Titan expects businesses to be hit 'very substantially' due to COVID-19 (Representational image)
Watch and jewellery maker Titan Company is expecting its businesses to be hit "very substantially" in the current financial year due to disruptions caused by COVID-19 pandemic. The company said its focus during 2020-21 will be on cash flows and optimising spends to ensure liquidity.
"The lockdown necessitated by the COVID-19 pandemic is expected to hit the company's businesses very substantially in the financial year 2020-21. The company expects the economy to shrink, and tight regulations on operations of stores to continue for some time.
"Customers can also be expected to be wary of stepping out of their homes for some time. With job losses expected to increase substantially and salaries expected to fall or stay flat at best, spends on discretionary products could get affected more," Titan said in its annual report for 2019-20.
However, the company said it also expects customers to spend relatively more on jewellery compared to other discretionary spends as gold jewellery continues to be a valuable store of value.
"The focus therefore for financial year 2020-21 will be on cash flows and optimise spends. The company has therefore already begun a 'war on waste' programme to identify all costs that can be cut under the circumstances and ensuring adequate liquidity is available to run the businesses efficiently and also leveraging the company's strong balance sheet to seize opportunities that may present itself during the year will be key focus areas," the company added.
Titan Company Managing Director C K Venkataraman said since most of its products are in the discretionary and in the 'touch-and-feel' category, sales are likely to be under additional pressure during this period of uncertainty.
"We have implemented stringent safety measures across all our stores, which will help us in reassuring our customers and moving much faster towards normalcy. We are also accelerating our omni-channel marketing strategy with a renewed focus on e-commerce as customers look to increasingly shop online.
"We also remain focussed on driving relevant product innovations across our different businesses to capture mind and market share. To explain further, in the jewellery division, we are working extensively on creating a strong product portfolio at affordable price points," he said. Venkataraman said following the outbreak of the pandemic, the perception of gold as an asset class has improved considerably.
"Large scale weddings and international holiday travels are expected to reduce, freeing up funds for jewellery purchase. We may also witness a spree of 'indulgence consumption' after the lockdown is lifted and the situation is near-normal, opening up growth prospects for our products in the category of watches and fragrances. Titan is staying prepared to seize this expected demand,"he added.
Tata group firm Titan Company's revenue from operations grew to Rs 20,010 crore in 2019-20, up 4.9 per cent from Rs 19,070 crore in 2018-19. Its profit after tax was up by 10.4 per cent at Rs 1,518 crore in 2019-20 compared to Rs 1,374 crore in 2018-19.
