Multi-business conglomerate ITC posted a 20 per cent jump in net profit at Rs 1,602 crore for the quarter ended June, beating market expectations, albeit marginally. Net profit in the corresponding period last year stood at Rs 1,332 crore.
Profits from operations rose 21.3 per cent to Rs 2,174 crore, while profit before tax stood at Rs 2,337 crore, a rise of 20.6 per cent over the year-ago period. This was primarily driven by a rise in cigarette prices and reduced losses in the non-cigarette fast moving consumer goods (FMCG) segment.
ITC shares on Thursday closed at Rs 249 on the Bombay Stock Exchange, down two per cent from the previous close.
Gross revenue from operations, at Rs 9,457 crore, was 15.3 per cent higher than in the year-ago period. This was led by good performances in the branded packaged foods, education & stationery and cigarettes businesses.
ITC’s net cigarette sales rose 14.98 per cent to Rs 3,304.34 crore, against Rs 2,873.56 crore in the year-ago period, while non-cigarette FMCG sales (branded packaged foods, personal care, education & stationery products, etc) rose 23 per cent to Rs 1,473.05 crore, against Rs 1197.76 crore in the corresponding period last year.
The company on Thursday stated the cigarette industry in India continued to be hit by discriminatory taxation and a regulatory policy framework. “Steep increases in excise duty and value-added tax on cigarettes during the quarter have further exacerbated the situation vis-à-vis lightly taxed or tax-evaded tobacco products like bidi, khaini, chewing tobacco and gutkha,” it stated.
The company is test-marketing filter cigarettes not more than 65-mm long. In the Budget, the government had introduced a 65-mm slab to stem proliferation of illegal non-duty paid cigarettes available at Rs 1 a 69-mm cigarette.
More From This Section
In the quarter ended June, profit from the cigarette business rose 20.49 per cent to Rs 1,899.81 crore, against Rs 1,576.69 crore in the year-ago period, while the non-cigarette FMCG segment reduced its losses from Rs 76.28 crore to Rs 38.84 crore. Cigarettes account for about 80 per cent of ITC’s total profits.
The company’s hotels business, however, was affected by the weak global and domestic economic environment. Net sales rose marginally to Rs 232.35 crore, against Rs 230.46 crore in the corresponding period last year, while profits almost halved from Rs 51.31 crore to Rs 26.23 crore.
The company, however, is going ahead with expansion, keeping in mind the long-term potential of the sector. “In line with its investment-led growth strategy, given the compelling long-term potential of this sector, the company, through a newly formed subsidiary, acquired a prime plot of land in Colombo, Sri Lanka, on a 99-year lease from the government of that country for developing a five-star luxury property,” read a company statement.
Revenues from the paperboards, paper and packaging segment recorded growth of nine per cent, while profits rose 17 per cent, led by enhancement in the product mix.