Titan Company, a part of the Tata Group, on Monday said that its board has decided to scale down the operations of its wholly owned subsidiary, Favre Leuba AG (FLAG), with immediate effect. The watch-to-jewellery maker had acquired global rights to the trademarks of heritage Swiss watch brand Favre Leuba for 2 million euros in 2011.
Headquartered in Solothurn, Switzerland, FLAG was incorporated in 2012 by Titan as a 100 per cent subsidiary, following which, the Swiss watch brand was revived by the Tata group company.
In a regulatory filing, Titan Company said that it has been continuously supporting FLAG, and has made a series of investments aggregating to approximately Rs 275 crore, over a period of time for the revival of the Favre Leuba brand and its growth plans. The current COVID-19 pandemic, however, has severely impacted the revival plans and prospects, it said.
Considering the impact of COVID-19 pandemic on the businesses, the board of Titan at its meeting has decided to request the FLAG management to scale down the operations of the company substantially with immediate effect so that further investments from Titan to FLAG cease as early as possible, it said.
"Consequently, this will lead to Titan making provisions in the current financial year for additional impairment pertaining to its investments in FLAG, in addition to the impairment of Rs 145 crore already made in earlier years," the Tata Group company said in a filing to the BSE.
The first (pocket) watch was manufactured by Favre Leuba in the year 1718 and the brand was registered as a trademark in 1737. The brand has had a continuous involvement with 8 generations of the family, making it amongst the most well known family-owned brands in the Swiss watch industry.
Ahead of the announcement, shares of Titan Company ended Monday's trade at Rs 1,425.25, down 0.85 per cent, against previous closing price of Rs 1,437.40 on the BSE.
By Chitranjan Kumar