TITAN

FUTURE ?
HOW DID WE EARLIER DEVELOP OUR PROJECTS ?

EARLIER SITUATION

 We knew the product

 We knew the process

 We knew all the parameters

 But, nobody knew how to make a watch

 We had collaboration with France Ebuaches, Citizen


 We designed the product ourselves

 We brought in the raw materials

 We recruited employees from remote villages, who

were to be taught about the watch Mfg. Technology

 We developed supervisory staff and trained them

 We directly created the assembly

 Finally, we looked for customers

The Traditional Value Chain

Assets / Inputs, Raw Product / Customer

Core Service Channels Priorities
Material
Competencies Offering

The Modern Value Chain

Customer Inputs, Assets /

Channels Offering Raw Core
Priorities Competencies
Material
NOW

AT TITAN

Watch Industry is the major business

- Has worked itself to be a market leader

- Watch business ROCE is good

- Jewllery has started making profits

 Watch industry could head for a plateau

 Threats from Chinese products

 Devastating earthquake could change the priorities

 Employees are quite experienced and highly motivated
 They do not need inspectors and hardly any supervision
 They have developed / acquired new skills and continuously
improving
 They continuously innovate processes, and finding economical
ways
 They need only guidance / training and fresh challenges
 The available potential in the company is not being used fully
 High thrust on productivity improvement by the teams will create
additional capacity as well as capability

 This needs to be harnessed into NEW REVENUE

The need of the hour is ‘cost reduction’ &

‘value increase’ leveraging existing resources

(both human capital and equipment) fully

thereby converting

Cost Centres

Profit Centres
PETER DRUCKER

Unaccountable Accounting :
 ‘Revenue money’ and ‘Cost money’ are not automatically
the same money stream
 ‘Revenue’ produces the wherewithal for, including for the
‘costs’ - of course
 But, unless Management constantly seeks to direct these
‘costs’ into ‘revenue - producing’ activities, they will tend to
allocate themselves by ‘drift’ into ‘nothing producing’ activities
 Accountant allocates to all products those costs which are not
actually and physically tied to a particular unit of production
 One way or other, the great bulk of costs 60 ~ 70 % that are
not purchased (materials and parts) but are ‘allocated’ rather
than truly ‘direct’ costs
THE JOB OF AN ENTREPRENEUR IS TO MOVE THE

LOWEST VALUE GENERATING ASSETS

CONTINUOUSLY TO HIGH VALUE OUTPUT

- FAY
 RoCE

REVENUE out of CAPITAL EMPLOYED

R + CE
 
Plan - Rs. 26 Cr
Actuals - Rs. 21 Cr.
Capital Employed = Rs. 315 Cr.

R WATCH

Capital Employed > Rs. 150 Cr.

+ 2 Cr ? Jewellery
BALANCED SCORE CARD

FINANCIAL CUSTOMER
PERSPECTIVE PERSPECTIVE

LEARNING AND INTERNAL

GROWTH PROCESS
PERSPECTIVE PERSPECTIVE
 BALANCED SCORE CARD
IMPROVE SHARE HOLDER VALUE

REVENUE GROWT H STRAT EGY PRODUCTIVIT Y STRATEGY

BUILD INCREASE INCESSANT IIMPROVE INCREASE

DISTRIBUTION VALUE TO COST USE OF SPPED OF
REDUCTION ASSETS THROUGHPUT
FINANCIAL
CUSTOMERS
PERSPECTI
EXPAND
MARKET
S

CUSTOMER INT IMACY PRODUCT LEADERSHIP OPERATIONAL EXCELLENCE

PRODUCT / SERVICE PRODUCT / SERVICE

ATTRIBUTES ATTRIBUTES

COST TIME CUSTOMER

CUSTOMER PRICE TIME
VALUE PERSPECTIV
INCREASE
WANTS & FUNCTION
QUALITY PRODUCT
NEEDS ALITY CHOICE

Image Relationship Image

Relationship Imag Relationship
e
SERVIC CUSTOMER BEST IN
E RELATIIONS CLASS

INCREASE CUSTOMER CONTINUOUS MARKET ACHIEVE OEPRATIONAL BECOME A GOOD

VALUE THRO' EXPANSION INTERNAL
EXCELLENCE THRO' CORPORATE CITIZEN
CUSTOMER MGMNT. NEW TERRITORIES OPERATIONS & THRO' REGULATORY PROCESS
PROCESSES
LOGISTICS PROCESSES AND ENVIRONMENTAL PERSPECTI
PROCESSES

