Titan Company Ltd A Strong Recovery In Q2 Fy 2020-21
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Indian Giants, Titan Company reported an 89% 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 crores, including sale of gold bullion to the extent of Rs 391 crores, resulting in a decline of less than 2% compared to the income of Rs 4,466 crores for the same quarter in the previous year. The decline in total income excluding bullion sale was close to 11%.
The total income for the first half of the fiscal (Hl) was Rs 6,290 crores (including bullion sale of Rs 992 crores ), a decline of 34% against the income of Rs 9,461 crores in the corresponding period last year. The decline without considering the bullion sale was 44%.
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% for the Watches and Wearables division, 98% for the Jewellery division and 61 % 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 crores for the quarter (excluding gold bullion sales) as compared to Rs. 3,528 crores last year, a decline of 2%. The Watches and wearables business recovered well in the quarter to record an income of Rs. 400 crores against Rs. 719 crores in the previous year, a decline of 44%. The Eyewear business also improved with revenues declining by 39% in the quarter, recording an income of Rs. 94 crores as against Rs. 154 crores last year. Other segments of the Company comprising Indian dress wear and accessories recorded an income of Rs. 23 crores compared to Rs. 44 crores in the previous year, a decline of 48%.
Consequent to the recovery, the Company declared a profit before tax of Rs. 238 crores, compared to Rs 429 crores in the previous year, a decline of 45% for the quarter. The result is after a provision of Rs 34 crores for dues from a broker relating to commodity hedging. Despite the profit in the quarter, the Company has recorded a loss of Rs 97 crores in Hl compared to a profit before tax of Rs 9 52 crores in the previous year. The Jewellery division declared Earnings before interest and tax (EBIT) of Rs 285 crores for the quarter compared to Rs 384 crores in the previous year and Rs 231 crores for Hl compared to Rs 826 crores in the previous year. The Watch division reported a loss of Rs 4 crores for the quarter (EBIT of Rs 113 crores in the previous year) and loss of Rs 168 crores for Hl (EBIT of Rs 241 crores in the previous year). The Eyewear division turned around remarkably in the quarter with EBIT of Rs 9 crores (loss of Rs 31 crores in the previous year) and a loss of Rs 22 crores for Hl (loss of Rs 10 crores in the previous year). The Company's War on Waste program has been running better than plan and has contributed significantly to the bottom line during the current fiscal.
The Company's retail chain (including CaratLane) stands at 1,832 stores, as on 30th September 2020 with a retail area crossing 2.4 million sq.ft. for all its brands covering 290 towns.
The principal subsidiaries of the Company continued to do well. Titan Engineering and Automation Ltd (TEAL) recorded revenues of Rs 167 cr (decline of 16%) and Profit before tax of Rs. 25 cr (decline of 19%) for Hl FY 2020-21. CaratLane did very well with a growth of 10% and a positive EBIT in the quarter and ended with a revenue of Rs 194 cr (decline of28%) during Hl and a Net Loss of Rs. 24 cr.
Mr. C K Venkataraman, Managing Director of the Company 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."
