Titan Company shows strong recovery rate in Q2

The customer sentiment improved substantially in the quarter.

NEW DELHI: Titan Company reported an 89 per cent recovery in sales in Q2 of FY 2020-21 led by sharp recovery in the jewellery division post the significant disruption caused by the Covid 19 pandemic in India in the first quarter of the fiscal.

The total income for the quarter was Rs 4,389 crore, including sale of gold bullion to the extent of Rs 391 crore, resulting in a decline of less than 2 per cent compared to the income of Rs 4,466 crore for the same quarter in the previous year.

The decline in total income excluding bullion sale was close to 11 per cent. The total income for the first half of the fiscal (Hl) was Rs 6,290 crore (including bullion sale of Rs 992 crore), a decline of 34 per cent against the income of Rs 9,461 crore in the corresponding period last year. The decline without considering the bullion sale was 44 per cent.

With the lockdowns being lifted in most parts of the country, the company was able to operate most of its stores across all its divisions. Customer walk-ins have started improving even as social distancing norms remain. The recovery rate of revenue improved substantially in the quarter, with the rate being 55 per cent for the watches and wearables division, 98 per cent for the jewellery division and 61 per cent for the eyewear division.

While the customer sentiment improved substantially in the quarter, there was greater willingness to spend on plain gold jewellery and gold coins rather than pure discretionary items, explaining the reason why the recovery rates in watches and eyewear and even studded jewellery within the jewellery division were lower.

The jewellery division recorded an income of Rs 3,446 crore for the quarter (excluding gold bullion sales) as compared to Rs 3,528 crore last year, a decline of 2 per cent. The watches and wearables business recovered well in the quarter to record an income of Rs 400 crore against Rs 719 crore in the previous year, a decline of 44 per cent.

The eyewear business also improved with revenues declining by 39 per cent in the quarter, recording an income of Rs 94 crore as against Rs 154 crore last year.

Other segments of the company comprising Indian dress wear and accessories recorded an income of Rs 23 crore compared to Rs 44 crore in the previous year, a decline of 48 per cent. Consequent to the recovery, the company declared a profit before tax of Rs 238 crore, compared to Rs 429 crore in the previous year, a decline of 45 per cent for the quarter. The result is after a provision of Rs 34 crore for dues from a broker relating to commodity hedging. Despite the profit in the quarter, the company has recorded a loss of Rs 97 crore in Hl compared to a profit before tax of Rs 952 crore in the previous year.

The jewellery division declared earnings before interest and tax (EBIT) of Rs 285 crore for the quarter compared to Rs 384 crore in the previous year and Rs 231 crore for Hl compared to Rs 826 crore in the previous year. The watch division reported a loss of Rs 4 crore for the quarter (EBIT of Rs 113 crore in the previous year) and loss of Rs 168 crore for Hl (EBIT of Rs 241 crore in the previous year). The Eyewear division turned around remarkably in the quarter with EBIT of Rs 9 crore (loss of Rs 31 crore in the previous year) and a loss of Rs 22 crore for Hl (loss of Rs 10 crore in the previous year).

Titan Company MD C K Venkataraman said, "The recovery that the company has witnessed in the quarter has been very satisfying and the positive consumer sentiment witnessed gives rise to hope that the festive period could be good for all the divisions. The company continues to gain market share in its key businesses. The focus on cost and capital employed has helped manage our bottom line and cash flows very well."  

The principal subsidiaries of the company also performed well. Titan Engineering and Automation Ltd (TEAL) recorded revenues of Rs 167 crore (decline of 16 per cent) and profit before tax of Rs 25 crore (decline of 19 per cent) for Hl FY 2020-21.

CaratLane clocked a growth of 10 per cent and a positive EBIT in the quarter and ended with a revenue of Rs 194 crore (decline of 28 per cent) during Hl and a net loss of Rs 24 crore.

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