CORPORATE CULTURE EMPLOYEE TECHNOLOGY

LEARNING
COMPETENCY
GROWTH
PERSPECTI
CONTINUOUSLY INVENTORIES OF
MOVE EMPLOYEES NEW COMPETENCIES
TO HIGHER VALUE
ADDITION
Material cost per watch

MATERIAL COST PER WATCH

Value in Rs.
450
399 397
400
346 348 349 332
350
293
300 264 271 265
250
200

150
100

50
0
91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00 00-01
YEAR
Value Addition per employee - Watch Division

VALUE ADDITION PER EMPLOYEE

Rs. In Lakhs
9.77
10
9 8.32
8 7.59

7 6.51

6 5.18 5.25
5
4
3
2
1
0
95-96 96-97 97-98 98-99 99-00 00-01
YEAR
 Key Performance Indicators - TITAN

S NO. PARTICULARS 1997-98 1998-99 1999-00 2000-01 BENCHMARK

1 FIXED ASSET TURNOVER RATIO 1.85 2.04 2.82 3.58 8

- SALES TURNOVER 44206 48204 63033 77475
- NET FIXED ASSETS 23838 23664 22380 21641

2 EMPLOYEE COST / TOTAL T/O 11.06% 11.21% 11.45% 9.92% 9.00%

- EMPLOYEE COST 4891 5404 7217 7682
- SALES TURNOVER 44206 48204 63033 77475

3 OPERATING PROFIT RATIO 15.54% 14.62% 11.24% 10.65% 25%

- PBIT 6919 7084 7232 8352
- TOTAL TURNOVER 44522 48445 64335 78445

4 RETURN ON CAPITAL EMPLOYED 12.06% 12.10% 12.00% 13.67% 30%

- PROFIT BEFORE INTEREST & TAX 6919 7084 7232 8352
- AVERAGE CAPITAL EMPLOYED 56899 58557 60252 61076
 Comparison of factory & sales overheads - watch division (99-01)
Sl. Particulars UOM 1998-99 1999-00 2000-01-Estimate % Cha
99

1 Volume

a) Production in K 5018 6014 6685 11%

b) Sales in K 5111 5898 7009 19%

2 Factory Overheads

a) Manufacturing operations Rs. L 4703 93.72 6276 104.36 6920 103.52 10%

Employee costs 3474 4795 4820

b) Interest, Depreciation & Insurance Rs. L 4984 99.32 4824 80.21 3709 55.48 -23%

Total Rs. L 9687 193.04 11100 184.57 10629 159.00 -4%

3 Sales & Marketing Overheads

a) Sales & Marketing operations Rs. L 6741 (131.90) 8960 (151.93) 10450 (149.09) 17%

Employee costs 1211 898 1088

b) Interest, Depreciation & Insurance Rs. L 1134 (22.19) 1209 (20.50) 1728 (24.65) 43%

Total Rs. L 7875 (154.09) 10169 (172.43) 12178 (173.75) 20%

 EXPENSES : 2000-01 (PLAN) WATCH DIVISION

ASS
Emp. Costs
Rs.21 Cr. 3.8% Export, S & M Costs Sales & Corp.OH :Rs.121.80 Cr
Rs.10.9 Cr. 2.0% 22.3%
Dig. Watch (73.7%) Rs.10 Cr. 1.8%
Rs.4.4 Cr. 0.8% Advts.
Sales OH
(67.5%) Rs.32 Cr. 5.9%
Rs.13.7 Cr. 2.5%
Nebula
Interest
Rs.6.3 Cr. 1.2%
Rs.13 Cr. 2.4%
(62.4%)
Corporate OH
Material cost :Rs.217.80 Cr. Rs.17.9 Cr. 3.3%
40% Rates & taxes
Rs.10.65 Cr. 2.0%
Others
Rs.13.65 Cr. 2.5%
Watches
Employee Costs
Rs.186 Cr. 34.1%
Rs.48.2 Cr. 8.8%
(37.6%)

