Titan Company (TITAN) Q4 96/97 earnings summary

Executive summary

• FY97 sales rose 16.5% to Rs 408.52 crore; exports grew ~50% to Rs 55.66 crore, while weak consumer demand, higher interest and costs constrained profit growth.

• PBT was Rs 27.80 crore versus Rs 27.57 crore; PAT fell to Rs 24.22 crore from Rs 27.57 crore after a Rs 3.58 crore MAT provision.

Financial highlights

• Gross profit increased 29% to over Rs 100 crore, including Rs 10.13 crore from sale of part of the Timex Watches stake; prior-year gross profit was Rs 77.48 crore.

• Sales were Rs 408.52 crore versus Rs 350.72 crore; other income rose to Rs 12.93 crore, including Rs 10.13 crore profit on investment sale.

• Interest expense increased to Rs 56.40 crore from Rs 34.22 crore; depreciation was Rs 16.52 crore versus Rs 15.68 crore.

• Proposed equity dividend remained Rs 3.30 per share, or 33%; dividend tax of Rs 1.40 crore added to the profit charge.

Outlook and guidance

• FY97-98 was expected to be significantly better; first-quarter trends were described as encouraging, supported by expanded capacity, wider market reach and productivity initiatives.

• Planned inventory reduction was expected to release upwards of Rs 50 crore for current-year capital expenditure and investment needs.

• Plans included more than 40 Tanishq outlets across 30-plus towns by year-end and continued expansion of table-clock products and retail distribution.

• The US market launch for watches and jewellery was shifted to the following year to conserve funding and management capacity.