Reduction in jewellery sales and losses in the watch and eyewear segments has dragged down Titan’s net profit by 37.8 per cent to ₹199 crore for the second quarter of the current fiscal.

The total income for the quarter decreased 2 per cent to ₹4,389 crore, which included the ₹391-crore sale of gold bullion. The decline in total income, excluding bullion sales, was close to 11 per cent, according to a notification to the BSE.

The company also reported an 89 per cent recovery in sales in Q2, led by a sharp recovery of 98 per cent in the jewellery division post the Covid-19 disruptions in the first quarter of the fiscal.

The jewellery division recorded an income of ₹3,446 crore for the quarter (excluding gold bullion sales) as compared to ₹3,528 crore last year, a decline of 2 per cent, as customers showed a greater willingness to spend on plain gold jewellery and gold coins rather than on discretionary items. As a consequence, the watches and wearables business posted an income of ₹400 crore against ₹719 crore in the previous year, a decline of 44 per cent; and the eyewear business declined by 39 per cent in the quarter, recording an income of ₹94 crore as against ₹154 crore last year.

Other segments such as Indian dress wear and accessories recorded an income of ₹23 crore compared to ₹44 crore in the previous year, a decline of 48 per cent.

Recovery seen

With the lockdowns being lifted in phases across the country, the company also opened most of its stores across all divisions in phases, witnessing improved customer sentiment, footfalls and consequently, rate of revenue recovery across segments improved during the quarter, led by the jewellery division at 98 per cent, watches and wearables at 55 per cent and eyewear at 61 per cent.

CK Venkataraman, MD, Titan, stated that: “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 of the company. The company continues to gain market share in its key businesses aided by innovation and total commitment displayed by its employees and the extended business associate network. The focus on cost and capital employed has helped the company manage its bottom line and cash flows very well.”

Commercial papers issued

The Group had a commercial paper of ₹50 crore outstanding as of March 31, 2020. In the quarter ended June 30, 2020, the Group had issued ₹150 crore of commercial papers with a tenure of three-six months. Of these, ₹1,150-crore worth of commercial papers were matured and redeemed during the six months within due dates. Further, during the September quarter, the Group had issued ₹80 crore of commercial papers with a tenure ranging from three-six months.

Out of the balance amount of ₹630 crore, a total of ₹500 crore is due for maturity on November 17, 2020; ₹50 crore on November 19; ₹50 crore on December 8; and the balance ₹30 crore on December 28.

During the second quarter, the Group has negotiated with certain landlords on the rent reduction/waiver due to COVID-19 pandemic. Management believes that such reduction/waiver in rent is short term in nature.

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