AT THE END OF ITS FIRST YEAR OF SALES AS AN independent youth brand in March 2005, Fastrack, formerly a sub-brand of Titan Industries, sold about 1.5 lakh watches and 30,000 sunglasses, with a turnover of Rs 25 crore. In the ensuing seven years, the company has grown at an annual rate of 57%, to become a Rs 600 crore brand, thanks to its emphasis on quality, lean infrastructure, and a robust global sourcing strategy.
Ronnie Talati, the Titan Industries vice president and business head, Fastrack and New Brands, explains that the company has chosen product categories in otherwise unorganised sectors to avoid price-driven competition with existing players, while creating brand recall. It has sustained growth by keeping design and quality control in-house, while outsourcing production and keeping operations costs low.
Except watches, the company outsources all products. This strategy largely accounts for its profitability. “Our model has been that we design our products, get them made [by others], and control the quality,” says Talati. That’s a model that global fashion labels follow but few Indian companies do.
So, Talati’s team of five designers in Bangalore decide how a product should look and feel, but it is manufactured elsewhere. Therefore, helmets will come from Vietnam, bags are sourced from Guangzhou in China, and sunglasses from Xiamen. “These locations have mature vendor bases, which already make products for global fashion labels,” Talati adds.
An inclination towards leanness extends across the company: The entire Fastrack team numbers less than 100. A dedicated factory for a new product requires an investment of Rs 50 crore to Rs 100 crore, which is unnecessary when production is outsourced. And despite robust advertising, the company’s marketing spend barely hits 5% to 6% of turnover. Similarly, although the brand has opened 60 exclusive stores in the past 12 months, bringing the total tally to 100, it owns only seven. By March 2013, the management aims to have 280 Indian shops, primarily franchises.
Although watches contribute almost 70% to revenue, the sunglasses category, and the bags, wallets, and belts category bring in around Rs 100 crore each. Talati wants to bring revenue from watches down to 30% in the next five years as new categories grow; these include motorcycle helmets, likely to be launched this November, and, possibly, bicycles. Talati aims to grow Fastrack to Rs 3,000 crore by 2017.