Power & Fuel

Rs.7.1 Cr. 1.3%
Interest
Rs.17.9 Cr 3.3%

Depreciation
Income : Rs.545.40 Cr. Rs.18.3 Cr. 3.4%
Others
Expense : Rs.508.60 Cr. Rs.14.8 Cr. 2.7%
PBT : Rs. 26.70 Cr.
Excise Duty
Rs.62.75 Cr. 11.5%
Watch Business - Watches : Domestic
: Export - TIME
- TAPL
- TIML

- Jewellery Watches

- Euro watches

- Clocks

- Bracelets
 RETURNS FROM ASSOCIATED SUB-BUSINESSES / COST CENTRES
Rs. Crores
INVESTMENT MANPOWER INITIAL PRESENT PROFIT
(Rs. Cr) TARGET LEVEL LEVEL

Alarm Time 7.2 115 60.00 5.00 (4.53)

Pieces

Euro Watches 26.6 300 30.00 < 6.00 (6.86)

Jewellery 19.4 80 30.00 14.00 (3.8)

Watches
 HOW DO WE OBTAIN VALUE GROWTH ?

1. REDUCE COST FROM THE EXISTING BUSINESS

- EMPLOYEE COSTS ARE MORE THAN 35 % OF
THE ADDED VALUE

2. DEPLOY HUMAN CAPITAL TO GENERATE

- HIGH VALUE
- HIGH GROWTH PRODUCTS
INVENTORY OF TITAN’S CORE COMPETENCY

 Advanced design capability and fully equipped CAD/CAM centre

 Design skills to convert ideas into engineering design

through a highly talented and experienced CFTs
 Advanced technologies like thin film decorative and body
friendly coating
 Large vendor base enabling low cost production

 International suppliers including from China

 Experience in implementation of ERP

 First hand experience in producing the pointers for the

dash board clusters; capability to work to PPM level quality
INVENTORY OF TITAN’S CORE COMPETENCY

 Large and expandable sub-contract support, performing at most

economical cost
 Experience in setting up virtual factories to obtain cost
reduction to customers (Ex : Myrada, Action Aid)
 Capability of designing and production of Electronic CIRCUIT
boards at our J.V. Company, TTPL
 Automation and micro-precision machine building

 Very high self motivated team doing continuous

improvements in processes, enabling reduction in cost
 World Class precision Tool Manufacturing, Capability to
meet requirements of aero-space and defense Industries
 BUSINESS OPPORTUNITIES
WATCH

JEWELLERY

CLOCK
AUTOMOTIVE
MICRO PRECISION
M/c. BUILDING

MICRO
ELECTRONICS

BUSINESS SPECIAL
INSTRUMENTATION

I.T.
E-COMMERCE

AEROSPACE

TELECOM

PRESTEGIOUS PERSONAL
USE PRODUCTS
AREAS OF GROWTH

1. Auto Components
1.1) Pointers
1.2) Advanced Precision Dash Board Instruments
1.3) Other special auto components

2. Micro Precision Machine Building

3. Precision components for Aerospace

4. I.T. Solutions

5. Micro Electronics
BUSINESS OPPORTUNITIES
POINTERS

High Tech Mitsubishi Accent Indica - ?

BUSINESS Dash Boards
VDO Santro Maruti - ?

Navigation Proximity Sensors

CLOCK Systems
Speed Sensors

Auto Control Distance

AUTOMOTIVE Auxiliary
Devices
Window Electronics

Steering Electronics

Auto Clutches
Anti Lock Braking
Systems

Cabin Vane Rotary Comfort

Air Conditioning with SEIKO Monitoring
Auto Controllers Compressors & Maintaining

Security Systems
Global Tracking
Systems
Seat Control
System
Engine Ngmnt.
Systems
NEED FOR AUTOMOBILE SAFETY

 There is a large need for automobile safety devices

 No Indian auto ancillary is addressing the automobile
safety nor any plans visible
 Automobile safety devices involve micro mechanics,
electronic circuits and other design inputs
 The new cars entering India today are provided with
safety devices produced abroad
 The cost of production of components of automobiles
abroad is high
 We can leverage the existing Titan’s core competencies,
and enter into production of automobile safety elements
TYPES OF SAFETY DEVICES

1. Safety Navigation systems

- Proximity sensors
- Speed sensors
- Auto control distance
2. Safety Auxiliary devices
- Window electronics
- Steering electronics
3. Anti-lock breaking systems
4. Cabin Automatic climate control
5. Global Tracking systems
- Seat control system

