether Titan can repeat its Indian success story on the international platform is a question which only time will answer.

Watch industry upbeat on future

After two years of stagnation and dip in some segments, the countrys watch industry is set to grow at about 9 per cent-11 per cent in 2004, according to Mr. Kapil Kapoor, Regional Director, Timex, South Pacific and India. Mr. Kapoor, who was here to launch a theme store at Pradad Imax Mall, told Business Line that the overall watch industry in the country was looking up. This is clear from the positive signals from the Indian economy. When the economy grows, there is positive traction towards investments where lifestyle products and retail are major gainers. Within the watch industry, certain sectors are growing driven by the luxury-end models and sports patterns. However, one segment that has historically grown gold jewellery - has shown declining trend. The countrys watch market is estimated at about Rs.1,000 crore in the organized sector and another Rs. 500 crore comes from the unorganized market.A conservative estimate is that we could grow the watch market by at least 6 percent to 7 per cent. But with acceleration in the retail segment, we could possibly witness growth rate of about 9 per cent to
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11 per cent, Mr. Kapoor said. There is a large parallel market that is thriving the country. We are trying to lobby as part of the organized sector against this market. We have got together as association of watch manufactures and we are seeking a minimum levy on the value ascribed and have requested the Government to bring in a directive to regulate the market, he said.The landed duty for watches works out to about 70 per cent covering basic duty, and ad valorum and we expect this to gradually come down further, he said. The overall duty used to be about 81 per cent some times ago. With the Government being a signatory to trade and tariffs, some more changes, which will make it more competitive, are expected in the next two to three years, he said.

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COMPANY PROFILE
Company Profile Titan Industries
Titan Industries Limited is a joint venture of the Tata Group and The Tamil Nadu Industrial Development Corporation (TIDCO). Its business activities cover watches, clock sand jewellery. In a short span of time, the company has built and enviable reputation for its corporate practices, products and services. Titan Industries is Indias leading manufacturer of watches which it markets under the Titan and Sonata brand names. It enjoys a 25 per cent share of the total domestic market- more than three times the size of its nearest competitor - and close to a 50 per cent share among nationally recognized brands.

Titan Industries will make and market over 7 million watches this year, making it the sixth largest global player in the category of manufacturer brands, i.e. watch companies that manufacture the components that go into the branded products they market.. It has a very wide range of products in terms of looks, function and price points, all noted for their workmanship and reliability. A significant proportion is sold through two Titan controlled retail chains. The companys watches are presently sold in about 40countries of the world through marketing subsidiaries based in London, Dubai and Singapore. They enjoy a reputation for being excellent value for money. Titan Industries also makes watches for international labels. The company employs around 3,700 personnel. Its manufacturing facilities occupy a built-up area of 33,000 square meters. The main manufacturing plants are located at Hosur in the southern state of Tamil Nadu. In addition there is and assembly unit at Dehra Dun in the northern state of Uttar Pradesh and a unit that produces electronic circuitry for quartz watches in the state of Goa. Headquarter offices are in Bangalore, the Information Technology capital of India.

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Achievements
Titan Industries Limited is recognized as a corporate leader by its professional peers. It has been ranked as Indias leading consumer durable marketing company for the past seven years (199399) in polls conducted by the countrys leading advertising and marketing publication A&M. It was rated as one of Asias top 200 companies and Indias top 10 in each of the years 1994 to 1998 in surveys conducted by The Far Economic Review. In another survey conducted by The Economic Times in the year 2000, Titan was voted Indias most admired brand. Recognition for the companys engineering capabilities, innovative products, advertising excellence and services to the community has come in the form of several prestigious Indian and international awards.

Limitation of The Study

Since the data was not given Properly, So this study also suffers from certain limitations. The data provided for only one financial year. So, we cannot compared the data between two years. Du Pont analysis is also not possible because we need data for at least two years for comparing.

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TRADING AND PROFIT & LOSS ACCOUNT OF FOGLA DURABLES (P) LTD. Dr.
Particulars

( For the year ending 31st march, 2012 )

Amount (Rs) 94,80,959 3,32,13,934 77,64,856 50,459,749 Particulars Amount (Rs)

Cr.

