Titan Company fell 4.07% to Rs 1062.75 after the company reported a consolidated net loss of Rs 297 crore in Q1 June 2020 compared with net profit of Rs 364 crore in Q1 June 2019.
Revenue from operations stood at Rs 1979 crore in Q1 June 2020, tumbling 61.5% from Rs 5151 crore in the same period last year.During the quarter, the company sold gold-ingots aggregating Rs 601 crore to various customers dealing in bullion, which is disclosed as other operating revenues. The sale was done to reduce inventory given the low level of sales due to the disruptions in activity.
Titan reported a pre-tax loss of Rs 361 crore in Q1 June 2020 as against a profit before tax of Rs 520 crore in Q1 June 2019. The company received a tax rebate of Rs 64 crore in Q1 June 2020 as against total tax expense of Rs 156 crore in the corresponding period last year.
On a standalone basis, Titan reported a net loss of Rs 270 crore in Q1 June 2020 compared with net profit of Rs 371 crore in Q1 June 2019. Revenue from operations declined 62% year-on-year to Rs 1862 crore in Q1 June 2020 over Q1 June 2019.
The disruption caused by the COVID-19 pandemic affected company's performance severely with retail outlets closed for a major part of the quarter. The lockdowns impacted the company's operations significantly in the months of April and May 2020 as most stores were forced to shut down. While stores started opening in May, post Unlock 1.0, even as at end of June 2020, only 83% of all the stores opened and even for stores that opened, many of them were not operating for all days.
The Tata Group Enterprise said that the recovery rate of revenue started improving slowly and as of June it was 21% for the Watches and Wearables division, 77% for the Jewellery division and 25% for the Eyewear division. Consumer sentiment was impacted severely due to the economic downturn, people being forced to remain indoors for extended periods of time as most people worked from home and the perceived risk of going out to public spaces. Further with most weddings in the quarter being postponed, demand for wedding jewellery was affected.
With the negative consumer sentiment prevailing in the quarter, discretionary spends were very low, and specifically impacted company's Watches business and diamond studded jewellery in the Jewellery business. Plain gold jewellery sales, however, recovered better than expected in June despite high gold prices.
The impact of the lockdown resulted in the jewellery division recording an income of Rs 1,783 crore for the quarter ending June 2020 as compared to Rs 4,047 crore in June 2019, a decline of 56%. The Watches business was impacted far more and recorded an income of Rs 75 crore in Q1 June 2020 against Rs 715 crore in Q1 June 2019, registering a decline of 90%. The Eyewear business also was impacted with revenues declining by 80% in the quarter, recording an income of Rs 30 crore in Q1 June 2020 as against Rs 149 crore in Q1 June 2019.
The company's subsidiaries, Titan Engineering and Automation (TEAL) did well despite the pandemic with revenues of Rs 76 crore (decline of 19%). CaratLane, being in the consumer discretionary space was hit by the pandemic and ended with a revenue of Rs 42 crores (decline of 68%) and a net loss of Rs 19 crore for the quarter ending June 2020.
Commenting on company's performance, C K Venkataraman, Managing Director said, "The severity of the disruption in business due to the pandemic impacted the Company's performance resulting in an unprecedented loss for the company. The recovery in business, particularly in the jewellery business is encouraging and we expect to get back to normalcy by the fourth quarter of this year. The company's reassessment of its cost structure during this period and inherently strong Balance Sheet, will help it to create a stronger base for a sustainably higher profit margin business."
Powered by Capital Market - Live News
Disclaimer: No Business Standard Journalist was involved in creation of this content
