Titan, part of the Tata Group, reported a 23% decline in its second-quarter profit, citing inventory losses and shrinking margins due to a reduction in customs duty on gold imports. The company posted a consolidated profit after tax of Rs.7.04 billion ($83.74 million), down from Rs.9.16 billion in the same period last year.

The cut in the gold import duty from 15% to 6% in July boosted consumer demand, especially for plain gold jewellery, but also led to a significant dip in profit margins. The company’s earnings before interest and tax (EBIT) margin fell to 8.7% from 12.8% in the previous year, as the reduced tax impacted inventory valuations. Titan had already purchased inventory before the tax cut, leading to a mismatch between the cost of the older stock and the new, lower market prices.

Managing Director CK Venkataraman mentioned that the company incurred a Rs.2.90 billion loss from the customs duty reduction. "The profitability of Q2 was significantly impacted by customs duty-related losses and the need for further investments in business growth," he added.

Despite the challenges, Titan’s jewellery business, which includes brands like Tanishq, CaratLane, and Mia, saw a 15% revenue growth. The jewellery segment remains the company’s largest, contributing to 87% of its total revenue. Titan’s watches and wearables segment, which includes Fastrack and Xylys, also performed well, reporting a 19% growth, driven by strong demand for analog watches.

Overall, Titan’s sales surged nearly 26%, reaching Rs.134.73 billion for the quarter.