In Conversation With Sona Group On The Growing Strap Manufacturing Business In India & More

Originally established in 1987 as a plating services provider, Sona Group has since evolved into India's premier contract manufacturer of globally competitive, quality watches and watch straps for renowned national and international brands. Today, Sona supplies leather, steel, and ion-plated watch bands to leading watchmaking corporations worldwide. We caught up with Gautham Kammaje, Vice-President of SONA Group to understand more about the strap manufacturing business in India!

THM: So to begin with, tell us about the strap manufacturing business in India. How has it been and how do you see it going forward?

Sona Group: We manufacture several types of straps. So we do metal straps, leather straps, and now silicon straps. So, to break it down, the metal strap business is doing really well. We can choose between being partially related or partially associated based on the colours. So that is a category that has had significant growth in recent years. Due to the metal strap, I believe that over the previous three to four years, consumers have associated premiumization with metal rather than leather.

THM: Which are these businesses that are doing well?

Sona Group: We are doing business with many brands like Casio. Q&Q includes all of these brands. We currently supply to whoever is producing or assembling in India. So leather straps are one thing, but there are more. As of now, we have not given it any thought. Even simply being in the metal strap business opens up a lot of opportunities for us to grow. So, for example, we used to just work with sheet metal, but today we provide folded varieties as well as solid links. We are investigating that possibility. Mesh straps have seen a significant increase in popularity over the past three years. We have already begun making mesh straps.

THM: What other materials are you looking to explore?

Sona Group: Ceramics is not something we have investigated. As I have stated, we will begin to consider it once the volumes arrive. Or the actual shift in what we label or what others are talking about. You are aware of the China-to-India transition. So we need to see a significant transformation. Now I notice a lot more, and many brands are coming here. But they're not taking that step, you know. They are coming here to explore. This has been happening for the past 2-3 years. So, as you are aware, all of the brands have visited us. They came and saw, and they said, "Okay, we like you." We'd like to do business with you. But it takes time.

THM: But why do you think that? Do you think there is still a doubt on the credibility of the need in India?

Sona Group: I'm not sure if it’s about their credibility. One possible explanation is that they are typically satisfied with China. Everyone, I assume, is evaluating their options in case something happens. I don't believe India is considerably cheaper than China. However, some companies have begun to make the switch because India is also a market. They can save money on customs taxes and other fees. Even if both locations are similarly priced. If you bring it from there and sell it, you will need to add 15%, which you might be able to save. From that standpoint, I'm speaking with a few brands regarding simple assembly. When I mention smaller brands, you know the volumes will be fairly low. Perhaps you're familiar with any of these fashionable firms. There are no fashion labels or licenced brands.

They require a minimum order quantity of 500,000 and a distinct source in China. So I've been asked to try and work with them. You can bring your components here to assemble them and they want to sell here. So, through that process, they may be able to save some money on customs tariffs and other fees. For us, restrictions include receiving an order for 1000 watches with a unique design. It is really difficult for us to execute such manufacturing locally. Creating the case, strap, and dial would be tough, whereas these brands go to China and simply buy something off the rack and what you sell in India people do not know if the same product is being sold in Europe or Latin America or Africa.

THM: So I am curious to know if the brands that you work with, are at all sustainable strap angles yet?

Sona Group: This is occurring with the leather strap. There is a tiny amount of demand. It's similar to what you see in the news when people discuss ESG and other things. So I'm not sure if there's any true demand. You must have both a facade and a tick mark. In the showroom, you can draw folks in. It's essentially a marketing strategy that the brand can capitalise on. I mean, having that on your product may help it sell. However, there is only so much you can provide in terms of it. I don't believe a customer walks into a store and says, "I'll only buy e-steel or something like that."

THM: There is an e-steel right now. What is that?

Sona Group: So all steel makers acquire scrap. Additionally, they buy raw materials. Finally, it enters the foundry and all becomes one. I'm not sure if any steel manufacturers maintain this and that separately. That is what the brands are talking about. Even in terms of straps, some of the international watch brands are manufacturing straps with, say, rose petals, and there is an idea of vegan straps.

THM: So are these things also that you are exploring?

Sona Group: I mean, we've done some samples here and there. However, it is not significant to state that it will. It currently accounts for a small portion of my production on the balance sheet. But we have both the product and the product line. It all depends on what the buyer wants.

THM: You mentioned earlier you have five factories in Bangalore all for strap manufacturing. Can you elaborate on the same?

Sona Group: All horological industries. We specialize in strap fabrication, watch SMB, and PVD coating. So these are the activities we engage in. We are a metal strap manufacturer. So three options and we have five units of that. We also have one unit that uses PVD coating for metal strap manufacture. We have around ten machines presently. We're doing a variety of colors -gold, rose gold, black, gunmetal, blue. Another plant in Phukpur is our largest, where we manufacture metal straps, leather straps, and silicone. So there's a little bit of everything in all the units.

THM: Also in terms of straps, what are the things that you are doing? What is the least is you can produce?

Sona Group: We can create around 6 lakhs of leather straps. It's still the number, but we haven't touched it in leather straps in a while. So we're currently producing roughly 400,000, leather straps per month. However, we sell approximately 400,000 metal straps each month. That has also come down perhaps in the last three months. So maybe 250000-270000 each month.

THM: Do you think that's going to change? How do you foresee that the business going forward?

Sona Group: See, I would say that the replacement section accounts for about 15% to 20% of my revenue. I am doing business with Titan's replacement section. There are also some additional people involved in the replacement business. Otherwise, I primarily work with brands and OEMs on direct fitment for watches. However, several brands now offer interchangeable timepieces. You are aware that self-interchangeability options exist like quick-release spring bars. Even for metal, we are implementing. We're doing some for Titan and some for Fossil, and customers can swap them out. As a result, it is available in the form of metal. Then they can make changes if they desire. And I'm not sure if Fossil will include another leather strap with it. They have a few options, including straps with that option. So I believe that may benefit the firm.

THM: And lastly, as a way forward, have you ever considered something that you are doing?

Sona Group: We are doing a small amount of it, but not too much. My brother tried a small amount of it. We merely package it and sell it, with a focus on Apple straps. Leather straps for Apple Watches. With the interchangeability, you can put four straps together. However, this was approximately two or three years ago, when I believe the Apple Watch was still rather small. And the smartwatch itself was quite small at the time. But now we're trying to get it online and whatever, but it's a lot of work for us. We are accustomed to interacting with B2B people in the same way that we do with the general public.

The conversation ended with him sharing insights on online markets and more. He said, “Honestly, we put something online on Amazon, and we get 25-30% returns with no issues. Dealing with consumers as individuals is fine. However, there is a significant gap, and many consumers continue to buy in English. I'm not sure if I'll pursue it further.”