Company carried out cost reduction initiatives
The poor performance was consequent to the decline in revenues, despite a company-wide cost reduction initiative and cuts in advertising spends given the low level of activity.
The profit after tax for the immediate previous quarter was Rs257 crore. The disruption caused by the Covid 19 pandemic in India affected the performance of Titan Company severely with retail outlets closed for a major part of the quarter, resulting in a decline in income of 62 per cent for the first quarter of financial year 2020-21 with the total income declining to Rs1,901 crore, against last year’s income of Rs 4,995 crore during the same period.
Revenue includes Rs601 cr bullion sale
Revenues included sale of bullion worth Rs 601 crore done to reduce inventory given the low level of sales due to the disruptions in activity. 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 per cent of all the stores opened and even for stores that opened, many of them were not operating for all days. The recovery rate of revenue started improving slowly and as of June it was 21 per cent for the Watches and Wearables division, 77 per cent for the Jewellery division and 25 per cent for the Eyewear division.
C K Venkataraman, Managing Director of the company stated that 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,” Venkataraman added.