To opening stock To purchase To gross profit c/d

By sales By closing stock

4,04,35,277 1,00,24,472

50,459,749

To operating expense To payment to employees To selling expense To finance charge To depreciation To provision for current taxation To Net profit c/d

44,67,384.49 22,34,741.70 9,94,324 10,83,956 2,75,029.03 4,67,300 15,51,701.68

By gross profit b/d By indirect income E.M.G By incentives By interest on F.D By profit on sale of sales By rebate & discount By service centre receipts By special schemes By deferred tax refund

77,64,856 3,17,400 10,35,868 15,932 5,93,671.18 1,42,593 5,00,978 6,96,591 6,547.72

11,074,436.9

11,074,436.9

NOTE:Operating expenses:- Accounting charges, audit fee, bank charges & commission, car expenses, computer expenses, guarantee expenses, rent, showroom expenses , travelling& conveyance, telephone expenses, security charges, repairs & maintenance, office expenses etc. Payment to employee:- Managers salary, bonus, salary etc. Selling expense:- Gift voucher discount, advertisement, sales promotion etc. Finance charge:- Interest on Bank c/c, Interest on Unsecured loans etc.

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BALANCE SHEET OF FOGLA DURABLES (P) LTD. (As at 31st march 2012)
Liabilities Amount (Rs) Assets Amount (Rs)

Shareholders fund Reserves & surplus 5781139.59 SHARE CAPITAL 1073000.00 Loan Funds Bank OD a/c 6491894.80 Secured Loans 627810.00 Unsecured Loans 3219814.31 Current Liabilities 6854139.59

Fixed Assets Air conditioner 218227.03 Camera 85739.00 Electrical panel 19089.00 Furniture & Fixture 577224.32 Generator 46850.91 10339519.11 Hot drink vending machine 17588 Hyundai verna sx 864084.00 Maruti zen vxi Estilo 199369.83 Mobile phone 199528.00 Tools & Equipments 15662.23 Water Dispencer 19810.00 2263172.32 Investments Fixed Deposit 189338.00 Current Assets Receivables from T.I.L 156302.00 Closing stock 10024472.00 Deposits(Assets) 32700.00 Loans & Advances(Asset) 1716583 Sundry Debtors 112640.00 Cash in hand 850897.32 Bank Accounts 31651.12 Gift Voucher 20400.00 Credit card 44190.00 Gift card 19590.00 13009425.44 Branch/Divisions Fogla Durables (p) Ltd(FS) Fogla Durables pvt. Ltd.(lalpur)

Bills Payable 41918.5 Creditors(capital items) 41918.5 Duties & taxes 2080635.48 97744.00 Provisions 1632036.00 Sundry creditors 392006.48 Advance From customer 70500 Profit & Loss A/c Opening Balance Current period 1551701.68 Less: Transferred 1551701.68

3212358.42 600000.00

19274294.18

19274294.18

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PROFITABILITY RATIOS:1. Gross profit ratio = Gross profit * 100 Sales

= 7764856 *100 40435277 = 19.20%

2. Net profit ratio = Net Profit * 100 Sales

= 1551701.68 * 100 40435277 = 3.84%

Fogla Durables gross profit ratio is 19.20%. Fogla Durables net profit ratio is 3.84%.

Efficiency of Fogla Durables business is quite good. Since gross profit ratio and net profit ratio are sufficiently higher than the norms set for similar type of business enterprises.

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Granting of Loan:Bank will also consider the following ratios before granting the loan:-

1. Current ratio = Current Assets Current liabilities = 13009425.44 2080635.48 = 6.25

2. Quick ratio = Liquid Assets Current liabilities = 2984953.44 2080635.48 = 1.43 Liquid Assets = Current Assets Stock = 13009425.44-10024472 = 2984953.44

3. Debt-Equity ratio = Long-term Debts Equity = 10339519.11 6854139.59 = 1.50 Equity or Shareholders Fund = Reserves & surplus + Share Capital = 5781139.59+1073000 = 6854139.59

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Conclusion
Gross profit ratio and Net profit ratios show that the profitability of Fogla Durables is sufficiently higher as compared to similar business enterprises. Current ratio of Fogla Durables is 6.25 which is above the accepted norm of 2. Hence he is in a Position to pay its current liabilities in time. Quick ratio of Fogla Durables is 1.43 which is above the accepted norm of 1 which shows that the liquidity position is quite good. Debt-Equity ratio indicates that long-term borrowings are only 1.50 in comparison to shareholders funds. As such, the long-term financial position is quite satisfactory. Since, all of the above ratios are satisfactory, the bank should grant further loan to Fogla Durables.

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Bibliography
Book referred:-

Chandra, P. (4th Edition). Fundamentals of Financial Management. Tata McGraw-Hill Publishing Company Limited. D.K.Goel, R. G. Analysis of Financial Statements. Arya Publicatios. I.M, P. (9th Edition). Financial Management. Vikash Publishing House Pvt. Ltd.

Website referred: www.google.com www.economywatch.com Web site of watch industry

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