Tata group firm Titan Company Ltd on Wednesday reported a 37.81 per cent decline in its standalone net profit to Rs 199 crore for the quarter ended September 30, on account of higher expenses.
The company had reported a net profit of Rs 320 crore in the corresponding period of the previous financial year.
Its total income for the quarter was Rs 4,389 crore, down 1.72 per cent as compared with the income of Rs 4,466 crore for the corresponding quarter in the previous year, Titan said in a regulatory filing.
During the quarter, Titan recognised a loss of Rs 484 crore, part of total expenses, as a result of change in the cash flow hedging relationship due to an increase in sales compared to the original sales forecast and availment of the moratorium offered on the gold on loan.
"This has led to pre-closures of hedge contracts originally designated against sales in the subsequent quarters and redesignation of certain open contracts. Consequently, these hedging contracts have been accounted as ineffective hedges," the company said.
Titan's total expenses during the quarter were at Rs 4,151 crore as against Rs 4,037 crore a year ago.
Titan Company said it reported an 89 per cent recovery in sales in the second quarter of 2020-21 led by a sharp recovery in the jewellery division after significant disruption caused by the COVID-19 pandemic in India in the first quarter of the fiscal.
Titan Company Managing Director C K Venkataraman said, "The recovery that the company has witnessed in the quarter has been satisfying, and the positive consumer sentiment witnessed gives a rise to hope that the festive period could be good for all the divisions of the company." He added that the company continues to gain market share in its key businesses. "The focus on cost and capital employed has helped the company manage its bottom line and cash flows well." With the lockdowns being lifted in most parts of the country, Titan said it was able to operate most of its stores across all its divisions.
The jewellery division recorded an income of Rs 3,446 crore for the quarter as compared to Rs 3,528 crore last year, a decline of 2 per cent. Titan's watches and wearables business reported an income of Rs 400 crore against Rs 719 crore in the previous year, a decline of 44 per cent.
The eyewear business revenues declined 39 per cent in the quarter to Rs 94 crore, against Rs 154 crore last year.
The company's other segments, comprising Indian dress wear and accessories, recorded an income of Rs 23 crore as compared to Rs 44 crore in the previous year, a decline of 48 per cent.
Shares of Titan Company Ltd were trading 1.61 per cent lower at Rs 1,208.80 on the BSE.