All of Titan’s Businesses Substantially Impacted by COVID-19 Pandemic

Titan Company Limited providing an update on the impact of COVID-19 on its operations and business, said that the lockdowns and restrictions imposed on various activities due to COVID – 19 pandemic have posed “challenges” to all its businesses.

“The Company‟s operations were hit substantially from 17th March 2020 till the 1st week of May 2020, when lockdown was gradually lifted,” the Company stated in a filing. “Corporate offices, regional offices, retail operations and manufacturing facilities were fully shut during the period and the Company was able to get only very marginal sales through its online channel at the end of April but delivery for these have been affected due to classification of our products as non-essential so far.”

Titan noted that Akshaya Tritiya, which is considered highly auspicious and is one of the major days when gold jewellery is bought, this year fell on April 26, during the period of the lockdown. As a result, “almost all the sales related to it were lost except for some online sales”, the Company said.

The wedding season too, is normally quite strong in the months of April and May. However,   as almost all weddings in this period were postponed this year, Titan’s  jewellery business   deferred the launch of two of its collections till such  time  when most of the stores are re-opened.

During the period of the lockdown Titan adopted the work from home policy.   Now that lockdown restrictions are being eased in many parts of the country, the Company has started re-opening its stores in the non-containment zones, “after establishing thorough and well-rehearsed safety protocols”, the Company stated. “These protocols include encouraging customers to take appointment before a visit to the stores, making possible cashless payment in all stores, sanitizing products before and after every trial by customers, allowing limited number of persons inside the stores basis the store size, thermal screening, compulsory use of face masks, rotation of store staff, etc.,” Titan said, outlining the safety measures.

So far, the Company has opened around 43 % of its stores across all businesses. Only stores in malls continue to remain closed as per Government directives. However, the Company is optimistic that as a result of the various representations being made by different industry associations, these will also be allowed to open in the coming weeks in the non-containment zones.

Titan also reported that manufacturing activities have been resumed “gradually” in most of the facilities.

The Company’s corporate office at Bengaluru re-opened on May 6, 2020 with limited staff working from office in the initial phase.

Trying to estimate the future impact of CoVID-19 on its operations, the Company pointed out that it is “predominantly dependent on retail operations being robust as it sells its products through nearly 1850 retail outlets in the country”. Its online business accounts for only around 2% of its sales. “The sales in stores that have opened up are at around 50 % of the sales in a normal period and is improving gradually,” Titan noted. “These are early days and the Company is not in a position to gauge with certainty the future impact on operations but expects normalcy to be achieved only after a quarter. Customer sentiment pointing to reduced spends on discretionary items might impact demand for most of the Company’s products.”

What is more, the fall in sales is expected to impact store profitability in the near term, and hence, store roll outs “will be calibrated in the immediate future till more clarity emerges”, Titan stressed.

With regards to its financial status, the Company reassured stakeholders saying it is in a   “comfortable liquidity position due to adequate banking limits being in place and ability to issue Commercial Papers as the Company continues to enjoy the highest rating in both short term (A1 +) and long term (AAA) borrowings by CRISIL and Brickworks”.

Titan said, that even prior to the outbreak of the coronavirus pandemic, the Company had embarked upon a Company-wide initiative to bring down costs and conserve cash. “This programme is well under way and the Company is expected to get benefits as a consequence of these initiatives in future,” Titan said.

Titan said there had been “minimum disruption” in its supply chain as most of the vendors have re-started their production and are ready to provide required supplies.

Also, remarking on the impact on its subsidiary CaratLane Trading Private Limited (Caratlane), Titan said its sales were adversely impacted (as many of the stores are in malls and they have not reopened as yet). “However, since Caratlane has got a good proportion of sales from online operations, it is expected that these sales will help in the cash flows and profitability of Caratlane,” Titan remarked.

Courtesy:GJEPC