Yashovardhan Saboo is one of the most respected names in the Indian horological industry. He started the first high quality watch dial factory, Kamala Dials, in India in 1983. As the CEO of Ethos Watch Studios, a veritable retail chain, he has shown an unprecedented futuristic outlook. Karishma Karer chats with the industry doyen…
What are your views post-GST? Has it really straightened things or have things got more complicated?
There are a couple of aspects. First, the rate…. 28% is too high. However, I must say that the logic why it was put on 28 was clearly explained by government. So, taking into the account the present ‘burden’, one would be put into the GST ‘bucket’ closest to it. The estimates were that indeed 28% was the closest bucket, though is most definitely higher than the cost we are currently incurring. There was no surprise in my mind. Something like 22-23 would have been good. The fact that it is almost the highest in the world, is surely a dampener. We are in the process of representing to the government to get the rate down. We have got pretty strong arguments. One is that smartwatches are at 18% and they are our greatest competitors. At the most basic level, we are thus arguing for a level playing field. We do know that in future smart watches and conventional watches will find convergence.
The other big problem is that on the transition stock there are huge losses. For duty which has been paid, there is no reason why a better mechanism was not found. More transparency in this case would help. That said, the difficult period of transition that we are going through will be over in the next couple of months. Post that, I feel that the business will rebound. 28% is surely too high. It gives incentive to those who work outside the tax regime. 18-20% is fair and would encourage more compliance.
How do you see the interaction between the smartwatch and the conventional watch market playing out in India?
The jury is going to be out for a long time on this. Firstly, we need to distinguish between smartwatches and Apple. Everybody knows that Apple, despite early setbacks, is successful. It is the biggest watch brand in the world! Other than that, everyone knows it is a mixed bag. It is not that smartwatches as a category is raking it. Yes, but Apple is a different ballgame. Eventually, smartwatches will take a certain share of the market. There will be a kind of convergence, just like it happened between quartz and mechanical watches about 40 years ago. I do think that conventional watches need to redefine the purpose of their existence more sharply.
What is the strategy for Ethos?
We were asking ourselves the question- how are we different? Why should someone come to us to shop for watches? As retail gets more organized a lot of retailers are working with many customers. We really had to answer that question. You will now find products that are different at Ethos. We have a strategy- first at Ethos, only at Ethos. We have to take chances. But we believe that customers are open for that. We can use our reach across the country and reach out to ore people. We are investing very heavily on digital space as its moving very fast. We want to be in the forefront of this. You have to have a lot of skills in-house and these skills are not cheap anymore. There is much more work happening on the back end than for new store opening! There are going to be other segments in the watch segments that we are looking at. We are having new concepts for the designs of the stores. We have launched stores in various cities like Jaipur, Pune, Nagpur etc..
The global mood is quite low…
It has been dull. Last year was the first year, that we didn’t see growth! This year, there will be growth. But yes, it has been challenging. But I believe the bottom has been reach. We will start to see a rebound. This is the time to take chances. If my belief is wrong, we will pay for the gamble! But, I do believe that the next year will be fabulous. From 2019 we will enter a very strong decade. We are positioning ourselves for that.
Ethos has been a name that has a strong ground thanks to the trust of customers and a great vision which it has followed and stuck to. It is all set to take on the future!