 |
|
Titan Company, the Tata Group's retail arm specializing in jewellery, watches, and eyecare, reported a significant decline in standalone net profit for the second quarter ending September 2024. The company's profit fell by 25% year-on-year to Rs 705 crore, compared to Rs 940 crore in the same period last year. This decline was primarily attributed to a Rs 290 crore loss related to the reduction in customs duty on gold, implemented in July 2024 as part of the Union Budget. The government's decision to lower the custom duty on gold from 15% to 6% impacted companies like Titan, which had acquired inventory at the higher duty rate prior to the change. This resulted in a substantial financial burden for Titan, as they were forced to sell their existing inventory at the reduced duty rate, leading to a significant decrease in profit margin.
Despite the profit dip, Titan's revenue from operations saw a considerable increase of 32% year-on-year to Rs 13,215 crore in the second quarter, compared to Rs 10,025 crore in the previous year. This growth can be partly attributed to the Rs 884 crore sale of gold ingots in Q2FY25, a significant drop from Rs 1,755 crore in the same quarter last year. CK Venkataraman, managing director of Titan, acknowledged the impact of customs duty-related losses on the company's profitability, stating that the need to invest in the growth of various businesses further contributed to the decline. However, he expressed optimism about the company's growth trajectory, highlighting encouraging performance across key businesses, including a healthy double-digit growth in jewellery sales.
The company's jewellery business exhibited strong performance, registering a 26% year-on-year increase in sales to Rs 10,763 crore in the quarter. The Indian market contributed a 25% growth to this overall figure. The reduction in customs duty on gold seemed to have a positive impact on consumer demand, leading to a surge in gold purchases, particularly in the mid-September period. This surge was accompanied by a double-digit increase in both buyer growth and average selling prices. In addition to jewellery, Titan's watches and wearables division also witnessed significant growth, with revenue rising by 19% year-on-year to Rs 1,301 crore. The Indian market mirrored this growth with a 19% increase. However, the wearables segment experienced a 13% drop in revenue due to a decrease in average selling prices. The company attributed this to consumer preference for premium brands, which was reflected in the strong performance of the Helios channel (international brand sales) with a 43% growth over the same period last year.
Titan's Eye Care division reported a more modest 7% year-on-year rise in total income to Rs 201 crore, with international brand sales experiencing a significant 53% growth. The company's emerging businesses, encompassing brands like Taneira, SKINN, Fastrack, and IRTH, collectively recorded a 14% year-on-year increase in total income to Rs 106 crore in the quarter. However, these businesses collectively incurred a loss of Rs 29 crore for the quarter. On an international front, Titan's consolidated international jewellery business saw an annual income growth of 62% to Rs 273 crore, while businesses primarily focused on analog watches experienced a 54% year-on-year income increase. Titan's subsidiary, CaratLane, also demonstrated strong growth with a 28% year-on-year increase in income to Rs 829 crore.
Source: Titan Q2 Results: Profit drops 25% due to gold duty loss