Cigarette major ITC Ltd has recorded modest growth in the first half of the current fiscal. The company, which is currently battling against grey market cigarette sales and rapidly declining consumption patterns, has managed to post a marginal one per cent sales rise. However, operating profit increased by nearly 16 per cent due to effective cost control measures. Total expenditure during the period declined by more than five per cent.
According to a survey by the Tobacco Institute of India, total sales volume of the industry was down by nearly seven per cent during the first half of the current fiscal. Cigarette sales were down to 43,516 million sticks against 46,780 million in the corresponding period last year.
Considering the above figures, ITC Ltd has done better than its industry peers. According to ITC, volumes have increased by nearly three per cent to 5,394 million sticks during September 1999 from 5,246 million sticks in the preceding month against an industry sales growth of 2.5 per cent at 8,152 million sticks. Despite a 12 per cent rise in depreciation, pre-tax profit of the company jumped by nearly 22 per cent. Net profit growth was restricted at 14.3 per cent due to higher tax provision.
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But in view of the better performance in the first-half, investors and marketmen are of the opinion that the full year results will be better than the previous year.
In fact, ITC's first-quarter results were a let down for market players. Sales for the quarter fell nearly eight per cent with operating profit increasing by over 15 per cent. Total expenditure decreased by nearly 14 per cent.
Profit after tax for the first-quarter increased by nearly 20 per cent despite higher depreciation provision of 33 per cent.
ITC improved its performance in the second quarter with sales increasing by nearly three per cent. Operating profit during the quarter rose by 15 per cent and expenditure by four per cent.
A decrease in interest payments and provision for depreciation helped the company to register a 24 per cent growth in profit before tax.
RS crore Years ended Six Months ended
Item 31-3-98 31-3-99 %change 30-9-98 30-9-99 %change
Sales 6,834.75 7,579.17 10.89 3,832.49 3,873.8 1.08
Other income 89.00 121.79 36.84 67.75 53.37 -21.23
Exports (f.o.b.) 759.08 756.00 -0.41 - - -
Expenditure 2,271.46 2,443.30 7.57 1,193.33 1,132.84 -5.07
PBIDT 958.35 1,193.87 24.58 650.9 753.37 15.74
Interest 81.02 153.55 89.52 82.43 63.72 -22.70
Depreciation 85.85 102.29 19.15 50.16 56.14 11.92
PAT 526.20 623.42 18.48 350.08 400.32 14.35
EPS (Rs) 21.44 25.40 - *28.53 *32.62 -
NPM (%) 7.70 8.23 - 9.13 10.33