On Wednesday, Titan Company released its annual report for the financial year 2019-20. In the part about its outlook for the business for the current financial year 2020-21, the Tata Group company said that it is expecting its businesses to be hit "very substantially" due to disruptions caused by COVID-19 pandemic.
"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," it said.
The company added that its focus during 2020-21 will be on cash flows and optimising spends to ensure liquidity.
"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. However, the Company 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 statement said.
"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 program 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," it 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. However, he said that 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.
Titan Company reported a 10.4 percent year-on-year increase in profit after tax at Rs 1,518 crore for 2019-20.
Shares of Titan Company Ltd closed 0.57 percent lower on Wednesday.