Timex Group (TGIL) – time to take notice?

I had sent a long list of questions to the company. At the AGM yesterday the management answered some, side stepped some. Given below are some of the points noted down from the interaction (E & OE).

1. Two thirds of the business comes from four brands – Timex, Gc, Guess and Versace (not fully sure the names are captured correctly)
2. New product launches contributed 35 % of the revenue this year, more than 1000 new products were launched during the year
3. Around 2.8 million watches were sold during the year
4. Two thirds of the business comes from the trade channel i.e., retail stores.
5. South & North contributes about 60 % of the business, then comes West followed by East. Top 10 cities contribute about 50 % of total business.
6. Capacity utilization was almost 95 % and for the year, 2.8 million watches were sold. The largest was Timex analogue.
7. OEM business is 16 % of the total business (This is Flipkart / Myntra I understand). We also do manufacturing for other Timex subsidiaries around the globe.
8. Marketing expenses will be 9 to 10 % of revenue this year. We got Rs.75 crores worth of exposure due to IPL sponsorship.
9. A Long-Term incentive plan was introduced this year – basically a performance linked bonus to some of the key employees
10. On margins – Current margin is at 10 %, we do not give forward guidance. There is a 7 to 8 % delta between Timex’s own brands vs license due to customs duty etc.
11. Company has started selling at Duty Free stores at airports, are also looking at mobile and electronic stores for smart watches
12. Women watches are growing much faster than men’s watches
13. No plan to enter new categories now besides watches
14. Purchased Services expense of Rs. 15 crores – this pertains to temporary people hiring / DSA cost, mainly selling cost.
15. Dividend will take a few years. First the retained losses which are now Rs 27 crores must be erased, then preference dividend needs to be paid off and only after that dividend can be paid to equity shareholders.
16. Just Watches acquisition: They do not manufacture watches. By end October, we will take over all 16 stores, plus the website. We will run them on a FOFO model. Last year turnover was Rs.25 crores approx. It is an all-cash deal.

Overall, my impression is that the management is reluctant to share information with outsiders. This could be because unlike many other multinationals operating in India, TGIL’s parent is a closely held company and hence not mandated / used to sharing information with outsiders. Nevertheless, the new CEO seems to be doing well and one can still hope for improvement in future. Company performance has certainly improved, and stock continues to trade close to its ATH indicating investors are hopeful. I had reduced my exposure some time back but continue to hold on to the remaining for the time being.