Employee voluntary retirement wage bill drags Titan’s first quarter profit by 16.3%
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Net profit of jewellery and watch maker Titan Co. Ltd fell 16.3% during first quarter of the current fiscal year to Rs.126.69 crore because of a one-time expense towards paying employees who took voluntary retirement.
Titan incurred an expenditure of Rs.96.88 crore against this exceptional item and the entire amount has been accounted for in this quarter, the company informed the bourses on Wednesday.
Revenue for the maker of Titan and Fastrack watches and Tanishq jewellery grew by 3.3% to Rs.2,798.81 crore even as retails sales were “adversely impacted” by fewer wedding dates during April-June and an industry-wide impact on jewellery sales because of high gold prices.
“The first quarter this year has been good for the company from a bottom line perspective; the final number, though, has been impacted adversely by an exceptional item, the benefits of which will accrue over the coming years,” Bhaskar Bhat, managing director of Titan, said in a statement. “Growth has been muted and our jewellery business has grown despite a reported drop of 50% in gold imports during the first half of this calendar year.”
Income from the jewellery segment, Titan’s biggest money earner, grew by 3.2% from Rs.2,072.91 crore to Rs.2,138.32 crore, while money from the company’s second biggest segment—watches—increased by 1.4% to Rs.491.72 crore. The company introduced a new brand called Octane in its watch business and launched another brand Niloufer in the jewelry business. Titan is the world’s fifth largest wristwatch maker.
The eyewear business grew by 2.7% to Rs.109.87 crore, while the precision engineering unit saw sales rise 36.2%, adding Rs.63.92 crore to Titan’s sales income.
Titan, a lifestyle retail brand of the Tata group, acquired 62% stake in online jewellery seller CaratLane Trading Pvt. Ltd. for Rs.357 crore in May to boost its online presence, get access to new customers and design capabilities of the Tiger Global-funded start-up.
The company is working on innovative advertising campaigns and is planning new product launches to fuel demand for its products in the coming quarters. “All our brands are working on plans to stimulate demand in the coming quarter,” Bhat said.
Titan added 11 stores during the quarter to take its retail chain strength to 1,293 stores spread over 1.73 million sq.ft. across India.
Titan’s stock price fell 2.10% to Rs.414.40 on Wednesday, while the benchmark Sensex fell 1.02% to 27,697.51 points.