Cigarette-to-hotels company ITC Ltd on Monday reported a 21.5 per cent rise in second-quarter post-tax profits at Rs 1,514 crore, on the back of all-round improvement in all businesses, especially cigarettes.
Pre-tax profits for the quarter ended September grew by 21.1 per cent to Rs 2,215 crore beating market expectations, which reflected in the company’s stock movement. The ITC scrip touched an intra-day high of Rs 208 on the Bombay Stock Exchange, close to its 52-week high of Rs 211.35, and finally closed at Rs 206.90.
Net turnover rose 17.5 per cent to Rs 5,974 crore. Cigarette revenue increased 16 per cent to Rs 2,968 crore. Sales of other FMCG products such as soaps, shampoos and packaged foods rose 27 per cent to Rs 1,341 crore.
ITC, which has been consciously reducing its dependence on cigarettes, registered a 31 per cent increase in non-cigarette profits at Rs 486 crore. Profits from cigarettes grew 18.56 per cent to Rs 1,728.90 crore. The cigarette business accounted for 78 per cent of the overall pre-tax profits and 43 per cent of revenues.
ITC said the problem of discriminatory taxation was further exacerbated during the quarter, with certain state governments increasing the rate of value-added tax (VAT). Steep increases in VAT rates were brought about by states like Rajasthan, Gujarat, J&K, West Bengal and Tamil Nadu. Prices of Classic and Navy Cut brands were increased by the company to offset the rate hike to an extent. Among all segments, ‘FMCG Others’, which includes branded packaged foods, garments, educational and stationery products, and personal care, posted losses, but brought it down from Rs 66.90 crore to Rs 55.90 crore.
“The segment results of ‘FMCG Others’ are after considering significant business development, brand building and gestation costs of branded packaged foods and personal care products,” the company stated. Profits from the agri business grew by 15 per cent, primarily because of better realisations and higher volumes in soya, coffee and wheat, while the paperboards, paper and packaging division improved its profitability from Rs 245.64 crore to Rs 289.70 crore.
Despite the economic turmoil in Europe and the US, the hotels business managed to post marginal growth in its top line at Rs 234 crore, while profits rose by nine per cent.