Titan Q2: Net Profit Slumps 25 Per Cent As Change In Customs Duty Drives Inventory Losses
The overall income of the firm climbed 24 per cent to Rs 12,458 crore in the September quarter in FY25 in comparison to Rs 10,027 crore clocked in the corresponding quarter a year earlier
Titan Ltd on Tuesday reported a 25 per cent slump in net profit at Rs 705 crore for the second quarter of the current 2024-25 fiscal year (FY25). The company’s profit in the July-September quarter in the preceding 2023-24 fiscal year (FY24) stood at Rs 940 crore.
This decline in profit was due to a cut in customs duty on gold imports which results in inventory losses and reduced margins for the company. The overall income of the firm climbed 24 per cent to Rs 12,458 crore in the September quarter in FY25 in comparison to Rs 10,027 crore clocked in the corresponding quarter a year earlier.
Consumer demand increased significantly after the change in customs duty on gold imports, helping in boosting plain gold sales in the quarter. The total income for the jewellery segment rose 26 per cent to Rs 10,763 crore in the quarter ended September 30, 2024 on a year-on-year (YoY) basis.
Elaborating on the performance in the segment, the company said, “The India business grew 25% in the same period. EBIT, at Rs 932 crore, came at a margin of 8.7% for the quarter. Normalising the custom duty impact, Q2FY25 EBIT came at Rs 1,222 crore, clocking 11.4% margin.”
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C K Venkataraman, MD, Titan, pointed out that the company felt an impact worth Rs 290 crore as a result of the customs duty cut as it already had inventory before the change in import taxes. This reduced the average value of its stock during the quarter under review. Further, the company had to resort to selling the old inventory at the new, lower market prices post the cut.
“After a muted Ql, Q2 witnessed encouraging growth across key businesses. Jewellery clocked healthy double digit growth for the quarter. Our portfolio approach in this business of straddling diverse customer needs through the brands of Tanishq, Mia, Zoya and CaratLane is working well. The buyer growth metrics were fairly strong and in good double-digits across gold and studded product categories,” the executive noted.
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