6. Engine Monitoring systems

7. Dash Board instruments
SUMMARY OF INCOME STATEMENT - NEW PROJECT

Business 2000-01 2001-02 2002-03 2003-04 2004-05

In Rs. crores

INCOME

Automotive Components
1.1) Visteon 0.30 0.40 0.80 1.20 1.20

1.2) VDO Components - New 0.18 0.35 0.50 0.50 2.00

- Existing 0.48 1.00 1.50

1.3) Other Plastic components 0.00 0.40 0.50 0.50 0.50

1.4) Speedometer components 0.00 0.50 1.00 1.50 2.00

1.5) Moulds & Tools 1.00 2.00 2.50 2.50

Sub-total (1.1 to 1.4) 0.48 3.13 5.80 7.70 8.20

1.5) Advanced Precision Dashboard Instruments 0.00 0.00 0.50 3.00 4.00
and safety systems
1.6) Process Automation 1.00 1.00 2.00 2.00

Sub-total (1.6 & 1.7) 0.00 1.00 1.50 5.00 6.00

Total (1.1 to 1.7) 0.48 4.13 7.30 12.70 14.20

SUMMARY OF INCOME STATEMENT - NEW PROJECTS
Rs. Crores

Business 2000-01 01-02 02-03 03-04 04-05

1 Automotive Components 0.48 4.13 7.30 12.70 14.20

2 Micro Precision Machine Building 2.50 5.00 10.00 17.00 22.00

3 Precision components for Aerospace 0.50 0.80 1.20 2.30 4.00

4 IT Solutions 0.00 9.00 14.00 22.00 27.00

5 Micro Electronics 0.00 2.00 5.00 12.00 25.00

Total Income 3.48 20.93 37.50 66.00 92.20

SUMMARY OF INCOME STATEMENT - NEW PROJECTS
Sl. Business 2000-01 2001-02 2002-03 2003-04 2004-05
In Rs. crores

1 Automotive Components
Turnover 0.48 4.13 7.30 12.70 14.20
Expenditure 0.41 3.51 6.21 10.80 12.07
Net Income 0.07 0.62 1.10 1.91 2.13
2 Micro Precision Machine Building
Turnover 2.50 5.00 10.00 17.00 22.00
Expenditure 2.25 4.50 9.00 15.30 19.80
Net Income 0.25 0.50 1.00 1.70 2.20

4 Precision components for Aerospace

Turnover 0.50 0.80 1.20 2.30 4.00
Expenditure 0.33 0.52 0.78 1.50 2.60
Net Income 0.18 0.28 0.42 0.81 1.40
3 IT Solutions
Turnover 0.00 9.00 14.00 22.00 27.00
Expenditure 0.00 5.00 8.00 12.00 15.00
Net Income 0.00 4.00 6.00 10.00 12.00

5 Micro Electronics
Turnover 0.00 2.00 5.00 12.00 25.00
Expenditure 0.00 1.60 4.00 9.60 20.00
Net Income 0.00 0.40 1.00 2.40 5.00
Total of all
Turnover 3.48 20.93 37.50 66.00 92.20
Expenditure 2.99 15.13 27.99 49.19 69.47
Net Income 0.50 5.80 9.52 16.81 22.73
 MANPOWER DETAILS

Manpower Present 2000-01 2001-02 2002-03 2003-04 2004-05

1 Automotive Components 8 15 25 30 32 40

2 Machine Building 30 35 55 70 80 90

3 Precision Components for Aerospace 3 5 10 20 25 30

4 IT Solutions 49 115 130 150 180 200

5 Micro Electronics 6 20 30 40 50

Total Manpower 90 176 240 300 357 410

* > 50 % of the manpower can be drawn from the existing business
* This will reduce Overheads of the Watch division
BUSINESS
Watches &
Total Automation Micro Components

Assembly Solutions
Biocon, Pharma

MICRO PRECISION
M/c BUILDING
Robotics Micro Assemblies
(Micro) Biocon, Pharma

Assembly Stations with

Artificial Intelligence (PLCs, Logics, Sensors)
Micro Assemblies Assembly Lines

Surface Mounting
Systems
Movement Assembly Computer Controlled System